DOMINO'S PIZZA INTERNATIONAL, INC.
STANDARD FRANCHISE AGREEMENT
This Franchise Agreement (this "Agreement") is being entered into between
Domino's Pizza International, Inc., a Delaware corporation ("we" "DPII" or "us"
in this Agreement), and_________________________________________________________
_________________________________________________________("you" or "Franchisee"
in this Agreement). If you are a corporation or partnership, or if this
Agreement is transferred to a corporation or partnership, the term "Owners" in
this Agreement refers to all of the shareholders of such corporation or partners
of such partnership. Unless otherwise approved by DPII, the term "Controlling
Shareholder or Partner" refers to the person or legal entity designated by us as
the controlling shareholder if you are a corporation, or controlling partner if
you are a partnership.
1. INTRODUCTION
Domino's Pizza, Inc. ("DPI"), the parent company of DPII, has developed
and operates retail outlets specializing in the sale of pizza and featuring
carry-out and delivery services. These outlets are known as "DOMINO'S PIZZA
Stores" and conduct business under a uniform business format, specially designed
equipment and specifications for the preparation and sale of pizza and other
authorized food products (the "Domino's System"). DPI also owns, uses, promotes
and licenses certain valuable trademarks, service marks and commercial symbols
in connection with the operation of DOMINO'S PIZZA Stores including the ▇▇▇▇
"DOMINO'S PIZZA" (the "Marks"). DPI has granted DPII the right to grant
franchises for DOMINO'S PIZZA Stores, including the right to license use of the
Marks as provided herein outside of the United States. A listing of the Marks
relevant to the operation of your Store is available upon your request.
You have applied to DPII for a franchise to operate a DOMINO'S PIZZA Store
utilizing the Domino's System and the Marks at the location identified in this
Agreement. Your application has been approved by DPII in reliance upon all of
the representations made in your application including those concerning your
financial resources and the manner in which the franchise will be owned and
operated. It is understood and agreed that the Pizzazz concept, the Pizzazz type
unit (store) and the "PIZZAZZ" ▇▇▇▇ are not within the scope of this Agreement.
You acknowledge that you have read this Agreement and been given an
opportunity to obtain clarification of any provision that you did not
understand. You also understand and agree that the terms and conditions
contained in this Agreement are necessary to maintain DPII's high standards of
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quality and service and the uniformity of those standards at all DOMINO'S PIZZA
Stores and thereby to protect and preserve the goodwill of the Marks.
2. GRANT AND TERM OF FRANCHISE
2.1 GRANT. Subject to the terms of this Agreement, DPII grants to you a
franchise (the "Franchise") to operate a DOMINO'S PIZZA delivery store (the
"Store") under the Domino's System and a license to use the Marks in the
operation of the Store located at the following location:
________________________________________________________________________
________________________________________________________________________
2.2 TERM OF FRANCHISE. The term of this Agreement shall be for a period
of ten (10) years, beginning on the effective date of this Agreement as defined
in Section 22.12.
3. RENEWAL OF FRANCHISE
3.1 OPTION TO RENEW. You may, at your option, renew the Franchise for
one additional ten (10) year term at the end of the initial term, provided at
the time of renewal you are not in default of any material provision of this
Agreement or any other agreement with us or our subsidiaries or affiliates or
any other creditor or supplier of the Store.
3.2 MANNER OF RENEWAL. In connection with a renewal of the Franchise,
you must execute our then current form of standard franchise agreement and all
other agreements customarily used by us in the grant of franchises. The renewal
will be subject to your obtaining all required governmental approvals. You
understand that the renewal franchise agreement may provide for higher royalty
fees and greater expenditures for advertising and promotion than are provided
for in this Agreement and may contain other terms materially different from the
terms of this Agreement, however, such fees, expenditures and terms will be the
same as are generally used by us on a system-wide basis at that time. However,
there will be no initial franchise or similar fee charged upon a renewal of the
Franchise. The renewed franchise agreement is subject to further renewal in
accordance with the terms contained therein.
3.3 NOTIFICATION OF EXPIRATION. We will send all agreements relating to
renewal of the Franchise for your review and execution approximately six (6)
months prior to the expiration of this Agreement along with a notification of
the expiration of this Agreement. Your failure to return these to us, executed
by you, within thirty (30) days of receipt will be deemed an election by you not
to renew this Agreement. Our notice will also state what actions, if any, you
must take to correct the deficiencies in your operation of the Store and will
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specify the time period in which these deficiencies must be corrected. Renewal
of the franchise will be conditional on your continued compliance with all the
terms and conditions of this Agreement and all other agreements with us and our
affiliates and subsidiaries and all other creditors and suppliers of the Store
up to the date of expiration.
4. AREA OF PRIMARY RESPONSIBILITY
4.1 DEFINED. The following geographic territory will be your Area of
Primary Responsibility:
As defined on the map attached hereto.
4.2 PROTECTED AREA. Provided you are in compliance with the terms of
this Agreement, we will not operate or grant a franchise for the operation of a
DOMINO'S PIZZA Store during the term of this Agreement whose area of primary
responsibility significantly overlaps your Area of Primary Responsibility as
determined by us.
5. INITIAL PAYMENTS
5.1 FRANCHISE FEE. Prior to your execution of this Agreement, you shall
to pay us or our designee, to a bank account designated by us, or at our
offices, a franchise fee in the amount of US $_____________ or, at our sole
option, in the local currency equivalent.
5.2 OPENING ADVERTISING AND PROMOTION FEE. You agree to provide us with
opening advertising and promotion plans for our approval prior to opening the
Store and additionally, to expend the local currency equivalent of US $3,000.00
in opening advertising and promotion, and to provide to us, upon our request,
copies of all records evidencing said expenditures.
5.3 NON-REFUNDABILITY OF FEES. The fees payable under this Section 5 are
fully earned and are not refundable under any circumstances.
6. ROYALTY FEE AND OTHER CHARGES
6.1 AMOUNT AND PAYMENT. During the term of the Franchise, you agree to
pay us a royalty fee in U.S. Dollars or, at DPII's option, its local currency on
the date of payment of ______________________of the weekly Royalty Sales of the
Store. This fee must be postmarked or wire transferred, if requested by DPII
pursuant to subsection 15.4 hereof, on Monday and paid by Wednesday of each week
on royalty sales for the week ending on the preceding Sunday. Any and all
governmental and/or administrative approvals which may be required to permit the
payment of the foregoing fees to DPII outside of the country in which the Store
is located shall be obtained by Franchisee at its sole expense.
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6.2 DEFINITION OF ROYALTY SALES. The term "Royalty Sales" means the
total receipts from all sales at or from the Store, excluding sales and
equivalent taxes and coupons and similar discounts or beverage container
deposits approved by us in advance. Premium items or similar items must be
included in computing Royalty Sales unless these items have been sold at or
below cost by the Store.
6.3 INTEREST ON LATE PAYMENTS. All royalty fees, advertising
contributions and all other amounts owed to us pursuant to this Agreement will
bear interest after the due date at a rate which is two percent (2%) above the
one-month London Interbank Offered Rate (LIBOR) for U.S. Dollars for the date on
which payment was due, or if that date is not a business day, for the next
business day. Entitlement to such interest shall be in addition to any other
remedies we may have.
6.4 APPLICATION OF PAYMENTS. When we receive a payment from you, we have
the right in our sole discretion to apply it as we see fit to any past due
indebtedness of yours due to us or our affiliates, whether for royalties,
advertising contributions, purchases, interest, or for any other reason,
regardless of how you may designate a particular payment to be applied.
6.5 CONVERSION OF PAYMENTS. All fees, advertising contributions, and all
other amounts owed to us in U.S. Dollars will be computed at the telegraphic
transfer selling rate for U.S. Dollars quoted by Bank of America International
as quoted in The Wall Street Journal with respect to the local currency for the
date of payment, or if that date is not a business day, for the next business
day. If the exchange rate at the time of remittance, as opposed to the exchange
rate on the due date, must be used, you will compensate us for any resulting
loss. If at any time legal restrictions shall be imposed upon the purchase of
U.S. Dollars or the transfer to or credit of a non-resident corporation with
payments in such currency, you will notify us immediately, and use your best
efforts to obtain any consents or authorizations which may be necessary in order
to effect payment. We may direct you to make payments to us in such other
currency and in such other territory or jurisdiction as we may select, or (to
the extent permissible by law) to make such payments to a designated account for
our exclusive and sole use and benefit, and you will provide evidence to us of
such payments. Our acceptance of payment in a currency other than U.S. Dollars
will not relieve or release you of or from your obligation to make future
payments in U.S. Dollars to the extent permitted by law.
6.6 PAYMENT OF TAXES. You must pay to the local tax authorities, on our
behalf, withholding payments required by law and provide us with an official
receipt for payment of these withholding taxes. You may deduct the amount of any
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of these withholding taxes from the royalty payments to us. If you fail to pay
these withholding taxes, you will indemnify us for the full amount of such
taxes, including any losses occasioned by your failure to withhold any taxes
imposed by any local jurisdiction on amounts payable by you pursuant to Sections
5 and 6, and for any liability (including penalties, interest, and expenses)
arising from or concerning the payment of such taxes, whether such withholding
taxes were correctly or legally asserted or not. All other taxes imposed, such
as turnover taxes, value-added taxes, or sales taxes, which may be imposed now
or in the future, will be your responsibility and will not affect your
obligations to make payments as required under this Agreement.
