Exhibit 10.9
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HEALTHY BITES GRILL
FRANCHISE AGREEMENT
BETWEENH EALTH EXPRESS FRANCHISE COMPANY,
A FLORIDA CORPORATION
AND
THE JUNIE CORP.
DATED: FEBRUARY 19, 2003
LOCATION:
OR ----------------------------
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RESERVED AREA:
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TABLE OF CONTENTS
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ARTICLE 1 - APPOINTMENT..........................................................................................1
SECTION 1.1 GRANT OF FRANCHISE................................................................................1
SECTION 1.2 LOCATION OF YOUR HEALTHY BITES GRILL FRANCHISE....................................................2
SECTION 1.3 PROTECTED TERRITORY...............................................................................2
SECTION 1.4 RELOCATION OF YOUR HEALTHY BITES GRILL FRANCHISE..................................................2
ARTICLE 2 - OUR DUTIES...........................................................................................3
SECTION 2.1 SITE SELECTION ASSISTANCE.........................................................................3
SECTION 2.2 LEASE ASSISTANCE..................................................................................3
SECTION 2.3 PLANS AND SPECIFICATIONS..........................................................................4
SECTION 2.4 ACCOUNTING, COST CONTROL, PORTION CONTROL.........................................................4
AND INVENTORY CONTROL SYSTEMS..................................................................................4
SECTION 2.5 LISTS, FORMS AND SCHEDULES........................................................................4
SECTION 2.6 EMPLOYEE INFORMATION AND ASSISTANCE...............................................................5
SECTION 2.7 INITIAL TRAINING..................................................................................5
SECTION 2.8 LOAN OF THE MANUALS...............................................................................5
SECTION 2.9 PRE-OPENING INSPECTION............................................................................5
SECTION 2.10 PRE-OPENING ON-SITE TRAINING.....................................................................5
SECTION 2.11 GRAND OPENING ASSISTANCE.........................................................................6
SECTION 2.12 CONTINUED ASSISTANCE AND SUPPORT.................................................................6
SECTION 2.13 LICENSE OF INTELLECTUAL PROPERTY.................................................................7
SECTION 2.15 DUTIES SOLELY TO YOU.............................................................................8
SECTION 2.16 OUR RIGHT TO DELEGATE DUTIES.....................................................................8
ARTICLE 3 - FEES AND PAYMENTS...................................................................................8
SECTION 3.1 TYPES OF FEES.....................................................................................8
SECTION 3.2 PAYMENT SCHEDULE..................................................................................9
SECTION 3.3 PAYMENT SYSTEM....................................................................................9
SECTION 3.4 INTEREST ON LATE PAYMENTS; LATE CHARGE...........................................................10
SECTION 3.5 APPLICATION OF PAYMENTS..........................................................................10
SECTION 3.6 SECURITY INTEREST................................................................................10
SECTION 3.7 NO WITHHOLDING...................................................................................11
ARTICLE 4 - YOUR DUTIES.........................................................................................11
SECTION 4.1 ACQUISITION OF THE SITE..........................................................................11
SECTION 4.2 CONSTRUCTION PLANS AND PERMITS...................................................................12
SECTION 4.3 CONSTRUCTION REQUIREMENTS........................................................................12
SECTION 4.4 OPENING..........................................................................................13
SECTION 4.5 USE OF THE PREMISES..............................................................................13
SECTION 4.6 MAINTENANCE AND REPAIRS..........................................................................13
SECTION 4.7 OPERATIONAL REQUIREMENTS.........................................................................14
SECTION 4.8 P.O.S. SYSTEM; E-MAIL............................................................................15
SECTION 4.9 HIRING, TRAINING AND APPEARANCE OF EMPLOYEES.....................................................16
SECTION 4.10 MANAGEMENT OF YOUR HEALTHY BITES GRILL FRANCHISE................................................16