7. STORE LOCATION
7.1 STORE LEASES. Concurrently with the execution of this Agreement, you
will execute a sublease or lease agreement pursuant to which you will sublease
or the premises of the Store at the location specified in Section 2.1. You will
not execute a lease or sublease with a third party lessor for the Store, or any
food preparation center ("Commissary") operated by you in connection with the
Store, which has not been approved by us or which does not contain the terms we
require in all such leases.
7.2 REQUIRED LEASE PROVISIONS. The lease for the premises of the Store
shall contain provisions to the effect that: (i) the lease is entered into by
and between you and the lessor upon the express understanding that you are a
licensed Franchisee and that the premises are to be used during the term of the
lease solely as a franchised business. DPII, as Franchisor, is a third-party
beneficiary of the lease agreement and is entitled to enforce on its own behalf
the rights given to it in the agreement; (ii) upon termination or expiration of
this Franchise for any reason, DPII shall have the right, but shall not be
obligated, to assume your status and replace you as lessee, and you, upon
exercise of that right by us, shall be fully released and discharged from all
liability for future rent and other lease charges (except for liability for
unpaid rent or other lease charges for the period of your occupancy or any other
then existing liability to the lessor under such lease). DPII shall further have
the right to assign the lease to another Franchisee upon 30 days notice to the
lessor. You and the lessor shall complete any required documents and/or
formalities to achieve this result; (iii) the lessor shall send us a copy of all
notices of default which it sends to you; and (iv) upon termination of the lease
or of the Franchise Agreement, the lessee shall remove all identifying signs and
trademarks from the premises. If the lessee fails to do so within five (5)
calendar days of its last day of active business or of the termination of the
lease, whichever is sooner, Franchisor may remove such signs or marks itself.
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7.3 LOCATION AND USE. You may operate the Store only at the location
specified in Section 2.1, and you may not relocate the Store except with our
prior written consent. The Store may only be used for the operation of a
DOMINO'S PIZZA Store and other related activities approved by us in writing. You
shall not allow the premises of the Store to be used for any immoral or illegal
purpose.
7.4 RELOCATION. If your lease expires or terminates without your fault,
or if the site is condemned, destroyed or rendered unusable, we will grant
permission for relocation of the Store to a new location to be approved or
determined by us, for which you will execute a lease or sublease with us, our
local subsidiary, or with a third party lessor, as we shall determine. Any
relocation will be at your sole expense. In the event of relocation of the
Store, you will pay us our reasonable expenses incurred in connection with any
such relocation. We will not, however, charge you more than the sum of One
Thousand U.S. Dollars (US $1,000.00) for the administrative expenses incurred by
us in connection with such relocation.
7.5 LOCATION AND OPERATION OF COMMISSARY. Any Commissary operated by you
in connection with the Store may be located only at the premises of the Store or
other premises approved by us. Such Commissary must be operated by you and your
employees exclusively for the benefit of the Store or other Domino's Pizza
Stores operated by you and may not be operated by any other person or entity
without our prior written consent.
7.6 TERMINATION OR ASSUMPTION OF LEASE. If you have leased or subleased
the Store and/or the Commissary from us, or our local subsidiary then, upon the
termination or expiration of the Franchise for any reason, such lease(s) and/or
sublease(s) shall terminate. If you have leased or subleased the Store and/or
the commissary from a third party lessor, upon the termination or expiration of
the Franchise for any reason, we shall have the right to assume your status and
replace you as a lessee or sublessee. Upon exercise of that right by us, you
will be fully released and discharged from all liability for rent and all other
future liability under the lease (although not from any liability for unpaid
rent or any other then existing liability to the lessor under the lease). If we
exercise our right to assume your lease, we will indemnify you and hold you
harmless against any claim made for future rent or other future liability under
the lease or sublease.
8. STORE DEVELOPMENT
8.1 INITIAL DEVELOPMENT AND CONSTRUCTION. You agree that promptly after
obtaining possession of the site for the Store you will:
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(a) cause to be prepared and submit for approval by us a site plan and
any modifications to our basic architectural plans and specifications for the
Store, including requirements for dimensions, exterior design, materials,
interior layout, equipment, fixtures, furniture, signs, and decorating. You
understand that you may modify our basic plans and specifications only to the
extent required to comply with applicable ordinances, building codes, and permit
requirements and only with our prior written approval;
(b) obtain all required zoning changes; all required building, driveway,
utility, health, sanitation, and sign permits and any other required permits;
(c) purchase or lease equipment, fixtures, furniture and signs meeting
our specifications and requirements;
(d) complete the construction and/or remodeling, equipment, fixture,
furniture and sign installation and decorating of the Store in full and strict
compliance with plans and specifications approved by us and all applicable
ordinances, building codes and permit requirements; and
(e) if applicable, obtain all customary contractors' sworn statements
and partial and final waivers of lien for construction, remodeling, decorating
and installation services provided for the Store.
8.2 STORE OPENING. You agree to complete development of the Store and
have the Store ready to open within a reasonable time after obtaining possession
of the site for the Store. If you do not open the Store and have it operating
within (6) months from the effective date of this Agreement, we will have the
option to terminate this Agreement upon the giving of written notice to you.
9. STORE REFURBISHING
You agree to refurbish the Store (in addition to regular maintenance and
repair), within six (6) months of receipt of written notice from us, as we may
from time to time reasonably require to maintain or improve the appearance and
efficient operation of the Store, to increase its sales potential, or to comply
with our standards and identity. Refurbishing may include:
(a) replacement of worn out or obsolete equipment, fixtures, furniture,
and signs;
(b) the substitution or addition of new or improved equipment, fixtures,
furniture, and signs;
(c) redecorating;
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(d) repair of the interior and exterior of the premises and repair and
resurfacing of parking facilities;
(e) structural modifications and remodeling of the premises; and
(f) repair or replacement of delivery and related motor vehicles.
You will not be required to make aggregate expenditures for refurbishing
of the Store in excess of one and one-half percent (1 1/2%) of the Royalty Sales
of the Store from the date of its opening to the date of any required
refurbishing or from the date of that refurbishing to the date of any subsequent
refurbishing on those occasions when a subsequent refurbishing is required.
10. TRAINING
10.1 INITIAL TRAINING. You (or the Controlling Shareholder or Partner if
you are a corporation or partnership and, if so, the Controlling Shareholder or
Partner may substitute a designated individual) must enroll and complete all
training programs and classes which we require for the operation of a DOMINO'S
PIZZA Store. These training programs and classes will be furnished in the
English language, at such times and places as we designate. There will be no
separate charge for these training programs or classes. All training programs
and classes must be completed to our satisfaction. You will be responsible for
the travel, living expenses, and compensation of you or your employees incurred
during these training programs and classes, and for the expenses of an
interpreter, if necessary.
10.2 TRAINING OF EMPLOYEES. You agree to implement a training program for
employees of the Store in accordance with training standards and procedures
prescribed by us from time to time. You also agree to purchase from us and
utilize all training aids which we may require from time to time (e.g., films,
videotapes or printed materials). You agree not to employ any person who is
required by us to complete a training program but who fails or refuses to do so.
10.3 ADDITIONAL TRAINING. We may also, at our option, require you (or the
Controlling Shareholder or Partner if you are a corporation or partnership and,
if so, the Controlling Shareholder or Partner may substitute a designated
individual) to attend supplemental or additional training programs which may be
offered from time to time by us during the term of the Franchise. You will be
responsible for the reasonable costs of such programs and for the travel and
living expenses and compensation of you and your employees incurred during these
programs.
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▇▇. OPERATING ASSISTANCE
11.1 ADVICE AND GUIDANCE. We will furnish you with such reasonable
operating assistance as we determine from time to time to be necessary for the
operation of the Store. Operating assistance will include advice and guidance
regarding:
(a) methods of pizza preparation, packaging, and sale;
(b) hiring and training employees;
(c) formulating and implementing advertising and promotional programs;
and
(d) the establishment of administrative, bookkeeping, accounting,
inventory control, and general operating procedures.
You understand that the assistance provided to you under this Section 11
does not obligate us to operate the Store on your behalf at any time during the
term of the Franchise or to provide the accounting or bookkeeping services
required for the operation of the Store.
11.2 OPERATING PROBLEMS. We will advise you from time to time of
operating problems of the Store disclosed by reports submitted to or inspections
made by us. We will make no separate charge for operating assistance except that
we may make reasonable charges for forms and other materials supplied to you and
for operating assistance made necessary in our judgment as a result of your
failure to comply with any provision of this Agreement or for operating
assistance requested by you in excess of that normally provided by us.
12. STORE PRODUCTS AND SERVICE
12.1 STORE MENU. You agree that you will offer for sale and sell at or
from the Store all pizza and beverage products and the carry-out and delivery
services that we from time to time authorize. You also agree that you will not
offer for sale or sell at or from the Store any products or services not
authorized by us in writing.
12.2 DELIVERY SERVICE. You agree that the Store will at all times during
approved hours of operation offer delivery service to all customers located
within your Area of Primary Responsibility. You further agree that in order to
maintain the quality of pizza, the Store will not offer delivery service to any
customer whose order cannot be delivered within thirty (30) minutes of the time
when such order is placed, taking into consideration the least favorable driving
conditions and your strict compliance with all laws, regulations and rules of
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the road and due care and caution in the operation of delivery vehicles. We
shall have the right to prescribe from time to time the boundaries beyond which
the Store may not offer delivery service. You further understand that in
revising these boundaries we may in our discretion make adjustments to the size
of your delivery and service area to account for, among other things, changing
market conditions, population changes and other relevant considerations.
12.3 SUPPLIES, EQUIPMENT AND MATERIALS.
(a) All pizza and beverage preparation, dispensing, storage and display
equipment; delivery and related motor vehicles; equipment, fixtures, furniture
and exterior and interior signs and decorations required for the Store; pizza
ingredients, beverage products and cooking materials; containers, packaging
materials and other paper and plastic products; utensils, uniforms, menus, forms
and cleaning and sanitation materials; and other supplies and materials used in
the operation of the Store must conform to the specifications and quality
standards established by us from time to time.
(b) You must use in the operation of the Store boxes, containers and
other paper or plastic products imprinted with the Marks as prescribed from time
to time by us.
(c) You will purchase ingredients, supplies, equipment, and materials
used in the preparation, packaging, and delivery of pizza from us, DPI, or any
of its subsidiaries, or from approved suppliers or distributors. If you propose
to purchase or lease items or equipment not previously approved by us as meeting
our specifications, you must first notify us and we may require submission of
sufficient specifications, photographs, drawings and/or other information and
samples to determine whether any such items meet our specifications. We will
advise you within a reasonable time whether any proposed item meets our
specifications.
(d) Any ingredient, supply or material not previously approved by us as
conforming to our specifications and quality standards must be submitted for
examination and/or testing prior to use. We reserve the right from time to time
to examine the facilities of any approved supplier or distributor, including the
Commissary, if any, operated by you, and to conduct reasonable testing and
inspection of the ingredients, materials or supplies to determine whether they
meet our standards and specifications.
(e) We also reserve the right to charge fees for testing and evaluating
any proposed item or equipment submitted by you and any proposed suppliers or
distributors and examining commissary operations and to impose reasonable
limitations on the number of approved suppliers or distributors of any product.
Approval of a supplier or distributor may be conditioned on requirements
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relating to frequency of delivery, standards of service including prompt
attention to complaints and the ability to service and supply DOMINO'S PIZZA
Stores within areas designated by us.
(f) You agree not to resell to any third party any of the foregoing
ingredients, supplies or materials which you have purchased or acquired from us,
DPI or any of its subsidiaries, or from any suppliers or distributors.
(g) We reserve the right to reinspect the facilities and products of any
such approved suppliers or distributors from time to time, and to revoke our
approval upon the failure of the supplier or distributor to meet our standards
and specifications.
(h) At the time the Store opens for business, you will stock the initial
inventory of supplies, equipment and materials prescribed by us. Thereafter, you
will stock and maintain all types of supplies, equipment and materials which we
prescribe, in quantities sufficient to meet reasonably anticipated customer
demand.
13. ADVERTISING AND PROMOTION
13.1 ADVERTISING FUND. You will be obligated to pay a minimum of four
percent (4%) of the weekly Royalty Sales of the Store to a separate fund
administered by you (the "Advertising Fund"). You will submit to us upon request
an annual accounting of the receipts and disbursements of the Advertising Fund.
It is also agreed that the advertising services of an agency must be approved by
the Franchisor. [OPTION: YOU SHALL HOLD, DIRECT AND ADMINISTER THE ADVERTISING
FUND, AND ACKNOWLEDGE AND AGREE THAT 25% OF THE ADVERTISING FUND MAY BE
ALLOCATED BY US AS WE DIRECT IN ORDER TO FURTHER GENERAL PUBLIC RECOGNITION IN
THE COUNTRY COMMUNITY FOR THE PURPOSE OF PROMOTING SALES IN THE TERRITORY.]
13.2 STANDARDS. All advertising and promotion by you shall be completely
factual and shall conform to the highest standards of ethical advertising as
defined by DPII from time to time and to the policies prescribed from time to
time by DPII, including policies contained in DPII's corporate identity manuals.
You shall submit to us your advertising plans for the Stores for our review and
approval and copies of such advertising and promotional material as to be
mutually agreed upon for use by you.
14. RECORDS AND REPORTS
14.1 BOOKKEEPING AND RECORDKEEPING. You agree to establish a bookkeeping
and recordkeeping system conforming to the requirements prescribed by us,
relating, without limitation, to the use and retention of franchise
documentation, daily sales slips, Domino's Original Order Right ("D.O.O.R.")
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sheet masters, coupons, purchase orders, purchase invoices, payroll records,
check stubs, bank statements, value added tax records and returns, cash receipts
and disbursements, journals and general ledgers, as well as any bookkeeping and
recordkeeping systems required by applicable law.
14.2 SALES REPORTS AND FINANCIAL STATEMENTS. You agree to submit to us,
in the English language:
(a) with the royalty fee due, a weekly report of the sales of the Store
and all other information and supporting records as we may require;
(b) within twenty (20) days of the end of each month, an unaudited
balance sheet as of the end of the preceding month and an unaudited statement of
profit and loss of the Store and, if you are a corporation or partnership, of
the corporation or partnership, for such month;
(c) within sixty (60) days of the end of each fiscal year of the Store
ending December 31, an unaudited balance sheet as of the end of the year and an
unaudited annual statement of profit and loss and financial condition of the
Store prepared in accordance with the local generally accepted accounting
principles by an independent certified public accountant in the manner
prescribed by us or, if you do not regularly employ an independent certified
public accountant, by the person charged with the performance of financial
recordkeeping for the Store;
(d) upon our written request, exact copies of any and all tax filings
required by any agency and/or taxing authority for any period; and
(e) such other information as we may reasonably require to determine you
and your owners' compliance with this Agreement or to assist you in the
operation of the Store or to otherwise evaluate the performance of the Store.
14.3 RIGHT TO REQUIRE AUDIT. We reserve the right to audit or cause to be
audited the sales reports, financial statements and tax returns you are required
to submit to us. In the event any audit discloses an understatement of the
Royalty Sales of the Store for any period or periods, you must immediately pay
on the amount of such understatement the required royalty fee, the required
advertising contribution, and the amount, if any, required to be paid to your
local or regional cooperative as provided in this Agreement, plus interest due.
Further, in the event such understatement for any period or periods shall be two
percent (2%) or more of the Royalty Sales of the Store, you will be obligated to
reimburse us for the cost of the audit, including the charges of any independent
certified public accountant used and the travel expenses, room and board and
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compensation of our certified public accountant, its employees, and our
employees. In the event you dispute the results of any audit conducted by us or
our representatives, we will give you the right to have the results verified by
an independent certified public accounting firm selected by our outside
accounting firm. The expense of this audit shall be borne by you unless this
further audit discloses that no deficiency is due in which case we will be
obligated to pay for the audit. This audit shall be commenced within ten (10)
days after completion of our initial audit. You agree to cooperate with all
personnel conducting the audit. The results shall be binding upon the parties.
You agree to pay any deficiencies within five (5) days after receipt of the
final audit.
15. OPERATING REQUIREMENTS
15.1 OPERATING PROCEDURES. You agree to fully comply with all
specifications, standards and operating procedures and rules from time to time
prescribed for the Store, including, but not limited to, specifications,
standards and operating procedures and rules relating to:
(a) the safety, maintenance, cleanliness, sanitation, function and
appearance of the Store premises and its equipment, fixtures, furniture, decor
and signs;
(b) qualifications, dress, grooming, general appearance and demeanor of
you and your employees;
(c) quality, taste, portion control and uniformity, and manner of
preparation and sale, of all pizza and beverage products sold by the Store and
of all ingredients, supplies and materials used in the preparation, packaging
and sale of these items;
(d) methods and procedures relating to receiving, preparing and
delivering customer orders;
(e) minimum and maximum distances for which delivery service shall be
offered;
(f) the hours during which the Store will be open for business;
(g) advertising and promotion;
(h) use of standard forms;
(i) use and illumination of exterior and interior signs, posters,
displays, menu boards and similar items;
(j) the handling of customer complaints;
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(k) compliance with our identity programs, as exist from time to time;
and
(l) the vehicles and related equipment used for delivery.
15.2 COMPLIANCE WITH LAWS AND OTHER BUSINESS PRACTICES. You agree to
secure and maintain in force all required licenses, permits and certificates and
operate the Store in full compliance with all applicable laws, ordinances and
regulations. You also agree to pay when due all amounts payable pursuant to any
provision of this Agreement or any other agreement with us or our affiliates or
subsidiaries or pursuant to any agreement with any other creditor or supplier of
the Store.