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SECTION 4.11 APPROVED SPECIFICATIONS AND SOURCES OF SUPPLY...................................................17
SECTION 4.12 SECRET RECIPE PRODUCTS..........................................................................17
SECTION 4.13 CREDIT CARDS AND OTHER METHODS OF PAYMENT.......................................................18
SECTION 4.14 TELEPHONES AND ANSWERING SERVICE................................................................18
SECTION 4.15 COMPLIANCE WITH LAWS, RULES AND REGULATIONS.....................................................18
SECTION 4.16 TAX PAYMENTS; CONTESTED ASSESSMENTS.............................................................18
SECTION 4.17 CUSTOMER SURVEYS................................................................................19
SECTION 4.18 INSPECTIONS.....................................................................................19
SECTION 4.19 NOTICES TO US...................................................................................19
SECTION 4.20 OPERATIONAL SUGGESTIONS.........................................................................20
SECTION 4.21 RENOVATION AND UPGRADING........................................................................20
SECTION 4.22 LIQUIDATED DAMAGES FOR SALE OF PROHIBITED.......................................................20
SECTION 4.23 PUBLICITY.......................................................................................21
ARTICLE 5 - INTELLECTUAL PROPERTY...............................................................................21
SECTION 5.1 OUR REPRESENTATIONS AS TO THE INTELLECTUAL PROPERTY..............................................21
SECTION 5.2 YOUR USE OF THE INTELLECTUAL PROPERTY............................................................21
SECTION 5.3 INFRINGEMENT BY YOU..............................................................................22
SECTION 5.4 CLAIMS AGAINST THE INTELLECTUAL PROPERTY.........................................................22
SECTION 5.5 YOUR INDEMNIFICATION.............................................................................23
SECTION 5.6 OUR RIGHT TO MODIFY THE INTELLECTUAL PROPERTY....................................................23
SECTION 5.7 OUR RESERVATION OF RIGHTS........................................................................23
SECTION 5.8 OWNERSHIP; INUREMENT SOLELY TO US................................................................24
ARTICLE 6 - THE MANUALS AND OTHER CONFIDENTIAL INFORMATION......................................................24
SECTION 6.1 IN GENERAL ......................................................................................24
SECTION 6.2 CONFIDENTIAL USE.................................................................................24
SECTION 6.3 PERIODIC REVISIONS...............................................................................25
ARTICLE 7 - ADVERTISING.........................................................................................25
SECTION 7.1 LOCAL ADVERTISING................................................................................25
SECTION 7.2 GRAND OPENING ADVERTISING PROGRAM................................................................26
SECTION 7.3 REGIONAL COOPERATIVE ADVERTISING.................................................................26
SECTION 7.4 SPECIAL ADVERTISING EXPENDITURES.................................................................28
SECTION 7.5 MARKETING FUND...................................................................................28
SECTION 7.6 CONTENT AND CONCEPTS.............................................................................28
SECTION 7.7 TERMINATION OF EXPENDITURES......................................................................29
SECTION 7.8 ADVERTISING CONTRIBUTIONS BY US..................................................................29
ARTICLE 8 - ACCOUNTING AND RECORDS..............................................................................29
SECTION 8.1 RECORDS..........................................................................................29
SECTION 8.2 REPORTS AND STATEMENTS; CONFIDENTIALITY..........................................................29
SECTION 8.3 REVIEW AND AUDIT.................................................................................30
SECTION 8.4 YOUR NAME, ADDRESS AND TELEPHONE NUMBER..........................................................30
ARTICLE 9 - INSURANCE..........................................................................................31
SECTION 9.1 TYPES AND AMOUNTS OF COVERAGE....................................................................31
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SECTION 9.2 EVIDENCE OF INSURANCE............................................................................31
SECTION 9.3 REQUIREMENTS FOR CONSTRUCTION AND RENOVATION.....................................................31