15.3 DATA AND VOICE COMMUNICATIONS SYSTEMS. DPII and Franchisee agree
that efficient data and voice communications are important to the operation of
the Domino's System and coordination of the respective responsibilities of DPII
and Franchisee. Accordingly, Franchisee agrees that, upon receipt of a written
request therefor from DPII, Franchisee will immediately take steps to acquire
and will install or cause to be installed in its Store within ninety (90) days
from the date of such request a communications system and necessary peripheral
equipment and software which will permit both voice and data communications with
DPII (the "Communications Package"). DPII agrees to provide Franchisee with its
hardware and software specifications and requirements and to provide such other
technical information and pricing information as is available to DPII to assist
and facilitate the acquisition, installation and operation of the Communications
Package by Franchisee. DPII expressly reserves the right to require Franchisee
to acquire and install a particular specified Communications Package. Franchisee
agrees that the Communications Package will meet the technical specifications
supplied by DPII from time to time, including updates thereof, so that such
Communications Package will at all times be compatible with the communications
system employed by DPII. It is understood and agreed that Franchisee shall bear
the entire cost and expense of the acquisition, installation and operation of
the Communications Package. In connection therewith, Franchisee agrees to
execute such contracts and/or proprietary agreements or licenses as may be
required by Domino's or the seller of the Communications Package to protect the
proprietary rights of Domino's and/or said seller in any aspect of the
Communications Package.
15.4 ELECTRONIC FUNDS TRANSFER. DPII and Franchisee agree that it may
become desirable to have available the means to electronically transfer royalty
fee payments, advertising payments and the like from Franchisee's bank account
directly to DPII's bank account, if possible. Accordingly, you hereby agree that
at the request of DPII, you will execute such documents as may be necessary to
permit and facilitate the electronic transfer of funds as contemplated herein,
at your cost and expense.
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15.5 PRICES TO BE DETERMINED BY FRANCHISEE. We may from time to time
offer guidance to you relative to prices for the products and services of the
Store that in our judgment constitute good business practice. You will have the
sole right to determine the prices to be charged from time to time by the Store.
No such guidance shall be deemed or construed to impose upon you any obligation
to charge any fixed, minimum or maximum prices for any product or service
offered for sale by the Store. A fundamental feature of our operation is the
prompt delivery of fresh hot products to the address or choice of the customer
without additional cost. Accordingly, in order that our identity and reputation
is maintained you will not makes any charges for delivery of products. You will
not enter into any agreement or engage in any concerted practice with DOMINO'S
PIZZA Stores or others relating to the prices at which products or services will
be sold by you or by other DOMINO'S PIZZA Stores.
15.6 OPERATING MANUAL. We will loan to you during the term of this
Agreement one or more copies of an operating manual, operational bulletins,
similar materials ("Operating Manual") containing proprietary know-how,
mandatory and suggested specifications, standards and operating procedures and
the rules prescribed from time to time by us, and information relative to the
operation of the Store. You will conduct all your operations under this
Agreement in accordance with the Operating Manual. The entire contents of the
Operating Manual will remain confidential and our property. You will not
duplicate, photocopy or otherwise reproduce the Operating Manual, either in
whole or in part, without our written permission. If we require, you agree to
translate the Operating Manual at your cost and expense, and provide us with a
copy of the translation for our approval. All translated copies of the Operating
Manual will be our property. We have the right to use the translation for any
use we require.
We shall have the right to add to and otherwise modify the Operating
Manual from time to time, if deemed necessary by us, to improve the standards of
service or product quality or the efficient operation of a Store, to protect or
maintain the goodwill associated with the Marks or to meet competition. You may
propose changes in the Operating Manual to conform it to the laws and customs
of, and market characteristics in, the Area of Primary Responsibility, and we
will determine, in our sole discretion, whether to change the Operating Manual
as proposed by you. Our approval of such changes must be in writing.
The provisions of the Operating Manual as modified from time to time and
the mandatory specifications, standards and operating procedures and rules
prescribed from time to time by us and communicated to you in writing, will
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constitute provisions of this Agreement as if contained in this Agreement. You
acknowledge the necessity and importance of all specifications and standards for
the overall performance of the obligations set forth herein. You agree to use
and apply the Domino's System as described herein and as set forth in the
Operating Manual and any specifications, standards, rules and procedures. You
will ensure that the Operating Manual is kept current and up-to-date. In the
event of any dispute as to the contents of the Operating Manual, the provisions
of the master copy of the Operating Manual (in the English language), maintained
at our home office, will be controlling.
15.7 TRADE SECRETS. In addition to maintaining the confidentiality of all
information received by you or your Owners in conjunction with your operation of
a Store as a franchisee, you hereby agree that you: (i) will maintain the
absolute confidentiality of all information and methods provided by us with
respect to the discharging of your responsibilities under this Agreement
inclusive of, but not limited to, the Operating Manual; (ii) shall disclose such
confidential information to your employees only to the extent necessary for your
performance under this Agreement; and (iii) shall not use any such information
in any other business or in any manner not specifically authorized or approved
in writing by us.
15.8 NEW CONCEPTS. If you develop any new concept, process or improvement
in the operation or promotion of the Store, you agree to promptly notify us and
provide us with all necessary information without compensation. You acknowledge
that any such concept, process or improvement shall become our property and that
we may utilize or disclose this information to other franchisees, without
compensation to you.
15.9 FRANCHISEE MUST DIRECTLY SUPERVISE STORE. The Store shall at all
times be under the direct, on-premises supervision of you or your designee (or
the Controlling Shareholder or Partner if you are a corporation or partnership
and, if so, the Controlling Shareholder or partnership may substitute a
designated individual). You or your designee (or the Controlling Shareholder or
Partner if you are a corporation or partnership and, if so, the Controlling
Shareholder or Partner may substitute a designated individual) must devote your
full time and efforts (excluding reasonable vacation periods) as manager of the
Store or to the management of other DOMINO'S PIZZA Stores (or other related
activities approved by us in accordance with Section 7.2 of this Agreement). If
you own more than one (1) Store, each Store owned must be under the direct,
on-premises supervision of a manager:
(a) who has completed, to our satisfaction, such training as we specify;
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(b) whose identity has been disclosed to us; and
(c) who shall have executed, upon our request, an agreement in the form
approved by us agreeing not to divulge any trade secret or confidential or
proprietary information, including the contents of the Operating Manual, or to
engage in or have any interest in any other fast food business, including
without limitation, sit-down, carry-out or delivery pizza business for the
period of employment and one (1) year thereafter.
15.10 INSURANCE. You shall at all times during the term of the Franchise
maintain in force at your sole expense general liability insurance with a
minimum limit approved by DPII (including, but not limited to, coverage for
personal injury, products and contractual liability), motor vehicle liability
insurance with a minimum limit approved by DPII (including, but not limited to,
hired and non-owned coverage), property insurance (including, but not limited
to, fire, extended coverage, vandalism and malicious mischief), workmen's
compensation insurance as required by applicable law, an umbrella policy, if
available at reasonable cost to Franchisee with a minimum limit approved by
DPII, and any other insurance required under applicable law or which we require,
under one or more policies of insurance containing coverage and limits, from
time to time prescribed by us. All insurance policies must be issued by an
insurance carrier (a) having the highest possible rating under the rating
system, if any, generally in use in the country in which the Store is located,
and (b) if requested, approved by DPII. All general liability and motor vehicle
liability insurance policies must name us and the subsidiaries and affiliates
which we designate as additional insureds and provide that we receive thirty
(30) days prior written notice of termination, expiration, cancellation,
modification or reduction in coverage or limits of any such policy and that we
receive prompt notice from the carrier of any claim filed under the policy. You
must submit to us annually within fifteen (15) days of issuance a copy of the
certificate of or evidence of the renewal or extension of each such insurance
policy or any modifications to any such insurance policies. If at any time you
fail or refuse to maintain in effect any insurance coverage required by us, or
to furnish satisfactory evidence of such insurance, we may, at our option and in
addition to any other rights and remedies we may have, obtain insurance coverage
on your behalf, and you agree to promptly execute any applications or other
forms or instruments required to obtain any such insurance and pay to us on
demand any costs and premiums incurred by us. Your obligation to obtain and
maintain the insurance described in this Agreement shall not be limited in any
way by reason of any insurance maintained by us.
15.11 IDENTIFICATION AS FRANCHISEE. You agree to exhibit (a) on the Store
premises and (b) on all delivery vehicles (or on car top signs on all delivery
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vehicles) signs of sufficient prominence and wording as we may prescribe from
time to time so as to advise the public that the Store is owned, operated and
maintained solely by you and that each such delivery vehicle is owned, operated
and maintained by you or the driver of the vehicle, as the case may be.
16. MARKS
16.1 USAGE. You acknowledge that DPI is the owner of all Marks licensed
to you by this Agreement and that all usage of the Marks and any goodwill
established shall inure to DPI's exclusive benefit. You further acknowledge that
DPI has licensed DPII to grant licenses for the use of the Marks outside of the
United States. You shall use the Marks in full compliance with rules prescribed
from time to time by DPII. You will execute such form of Registered User
Agreement of the Marks or its equivalent in ____________ as may be required by
DPII from time to time and reimburse DPII for the cost of registering such
document with the Trade ▇▇▇▇ Office. You agree that in case you directly or
indirectly contest the validity of our rights or ownership of the Marks, we may
terminate this Agreement. You shall not attempt to register any ▇▇▇▇ or
derivative thereof, shall not use any ▇▇▇▇ as part of any corporate name or with
any prefix, suffix or other modifying words, terms, designs or symbols nor may
you use any ▇▇▇▇ in connection with the sale of any unauthorized product or
service or in any other manner not explicitly authorized in writing by us or by
DPI. Upon expiration or termination of this Agreement, no monetary amount shall
be assigned or attributable to any goodwill associated with your use of the
Domino's System or the Marks.
16.2 INFRINGEMENTS. You agree to immediately notify us of any
infringement of or challenge to your or our use of any ▇▇▇▇ or claim by any
person of any rights in any ▇▇▇▇ or any suspected passing-off or unfair
competition involving the Marks or the Domino's System. You agree that you will
not communicate with any person other than us, DPI and our counsel in connection
with any such infringement, challenge or claim. Unless you have an independent
cause of action pursuant to applicable law, we and DPI will have sole discretion
to take such action as we deem appropriate and the right to exclusively control
any litigation or Patent and Trademark Office proceeding (or proceedings of the
equivalent office, agency or ministry in the country in which the Store is
located) or other proceeding arising out of any infringement, challenge or claim
or otherwise relating to any ▇▇▇▇. You agree to execute any and all instruments
and documents, render such assistance and do such acts and things as may, in the
opinion of our counsel, be necessary or advisable to protect and maintain our
interests in any such litigation, Patent and Trademark Office proceedings, or
other proceeding or to otherwise protect and maintain DPI's interest in the
Marks.
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16.3 INDEMNIFICATION. You will promptly notify us of any unauthorized use
of the Marks, any challenge to the validity of the Marks, or any challenge to
our ownership of, our right to use and to license others to use, or your right
to use, the Marks. You acknowledge that we have the right to direct and control
any administrative proceeding or litigation involving the Marks, including any
settlement thereof. We will defend you against any third-party claim, suit, or
demand arising out of your use of the Marks. If we, in our sole discretion,
determine that you have used the Marks in accordance with this Agreement, the
cost of such defense, including the cost of any judgment or settlement, will be
borne by us. If we, in our sole discretion, determine that you have not used the
Marks in accordance with this Agreement, the cost of such defense, including the
cost of any judgment or settlement, will be borne by you. In the event of any
litigation relating to your use of the Marks, you will execute any and all
documents and do such acts as may, in our opinion, be necessary to carry out
such defense or prosecution, including, but not limited to, becoming a nominal
party to any legal action. Except to the extent that such litigation is the
result of your use of the Marks in a manner inconsistent with the terms of this
Agreement, we agree to reimburse you for your out-of-pocket costs in doing such
acts.
17. INSPECTIONS
We will have the right at any time during business hours and without prior
notice to conduct reasonable inspections of the Store and the Commissary, if
any, operated by you. We will have the right to audit any business records and
to take a physical inventory of the assets of any such Store or Commissary.
Inspections of any such Store will be made at our expense unless we are required
to make any additional inspections in connection with your failure to comply
with this Agreement. In such event, we will have the right to charge you for the
costs of making all additional inspections in connection with your failure to
comply, including without limitation travel expenses, hotel accommodations,
meals and compensation of our employees.
18. TERMINATION AND EXPIRATION
18.1 TERMINATION BY FRANCHISEE. If you are in compliance with this
Agreement and we breach this Agreement and fail to cure any breach within thirty
(30) days after written notice is delivered to us, you may terminate this
Agreement and the Franchise effective ninety (90) days after delivery of notice
to us. A termination of this Agreement and the Franchise by you without
complying with these requirements or for any reason other than our breach of
these requirements or for any reason other than our breach of this Agreement and
our failure to cure the breach within thirty (30) days after receipt of written
notice from you shall be deemed a termination by you without cause and not in
accordance with the provisions of this Agreement.
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18.2 BY DPII. In addition to any other grounds for termination, we shall
have the right to terminate this Agreement effective upon delivery of notice of
termination to you, if:
(a) you or any of your Owners have made any material misrepresentation
on your application for the Franchise which is not cured within a reasonable
period of time;
(b) you do not open the Store within six (6) months from the effective
date of this Agreement;
(c) you are judged bankrupt, become insolvent, or make an assignment for
the benefit of creditors, or a petition under any bankruptcy law, which is not
dismissed within one hundred twenty (120) days, is filed against you or a
receiver or other custodian is appointed for a substantial part of the assets of
the Store;
(d) you abandon or fail to continuously and actively operate the Store;
(e) the lease or sublease for the Store is terminated or canceled or you
are unable to renew or extend the lease or sublease or you fail to maintain
possession of the Store premises unless you are permitted to relocate the Store
under Section 7 of this Agreement in which case this paragraph will not apply;
(f) you or any of your Owners are convicted of a felony or a crime which
substantially impairs the goodwill associated with the Marks, or you or any of
your Owners engage in any conduct which adversely affects the reputation of the
Store or the goodwill associated with the Marks as conclusively determined by
us;
(g) you intentionally underreport the Royalty Sales of the Store for any
period or periods;
(h) you or any of your Owners violates any of the restrictions contained
in Sections 20 or 21 of this Agreement;
(i) you fail to comply with any material provision of this Agreement or
any specification, standard or operating procedure or rule prescribed by us
which relates to the use of any ▇▇▇▇ or the quality of pizza or any beverage
sold by you or the cleanliness and sanitation of the Store and you do not
correct this failure within seven (7) calendar days after written notice is
delivered to you;
(j) you fail to pay when due any amount owed to us, our affiliates or
subsidiaries, or tax authorities, or any creditor or supplier of the Store
(other than amounts being bona fide disputed through appropriate proceedings)
and you do not correct such failure within fifteen (15) calendar days after
written notice is delivered to you;
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(k) you fail to obtain or maintain insurance required by us and you do
not correct this failure within forty-eight (48) hours after written notice is
delivered to you;
(l) an audit by us discloses an understatement of Royalty Sales and you
fail to pay to us the applicable royalty fee and advertising contribution and
interest due within five (5) calendar days after receipt of the final audit
report;
(m) the interest of a deceased or permanently disabled person is not
disposed of in accordance with the terms of this Agreement;
(n) you or any of your Owners fail on three (3) or more occasions during
any one (1) year period to comply with any one or more material provisions of
this Agreement including, without limitation, your obligation to submit when due
sales reports or financial statements, to pay when due the royalty fees,
advertising contributions or other payments to us or our affiliates or
subsidiaries or any other creditors or suppliers of the Store whether or not
such failure to comply is corrected after notice is delivered to you;
(o) you or any of your Owners fail to comply with any other material
provisions of this Agreement or any specification, standard or operating
procedure, and you fail to correct this failure within thirty (30) calendar days
after written notice is delivered to you; (p) you fail to properly execute any
document required by this Agreement or in connection with the operation of the
Store or which is necessary to properly implement or effectuate any of the
provisions of this Agreement or to record this Agreement or any document
executed hereunder or in connection herewith, and you fail to correct such
failure within thirty (30) calendar days after written notice thereof is
delivered to you;
(q) you directly or indirectly contest the validity of DPI's ownership
of the Marks or our right to use or to license others to use the Marks;
(r) you are in breach of any other agreements between you and DPII or
any of our affiliates or subsidiaries and you fail to cure such breach within
fifteen (15) days after written notice is delivered to you; or
(s) you or your Owners are involved in any act or conduct which impairs
our reputation and the goodwill associated with the marks and the system as
conclusively determined by us.
18.3 OBLIGATIONS UPON TERMINATION OR EXPIRATION. Upon termination or
expiration of this Agreement, all rights granted to you under this Agreement
shall forthwith terminate, and:
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(a) You will immediately cease to operate the Store, and will not
thereafter, directly or indirectly, represent to the public or hold yourself out
as a present or former franchisee of DPII;
(b) You will immediately and permanently cease to use, in any manner
whatsoever, any confidential methods, procedures and techniques associated with
the Domino's System; the ▇▇▇▇ "DOMINO'S PIZZA"; and all other Marks and
distinctive forms, slogans, signs, symbols and devices associated with the
Domino's System. In particular, you will cease to use, without limitation, all
signs, advertising materials, displays, stationery, forms, products and any
other articles which display the Marks;
(c) You will take such action as may be necessary to cancel any assumed
name registration or equivalent registration obtained by you which contains the
▇▇▇▇ "DOMINO'S PIZZA" or any other Marks, and you will furnish us with evidence
of compliance with this obligation within five (5) days after termination or
expiration of this Agreement;
(d) You will, in the event you continue to operate or subsequently begin
to operate any other business, not use any reproduction, counterfeit, copy or
colorable imitation of the Marks, either in connection with such other business
or the promotion thereof, which, in our sole discretion, is likely to cause
confusion, mistake or deception, or which, in our sole discretion, is likely to
dilute our rights in and to the Marks. You further agree not to utilize any
designation of origin or description or representation which, in our sole
discretion, falsely suggests or represents an association or connection with the
Domino's System constituting unfair competition;
(e) You will promptly pay all sums owing to us or our affiliates. In the
event of termination for any default by you, such sums shall include all
damages, costs and expenses, including reasonable attorneys fees, incurred by us
as a result of the default, which obligation shall give rise to and remain,
until paid-in-full, a lien in our favor against any and all of the personal
property, furnishing, equipment, signs, fixtures and inventory owned by you and
on the Store premises at the time of default;
(f) You will pay to us all damages, costs and expenses, including
reasonable attorneys' fees, incurred by us subsequent to the termination or
expiration of this Agreement in obtaining injunctive or other relief for the
enforcement of any provisions of this Section 18;
(g) You will immediately deliver to us the Operating Manual and all
other records, correspondence and instructions containing confidential
information relating to the operation of the Store, all of which are
acknowledged to be our property, and you will not retain any copy or record of
any of the foregoing;
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(h) You will notify the telephone company and all listing agencies of
the termination or expiration of your right to use all telephone numbers and all
classified and other directory listings relating to the Store and to authorize
transfer of these to us or our franchisee or designee. You acknowledge that we
have the sole rights to and interest in all telephone numbers and directory
listings relating to any ▇▇▇▇, and you authorize us to direct the telephone
company and all listing agencies to transfer all telephone numbers and directory
listings to us, our franchisee or designee. If you fail or refuse to do so, by
execution of this Agreement, you irrevocably appoint us as your lawful
attorney-in-fact with full power and authority to direct the telephone company
and all listing agencies to transfer all telephone numbers and directory
listings to us or our designee;
(i) You will make the Store accessible and available to us to operate
pursuant to Section 19.9 of this Agreement, if we elect to do so.