SECTION 9.4 OUR RIGHT TO PARTICIPATE IN CLAIMS PROCEDURE.....................................................31
SECTION 9.5 WAIVER OF SUBROGATION............................................................................32
SECTION 9.6 EFFECT OF OUR INSURANCE..........................................................................32
SECTION 9.7 FAILURE TO MAINTAIN INSURANCE....................................................................32
SECTION 9.8 GROUP INSURANCE..................................................................................32
ARTICLE 10 - INDEPENDENT ASSOCIATION OF HEALTHY BITES GRILL FRANCHISEES.........................................32
SECTION 10.1 YOUR RIGHT TO JOIN THE INDEPENDENT ASSOCIATION OF HEALTHY BITES GRILL FRANCHISEES...............32
SECTION 10.2 OUR DEALINGS WITH THE FRANCHISEE ASSOCIATION....................................................32
ARTICLE 11 - TRANSFER OF INTEREST..............................................................................33
SECTION 11.1 TRANSFER BY US...........................................................................33
SECTION 11.2 TRANSFER BY YOU..........................................................................33
SECTION 11.3 TRANSFER UPON DIVORCE OR PARTNERSHIP DISSOLUTION................................................35
SECTION 11.4 TRANSFER UPON DEATH OR DISABILITY...............................................................35
SECTION 11.5 OUR RIGHT OF FIRST PURCHASE.....................................................................36
ARTICLE 12 - DEFAULT AND TERMINATION............................................................................38
SECTION 12.1 TERMINATION BY YOU..............................................................................38
SECTION 12.2 TERMINATION BY US - WITHOUT NOTICE..............................................................38
SECTION 12.3 TERMINATION BY US - AFTER NOTICE................................................................38
SECTION 12.4 TERMINATION BY US - AFTER NOTICE AND RIGHT TO CURE..............................................40
ARTICLE 13 - YOUR OBLIGATIONS UPON TERMINATION DUE TO YOUR DEFAULT OR ON NONRENEWAL............................40
SECTION 13.1 CEASE OPERATIONS................................................................................40
SECTION 13.2 PAYMENT OF OUTSTANDING AMOUNTS..................................................................40
SECTION 13.3 DISCONTINUANCE OF USE OF TRADE NAME.............................................................41
SECTION 13.4 OUR OPTION TO PURCHASE YOUR HEALTHY BITES GRILL FRANCHISE.......................................41
SECTION 13.5 DISTINGUISHING OPERATIONS.......................................................................42
SECTION 13.6 UNFAIR COMPETITION..............................................................................43
SECTION 13.7 RETURN OF MATERIALS.............................................................................43
SECTION 13.8 OUR PURCHASE RIGHTS OF ITEMS BEARING INTELLECTUAL PROPERTY......................................43
SECTION 13.9 LIQUIDATED DAMAGES FOR PREMATURE TERMINATION....................................................44
ARTICLE 14 - YOUR INDEPENDENT COVENANTS.........................................................................44
SECTION 14.1 DIVERSION OF BUSINESS; COMPETITION ANDINTERFERENCE WITH US......................................44
SECTION 14.2 INDEPENDENT COVENANTS; THIRD PARTY BENEFICIARIES................................................46
ARTICLE 15 - INDEPENDENT CONTRACTOR AND INDEMNIFICATION.........................................................46
SECTION 15.1 INDEPENDENT STATUS..............................................................................46
SECTION 15.2 INDEMNIFICATION.................................................................................46
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ARTICLE 16 - REPRESENTATIONS AND WARRANTIES.....................................................................47
SECTION 16.1 OUR REPRESENTATIONS.............................................................................47
SECTION 16.2 YOUR REPRESENTATIONS............................................................................47
SECTION 16.3 RECEIPT OF FOC..................................................................................48
SECTION 16.4 RECEIPT OF COMPLETED FRANCHISE AGREEMENT........................................................48
SECTION 16.5 ACKNOWLEDGMENT OF RISK..........................................................................48
ARTICLE 17 - TERM...............................................................................................49
SECTION 17.1 TERM............................................................................................49
SECTION 17.2 OPTION TO OBTAIN SUCCESSOR HEALTHY BITES GRILL FRANCHISE AGREEMENT..............................49