19. OPTION TO PURCHASE STORE
19.1 OPTION. Upon the termination or expiration of this Agreement, we or
any party we designate shall have the option, but not the obligation,
exercisable for thirty (30) days, to purchase the Assets of the Store. For
purposes of Section 19, the term "Assets" shall mean the equipment, inventory,
leasehold interests and improvements and favorable rights and covenants of the
Store, but exclusive of delivery vehicles except as provided below.
19.2 FORMULA PRICE. The purchase price for these assets and the covenants
shall be equal to twenty-five percent (25%) of the first Three Hundred Thousand
Dollars (U.S. $300,000) of Royalty Sales ("Base Amount") of the Store during the
twelve (12) calendar months immediately preceding the date of termination or
expiration plus thirty-five percent (35%) of the Royalty Sales in excess of the
Base Amount during this period. The purchase price shall be allocated among the
Assets and covenants in the manner prescribed by us.
If the Store has been in operation less than twelve (12) months, the
option price shall be the Cost of the Store plus ten percent (10%). The term
"Cost" shall be defined as your documented expenditures for the equipment,
inventory and leasehold improvements of the Store, but shall not include any
charges for labor performed by you or your family members in connection with the
development of the Store.
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19.3 DELIVERY VEHICLE. In the event we exercise our option to purchase
the Assets of the Store, we will also agree to purchase one (1) properly marked
and operable delivery vehicle, if any, owned by the Store. The purchase price
for this vehicle will be its wholesale value. If we are unable to agree on the
wholesale value of this vehicle, the wholesale value will, if possible, be
determined in accordance with the wholesale values for automobiles contained in
a nationally recognized publication for the month in which we exercise our
option to purchase the Assets of the Store.
19.4 PURCHASE OF COMMISSARY. In the event you operate a Commissary in
connection with the Store, we shall also have the option to purchase the Assets
of the Commissary. The Purchase price for the Assets of the Commissary will be
the net book value (based upon a seven year depreciation schedule).
19.5 DEDUCTIONS FROM PURCHASE PRICE. In the event we exercise our option
to purchase the Assets of the Store, the purchase price will be reduced by:
(a) the total current and long term liabilities of the Store assumed by
us as described below, and
(b) the amount necessary to upgrade and renovate the Store to meet our
then current standards for a DOMINO'S PIZZA Store.
We will assume all current and long term liabilities (except liabilities
to you or your Owners or secured by or relating to delivery vehicles which we
are not purchasing) up to the amount of the purchase price subject, however, to
all defenses available to you. Further, the amount we charge for upgrading and
renovating the Store will not exceed one and one-half percent (1- 1/2%) of the
Royalty Sales of the Store from the date of opening to the date of termination
or expiration reduced by an amount equal to the total expenditures made by you
for renovation and upgrading of the Store at our request up to the date of
termination or expiration.
19.6 PAYMENT OF PURCHASE PRICE. The balance of the purchase price, after
deductions described above will be payable as follows: ten percent (10%) of the
balance at the time of closing and the remainder in sixty (60) equal monthly
installments of principal plus interest at a rate of interest per annum equal to
the one month London Interbank Offering Rate (LIBOR) for U.S. Dollars determined
as of the closing date with annual adjustments based on said Rate as in effect
on each anniversary date. The first payment will be due on the first day of the
second succeeding calendar month following closing and the remaining payments on
the first day of each month thereafter. On the first payment date, interest from
the date of closing shall also be paid. We shall pay you all such payments in
U.S. Dollars or, at our option, its local currency equivalent on the date of
payment, to a bank account designated by you, or at your offices. We will have
the right to set off from the purchase price any amounts you owe us or any
related corporation or entities as of the date of payment.
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19.7 REAL PROPERTY. In the event you own the real property on which the
Store or Commissary is located, we or any third party we designate (the
"Designee") will also have the option to purchase this property for a period of
thirty (30) days following expiration or termination of this Agreement. The
purchase price pursuant to this option will be the fair market value as
determined by an independent appraiser selected by both of us. If we cannot
agree on an independent appraiser, we each shall select an independent appraiser
who shall select a third independent appraiser. The independent appraiser
selected by our appraisers shall determine the fair market value of the real
property and his determination shall be final and binding on the parties. The
purchase price will be payable in full at the closing minus customary prorations
including the pay-off of existing mortgage liens. If we or our Designee do not
elect to purchase the real property, we or our Designee will have the option to
enter into a lease approved by us for the premises and you will use your best
efforts to secure such a lease for us.
19.8 CLOSING. The closing shall occur within thirty (30) days after we
exercise our option or our Designee's to purchase the Assets and/or real
property or such later date as may be necessary to comply with applicable bulk
sales or similar laws, if any. At the closing, we both agree to execute and
deliver all documents necessary to vest title in the purchased Assets and/or
real property in us free and clear of all liens and encumbrances, except those
assumed by us or our Designee, and/or to effectuate the lease of the Store
premises. You also agree to provide us with all information necessary to close
the transaction. We or our Designee reserve the right to assign our option to
purchase the Store or Commissary, if any, operated in connection with the Store
(and the real property to the extent applicable) or designate a substitute
purchaser for the Store. We or our Designee agree, however, to be responsible
for and shall guarantee payment of any deferred portion of the purchase price as
provided in Section 19.6 of this Agreement in the event our Designee purchases
the Assets of the Store. If you do not execute and deliver any documents
required, by execution of this Agreement you irrevocably appoint us as your
lawful attorney-in-fact with full power and authority to execute and deliver in
your name all these documents. You also agree to ratify and confirm all of our
acts as your lawful attorney-in-fact and to indemnify and hold us harmless from
all claims, liabilities, losses, or damages suffered by us in so doing.
19.9 OPERATION DURING OPTION PERIOD. We will have the right, upon written
notice to you, to manage the Store during the period in which we have or our
Designee has the option to purchase the Store upon termination or expiration of
this Agreement and for the period following the exercise of our option and prior
to the closing on the same terms and conditions as described in Section 21.7.
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19.10 FORMULA PRICE. The parties agree that the formula price described in
Section 19.2 is the agreed upon method of arriving at a price for the assets of
the Store in the event we or our Designee exercise the option contained in this
Section 19 and is not to be deemed a conclusive indication of the value of the
Store under other circumstances.
20. RESTRICTIVE COVENANTS
20.1 IN-TERM COVENANT. You and your Owners agree that during the term of
this Agreement neither you nor your Owners will, directly or indirectly for the
benefit of you or your Owners, or through or on behalf of or in conjunction with
any other person, partnership or corporation, engage in, be employed by, advise
or assist, invest in, franchise, make loans to, or have any interest in any fast
food business, including but not limited to sit-down, carry-out or fast food
delivery business or acquire any financial interest in the capital of such
business which might provide the power to influence the economic conduct of such
business (except for DOMINO'S PIZZA Stores operated under franchise agreements
entered into with us or other DOMINO'S PIZZA Stores in which you or your Owners
have an ownership interest).
20.2 POST-TERM COVENANT. You and your Owners agree that for a period of
one (1) year after termination or expiration of this Agreement, or the date on
which you cease to operate the Store, whichever is later, neither you nor your
Owners will, directly or indirectly for the benefit of you or your Owners, or
through or on behalf of or in conjunction with any other person, partnership or
corporation, own, engage in, be employed by, advise, assist, invest in,
franchise, make loans to, or have any interest in any pizza business, including
but not limited to, sit-down, carry-out or pizza delivery business located at
the premises of the Store or within ten (10) miles of the premises of the Store
(except for other DOMINO'S PIZZA Stores operated under franchise agreements with
us or other DOMINO'S PIZZA Stores in which you or your Owners shall have an
ownership interest).
20.3 OWNERSHIP OF PUBLIC COMPANIES. The covenants contained in this
Section 20 shall not apply to ownership by you or your Owners of less than a
five percent (5%) beneficial interest in the outstanding equity securities of
any corporation whose stock is publicly traded.
20.4 SOLICITATION OF EMPLOYEES. You and your owners agree that during the
term of this Agreement neither you nor your Owners will directly or indirectly
10/11/94 -26- MSTRCORP.SFA
solicit or employ any person who is employed by us, nor will you or your Owners
induce or attempt to induce any of these people to leave their employment
without our prior written consent and the consent of their employers.
20.5 CONFIDENTIALITY. You and your Owners agree to maintain the absolute
confidentiality of the Operating Manual and all other information concerning the
Domino's System during and after the term of the Franchise, disclosing this
information to the other employees of the Store only to the extent necessary for
the operation of the Store in accordance with this Agreement, and that you and
your Owners will not use the Operating Manual or such other information in any
other business or in any manner not specifically authorized or approved by us in
writing. You shall take all steps necessary to ensure that all staff personnel
having access to any confidential information are aware of the obligation to
keep the information confidential and comply herewith.
20.6 OWNERS OF CORPORATION OR PARTNERSHIP. If you are a corporation or
partnership, the Owners, by executing this Agreement, shall be bound
individually, jointly and severally, by the provisions contained in this
Agreement, including the restrictions set forth in this Section 20. Further, a
violation of any of the provisions of this Agreement, including the covenants
contained in this Section 20, by any Owner shall also constitute a violation by
you of your obligations under this Agreement.
21. ASSIGNMENT
21.1 BY DPII. We shall have the right to transfer or assign this
Agreement and all or any part of our rights or obligations under this Agreement
to any individual or legal entity, and you agree to release us from all
liability to you for performance under this Agreement subsequent to any such
assignment.
21.2 BY FRANCHISEE. This Agreement is personal to you and your Owners.
Accordingly, neither you nor any of your Owners may assign or transfer this
Agreement, any direct or indirect interest in this Agreement (including any
interest in the assets of the Store) and, if you are a corporation or
partnership, any interest in the corporation or partnership, except with our
prior written approval and as specifically authorized under this Agreement. Any
attempted assignment or transfer that we have not previously approved in writing
and which was not made in accordance with this Agreement shall have no effect
and shall constitute a breach of this Agreement.
21.3 ASSIGNMENT TO CORPORATION OR PARTNERSHIP. We will not withhold our
consent if you propose to assign this Agreement to a corporation or partnership
for the convenience of ownership of the Store, provided:
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(a) the corporation or partnership conducts no business other than the
operation of the Store or other DOMINO'S PIZZA Stores (or other related
activities authorized under this Agreement);
(b) the corporation or partnership is actively managed by you;
(c) the person designated as the Controlling Shareholder or Partner
retains a controlling interest in the partnership or the equity and voting power
of all issued and outstanding capital stock of the corporation; and
(d) all shareholders and investors meet our requirements as established
from time to time and agree to guarantee the obligations of the corporation or
partnership under this Agreement and to be bound by the terms of this Agreement
in the manner prescribed by us.
If you are a corporation or partnership or if this Agreement is assigned
to a corporation or partnership, you must comply with the requirements set forth
in this Section 21.3 throughout the term of this Agreement. Unless prohibited by
local law, the articles of incorporation and by-laws of any corporation or the
organization documents of any partnership owning the Franchise, including all
stock certificates, shall recite that they are subject to all restrictions
contained in this Agreement. We shall also have the right to require, as a
condition of any assignment of this Agreement to a corporation or partnership or
the operation of the Franchise by a corporation or partnership, that the
shareholders or partners enter into a buy/sell agreement among themselves in a
form and containing such terms as we prescribe for transfers of ownership
interests in such corporation or partnership. You shall provide us with all
documents to be executed in connection with any such assignment and we shall use
our reasonable efforts to approve or disapprove these within thirty (30) days
after receipt. You hereby irrevocably appoint us as your attorney to do all acts
and things and to give instructions to third parties as we may consider
necessary in order to perform the foregoing.
21.4 ASSIGNMENT OR TRANSFER TO OTHERS. We will not unreasonably withhold
our consent if you propose to sell, transfer or assign this Agreement or, if you
are a corporation or partnership, an ownership interest in the corporation or
partnership, to others, provided:
(a) you and your Owners are not in default under this Agreement or any
other agreement with us or our subsidiaries or affiliates or any other creditor
or supplier of the Store;
(b) the proposed transferee or assignee and its Controlling Shareholder
or Partner and all other owners if it is a corporation or partnership meets our
then applicable standards for franchisees or Owners;
10/11/94 -28- MSTRCORP.SFA
(c) the proposed transferee or assignee and its Owners if it is a
corporation or partnership is not operating any other fast-food business,
including but not limited to, sit-down, carry-out or pizza delivery business
except other DOMINO'S PIZZA Stores;
(d) the proposed transferee or assignee and its Owners if it is a
corporation or partnership signs our then current form of standard franchise
agreement for a term equal to the remaining term of this Agreement or, at our
election, the then current term under the standard franchise agreement,
whichever is longer;
(e) the proposed transferee or assignee or the person designated by us
must complete all required training to the extent required by us; and
(f) the proposed transferee or assignee pays us a transfer fee of the
local currency equivalent of (US $1,500).
The provisions of (d), (e) and (f) above shall not apply to an approved
sale, transfer or assignment by a shareholder or partner that does not convey a
controlling interest in the corporation or partnership except that the proposed
transferee or assignee must guarantee the performance by Franchisee of its
obligations under this Agreement and agree to be bound by all of the provisions
of this Agreement in the form prescribed by us. You must provide us with all
documents to be executed by you and/or your Owners and the proposed purchasers
in connection with any transfer or assignment at least thirty (30) days prior to
signing.
21.5 ASSIGNMENT UPON DEATH, MENTAL INCAPACITY OR PERMANENT DISABILITY.
Upon the death, mental incapacity or permanent disability of any person with an
interest in this Agreement or in the Franchisee, the executor, administrator or
personal representative of such person shall transfer such interest to a third
party approved by us within six (6) months after such death, permanent
disability or mental incapacity. Such transfers, including, without limitation,
transfers by devise or inheritance, will be subject to the same condition as any
inter vivos transfer. In the case of transfer by devise or inheritance, if the
heirs or beneficiaries of any such person are unable to meet the conditions of
this Section, the executor, administrator or personal representative of the
decedent shall transfer the decedent's interest to another party approved by us
within a reasonable time, which disposition will be subject to all the terms and
conditions for transfers contained in this Agreement.
21.6 DEFINITION OF PERMANENT DISABILITY. You or your Owners will be
deemed to have a "Permanent Disability" if your or your Owners' usual, active
participation in the Store as contemplated by this Agreement is for any reason
curtailed for a continuous period of six (6) months or more.
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21.7 OPERATION BY DPII AFTER DEATH OR PERMANENT DISABILITY. We shall have
the right to appoint a manager for the Store if in our judgment the Store is not
being managed properly after your death or Permanent Disability or the death or
permanent disability of an owner. All funds from the operation of the Store
during the management by our appointed manager will be kept in a separate fund,
and all expenses of the Store including compensation, other costs, and travel
and living expenses of our manager will be charged to this fund. We will charge
a weekly management fee of five and one-half percent (5.5%) of the weekly
Royalty Sales of the Store (in addition to the royalty fee and advertising
contributions payable under this Agreement) during the period in which we manage
the Store on your behalf. In managing the Store, our obligation will be to use
our reasonable efforts and we will not be liable for any debts, losses or
obligations of the Store, to any of your creditors for any products, materials,
supplies or services purchased by the Store prior to or during the time of
management by our manager. If the fund which we maintain is insufficient to pay
the expenses of the Store, we will notify you or your executor, administrator,
conservator, guardian or other personal representative and this person must
deposit in the fund within five (5) business days, any amount required by us to
attain a reasonable balance in the fund.
21.8 RIGHT OF FIRST REFUSAL OF DPII. If you or your Owners propose to
sell the Store (or its Assets) or, if you are a corporation or partnership, any
ownership interest in the corporation or partnership and you or your Owners
obtain a bona fide, executed written offer to purchase this interest, you or
your Owners are obligated to deliver a copy of the bona fide offer to us along
with all documents to be executed by you or your Owners and the proposed
assignee or transferee. We or our Designee will, for a period of thirty (30)
days from the date of delivery of this offer to us, have the right, exercisable
by written notice to you or your Owners, to purchase the Store (or its Assets)
or such ownership interest for the price and on the terms and conditions
contained in the offer. We or our Designee may substitute equivalent cash for
any form of payment proposed in such offer or designate a substitute purchaser
for the Store (or the Assets) or the ownership interest being offered, provided
that we will assume responsibility for the performance of our Designee. If we or
our Designee do not exercise this right of first refusal, the offer may be
accepted by you or your Owners, subject to our prior written approval as
provided in this Agreement. If the offer is not accepted within sixty (60) days,
we or our Designee will again have the right of first refusal to purchase the
Store as described above. This section will not apply to transfers made in
accordance with Section 21.3 of this Agreement.
10/11/94 -30- ▇▇▇▇▇▇▇▇.▇▇▇
▇▇. CONTRACT INTERPRETATION AND ENFORCEMENT
22.1 EFFECT OF WAIVERS. No waiver by us of any breach or a series of
breaches of this Agreement shall constitute a waiver of any subsequent breach or
waiver of the performance of any of your obligations under this Agreement. Our
acceptance of any payment from you or the failure, refusal or neglect by us or
you to exercise any right under this Agreement or to insist upon full compliance
with our or your obligations under this Agreement or with any specification,
standard or operating procedure or rule will not constitute a waiver of any
provision of this Agreement.
22.2 COST OF ENFORCEMENT. If we institute any legal or equitable action
against you to secure or protect our rights under or to enforce the terms of
this Agreement, in addition to any judgment entered in our favor, we shall be
entitled to recover such reasonable attorneys fees as we may have incurred
together with court costs and expenses of litigation.