SECTION 17.3 REINSTATEMENTS AND EXTENSIONS...................................................................50
ARTICLE 18 - DISPUTE RESOLUTION.................................................................................50
SECTION 18.1 MEDIATION.......................................................................................50
SECTION 18.2 ARBITRATION.....................................................................................50
SECTION 18.3 EXCEPTIONS TO MEDIATION AND ARBITRATION; EQUITABLE RELIEF.......................................52
SECTION 18.4 JURISDICTION AND VENUE..........................................................................52
SECTION 18.5 ENFORCEMENT COSTS...............................................................................53
SECTION 18.6 GOVERNING LAW...................................................................................53
ARTICLE 19 - DEFINITIONS.......................................................................................53
SECTION 19.1 DEFINITIONS.....................................................................................53
SECTION 19.2 OTHER DEFINITIONAL PROVISIONS...................................................................58
ARTICLE 20 - GENERAL PROVISIONS.................................................................................59
SECTION 20.1 AMENDMENTS......................................................................................59
SECTION 20.2 MODIFICATION OF THE SYSTEM......................................................................59
SECTION 20.3 BINDING EFFECT..................................................................................59
SECTION 20.4 NOTICES.........................................................................................59
SECTION 20.5 HEADINGS........................................................................................60
SECTION 20.6 SEVERABILITY....................................................................................60
SECTION 20.7 WAIVERS.........................................................................................60
SECTION 20.8 REMEDIES CUMULATIVE.............................................................................61
SECTION 20.9 EFFECTIVENESS; COUNTERPARTS.....................................................................61
SECTION 20.10 REASONABLENESS.................................................................................61
SECTION 20.11 SURVIVAL.......................................................................................61
SECTION 20.12 FORCE MAJEURE..................................................................................61
SECTION 20.13 THIRD PARTIES..................................................................................62
SECTION 20.14 ENTIRE AGREEMENT...............................................................................62
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HEALTHY BITES GRILL FRANCHISE AGREEMENT
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THIS HEALTHY BITES GRILL FRANCHISE AGREEMENT is signed on
February 19, 2003 between Health Express Franchise Company, a Florida
corporation and The Junie Corp.
This Agreement is written in an informal style to make it easy to read
and to help you become thoroughly familiar with all of the important rights and
obligations that the Agreement covers before you sign it. In this Agreement,
Health Express Franchise Company is referred to as the "Franchisor," "we," us"
or "our." You are referred to as the "Franchisee," "you" or "your."
BACKGROUND
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A. We have developed and own a special system under the trade name
"Healthy Bites Grill(R)" that offers a full menu of healthy and natural food
combined with a quick casual service restaurant format.
B. The distinguishing characteristics of the System include: Secret
Recipe Products; uniform standards and procedures for business operations;
special graphics package; training in the operation, management and promotion of
the Healthy Bites Grill Franchise; promotional programs; customer development
and service techniques; and other technical assistance.
C. You recognize the benefits from receiving a Healthy Bites Grill
Franchise and desire to enter into this Agreement subject to the terms of this
Agreement and to receive the benefits provided by us under this Agreement.
D. We have reviewed your application and have decided to award a
Healthy Bites Grill Franchise to you evidenced by this Agreement.
TERMS
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The parties agree as follows:
ARTICLE 1 - APPOINTMENT
SECTION 1.1 GRANT OF FRANCHISE
We grant to you, subject to the terms of this Agreement, the right and
you undertake the obligation, to operate 1 Healthy Bites Grill Franchise under
the System only at the location described in Section 1.2. You may also engage in
home delivery within the Protected Territory provided you comply with the home
delivery requirements set forth in the Manuals.