22.3 INDEMNIFICATION OF DPII AND DPI. If we, DPI or any of either of our
subsidiary or affiliated companies (collectively the "Domino's Companies") are
subjected to any claim, demand or penalty or become a party to any suit or other
judicial or administrative proceeding by reason of any claimed act or omission
by you, your employees or agents, or by reason of any act occurring on the Store
premises, or by reason of an omission with respect to the business or operation
of the Store including, but not limited to, making a delivery or returning from
making a delivery, you shall indemnify and hold the Domino's Companies and each
of them harmless against all judgments, settlements, penalties and expenses,
including attorneys fees, court costs and other expenses of litigation or
administrative proceeding incurred by or imposed on any of them in connection
with the investigation or defense relating to such claim or litigation or
administrative proceeding.
22.4 CONSTRUCTION AND SEVERABILITY. All references in this Agreement to
the singular shall include the plural where applicable, and all references to
the masculine shall include the feminine and vice-versa. If any part of this
Agreement for any reason shall be declared invalid and unenforceable, such
provision shall be severed (and this shall not affect the validity of the
remaining provisions) or, if possible, modified to best preserve the intentions
of the parties and this Agreement, so modified, shall remain in full force and
effect. Moreover, any provision not provided for herein, however mandatory
pursuant to applicable law, shall be deemed to be part of this Agreement and
enforceable.
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22.5 INTEGRATION AND MODIFICATION. This Agreement constitutes the entire
agreement between the parties and supersedes all prior and contemporaneous
agreements or understandings of the parties, oral or written, regarding the
subject matter of this Agreement. The covenants of shareholders/partners form a
part of this Agreement. No modification, waiver, termination, rescission,
discharge or cancellation of this Agreement shall affect the right of any party
to enforce any claim or right under this Agreement, whether or not liquidated,
which occurred prior to the date of such modification, waiver, termination,
rescission, discharge or cancellation. This Agreement may not be modified,
except in writing, and signed by the authorized representative of the parties.
The parties hereto agree to make any amendment/modification required to bring
this Agreement in compliance with applicable antitrust laws.
22.6 APPLICABLE LAW; ARBITRATION.
(a) This Agreement will be interpreted and construed under the laws of
the State of Michigan. In the event of any conflict of law, the laws of Michigan
will prevail, without regard to the application of Michigan conflict-of-law
rules. Nothing in this Section is intended by the parties to subject this
Agreement to any franchise or similar statute, rule or regulation of the State
of Michigan to which it would not otherwise be subject.
(b) Any claim or controversy arising out of or related to this
Agreement, or the making, performance or interpretation of this Agreement, will
be finally settled by arbitration pursuant to the then prevailing rules of the
American Arbitration Association, by one arbitrator appointed in accordance with
such rules. All arbitration proceedings will take place in Ann Arbor, Michigan.
The award of the arbitrator will be the sole and exclusive remedy between the
parties regarding any claims, counterclaims, issues or accountings presented or
pled to the arbitrator; will be promptly paid free of any tax, deduction or
offset; and any costs, fees or taxes incident to enforcing the award will, to
the maximum extent permitted by law, be charged against the party resisting such
enforcement. Judgment upon the award of the arbitration may be entered in the
court having jurisdiction thereof, or application may be made to such court for
a judicial acceptance of the award or an order of enforcement.
(c) Nothing herein contained shall bar our right to obtain injunctive
relief against threatened conduct that will cause us loss or damage, under the
usual equity rules, including the applicable rules for obtaining specific
performance, restraining orders, and preliminary injunctions; and you agree to
pay all court costs and reasonable attorneys fees incurred by us in obtaining
such relief.
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22.7 NOTICES. Any notices or other communications to be given under this
Agreement shall be in writing, delivered by hand, telegram, certified or
registered mail, facsimile or courier service to the following address (which
may be changed by written notice):
To DPII: Domino's Pizza International, Inc.
30 ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Drive
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇.▇.▇.
Attn: Legal Department
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Franchisee:
Attn:
Facsimile No.:
Notice by mail shall be deemed received on the fifth business day after
mailing or upon actual receipt, whichever is earlier.
22.8 INDEPENDENT CONTRACTORS. The parties to this Agreement are
independent contractors and no training, assistance or supervision which we may
give or offer to you shall be deemed to negate such independence. We shall not
be liable for any damages to any person or property arising directly or
indirectly out of the operation of the Store, including but not limited to those
damages which may occur while your employees are making or returning from making
deliveries. Nor shall we have any liability for any taxes levied upon you, your
business, or the Store. The parties further acknowledge and agree the
relationship created by this Agreement and the relationship between us and the
relationship between DPI and your employees is not a fiduciary relationship nor
one of principal and agent.
22.9 STANDARD OF REASONABLENESS. Unless otherwise stated in this
Agreement, we agree to exercise reasonable judgment with respect to all
determinations to be made by us under the terms of this Agreement.
22.10 ACKNOWLEDGEMENT. You acknowledge that you have conducted an
independent investigation of the business contemplated by this Agreement and
recognize that it involves business risks making the success of the venture
largely dependent upon your business abilities. We expressly disclaim the making
of, and you acknowledge that you have not received or relied upon, any warranty,
assurance or guarantee, express or implied, as to the potential volume, profits
or success of the business venture contemplated by this Agreement.
10/11/94 -33- MSTRCORP.SFA
22.11 BINDING EFFECT. This Agreement is binding upon the parties and their
heirs, approved assigns and successors in interest.
22.12 EFFECTIVE DATE OF THIS AGREEMENT. This Agreement shall be effective
as of __________________.
22.13 CONTROLLING LANGUAGE. The parties hereto confirm that it is their
wish that this Agreement, as well as all other documents relating hereto,
including notices, shall be drawn up in the English language only. This
Agreement may be translated; in case of any difference between the two versions,
the English version shall control. All costs in connection with the translation
shall be borne by you.
22.14 GOVERNMENTAL APPROVALS. Franchisee shall be solely responsible for
obtaining all governmental approvals and consents, if any, with respect to this
Agreement, including, without limitation, approval(s) of the amount or frequency
of franchise and advertising fees payable hereunder, consent(s) to the payment
of such fees in United States Dollars and consent(s) to the wire transfer or
other transfer of such fees to an account located outside of the Country in
which the Store is located, together with such other approvals or consents as
may be necessary with respect to any other provision or provisions of this
Agreement. Certified copies of all such approvals and/or consents shall be
furnished by Franchisee to us immediately upon their issuance. Franchisee's
failure to obtain any such approval or consent and to continue any such approval
or consent in full force and effect during the term of this Agreement shall
constitute a material breach of this Agreement, entitling us to all of the
rights and remedies provided herein upon breach of this Agreement by Franchisee.
22.15 LIMITATION UPON COMMENCEMENT OF ACTIONS. Any and all claims and
actions arising out of or relating to this Agreement or the relationship of the
parties to this Agreement, brought by any party against the other, will be
commenced within one (1) year from the occurrence of the facts giving rise to
such claim or action, or such claim or action shall be barred.
22.16 LIMITATION OF CLAIMS. Each party to this Agreement irrevocably
waives to the fullest extent permitted by law any right to, or claim of, any
punitive or exemplary damages against the other party, and agrees that in the
event of a dispute between the parties each will be limited to the recovery of
any actual damages sustained by it.
22.17 NONEXCLUSIVITY OF REMEDIES. No right or remedy herein conferred upon
or reserved to us is exclusive of any other right or remedy provided or
permitted by law or equity.
10/11/94 -34- ▇▇▇▇▇▇▇▇.▇▇▇
▇▇. FORCE MAJEURE
Neither party shall be in default of its delay in performance or failure
to perform any of its obligations hereunder, when and if the delay or failure
arises from a cause which is beyond the control of the party failing to perform.
Such force majeure (which includes, inter alia, strikes, acts of God, acts of
war, laws and regulations) would suspend the fulfillment of the obligations
under this Agreement until it is over. If the force majeure lasts more than one
(1) year, DPII shall have the right to terminate this Agreement.
DOMINO'S PIZZA INTERNATIONAL, INC. COMPANY NAME.:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By:
Its: Managing Director Its:
Date: Aug 28, 1997 Date:
10/11/94 -35- MSTRCORP.SFA
COVENANTS OF SHAREHOLDERS/PARTNERS
----------------------------------
The undersigned represent and warrant that they are all of the
shareholders or partners of Franchisee or otherwise have a direct or indirect
beneficial interest in the success of Franchisee. Accordingly, to induce DPII to
enter into this Agreement and grant the franchise to Franchisee, each of the
undersigned hereby jointly and severally guarantees the performance by
Franchisee of its obligations under this Agreement and each of the undersigned
hereby jointly and severally agrees to be bound by, and personally liable for
the breach of, all of the provisions of this Agreement including without
limitation the restrictions contained in Sections 20 and 21 of this Agreement.
KROLEWSKA PIZZA INTERNATIONAL FAST FOOD
CORPORATION
/S/ /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------- --------------------------------
Controlling Shareholder/Partner Shareholder/Partner
--------------------------------------- --------------------------------
Shareholder/Partner Shareholder/Partner
10/11/94 -36- MSTRCORP.SFA