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ALL CAPITALIZED TERMS ARE DEFINED IN ARTICLE 19.
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SECTION 1.2 LOCATION OF YOUR HEALTHY BITES GRILL FRANCHISE
You agree that you will operate your Healthy Bites Grill Franchise only
at the location described on the cover page or, if none is stated, the Premises
will be located with the Reserved Area and Exhibit A completed after you select
a site in accordance with Section 4.1. The location cannot be changed without
our written consent and compliance with our relocation procedures. You may
engage in home delivery. You will not solicit business outside your ADI through
the use of an 800 number, catalog, direct mail, Internet, Web Site or other
advertising or solicitation method without our written consent.
SECTION 1.3 PROTECTED TERRITORY
During the Term, if you are not in default, we agree not to open a
Company-Owned Unit or franchise another Healthy Bites Grill Franchise within
your Protected Territory. However, we reserve for ourselves the rights stated in
Section 5.7, which are superior to your rights under this Agreement.
SECTION 1.4 RELOCATION OF YOUR HEALTHY BITES GRILL FRANCHISE
(a) LOSS OF LEASE. If the Premises is leased by you and the lease or
sublease expires or is terminated (provided termination is not due to your
default) before the expiration or termination of this Agreement, you then have
90 days to secure a new location within your Protected Territory but not within
the protected territory of a Company Unit or another Franchise Unit of the
System whether operating or under development. We must approve the new location
in writing. You have 90 days from the date of the new lease or new sublease is
signed to open and begin full operation of the new Healthy Bites Grill Franchise
in compliance with this Agreement unless we otherwise agree in writing. The
failure to secure a new location and begin operation within the specified times
is an Event of Default on your part.
(b) CASUALTY. If the Premises is damaged or destroyed by fire or other
casualty, or is required by any governmental authority, to be repaired or
constructed you will, at your expense, repair or reconstruct the Premises within
a reasonable time under the circumstances. The minimum acceptable appearance for
the restored Premises will be as existed just before the casualty. However,
every reasonable effort must be made to have the restored Premises reflect the
then current Trade Dress of the newest Healthy Bites Grill Franchises within the
System. If the Premises is substantially destroyed by fire or other casualty,
you may, with our written agreement, terminate this Agreement instead of
reconstructing the Premises or relocating your Healthy Bites Grill Franchise
under the terms in Subsection 1.4(c).
(c) CONDEMNATION. You will, as soon as possible, give us notice of any
proposed taking by eminent domain. If we agree that your Healthy Bites Grill
Franchise or a substantial portion is to be taken, we will give prompt
consideration to transferring your Healthy Bites Grill Franchise to a nearby
location you select within your Protected Territory but not within the protected
territory of a Company Unit or another Franchise Unit whether operating or under
development as quickly as reasonably possible, within 90 days of the taking. If
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the new location is accepted and we authorize the transfer, and if you open a
new Healthy Bites Grill Franchise at the new location in accordance with our
specifications within 90 days after obtaining the new location, your new Healthy
Bites Grill Franchise will be deemed to be your Healthy Bites Grill Franchise
under this Agreement. If a condemnation takes place and a new Healthy Bites
Grill Franchise does not, for any reason, become your Healthy Bites Grill
Franchise under this Agreement, this is an Event of Default on your part.
(d) SITE RELOCATION FEE. If you must relocate your Healthy Bites Grill
Franchise, you will pay a site relocation fee to us sufficient to cover our
reasonable and necessary direct costs associated with approving the relocation;
for example, site location and/or lease negotiation assistance, legal and
accounting fees, travel expenses and other out-of-pocket costs.
ARTICLE 2 - OUR DUTIES
We will provide you with the following initial and ongoing assistance
and services, as long as you are not in default under this Agreement:
SECTION 2.1 SITE SELECTION ASSISTANCE
We must approve the proposed site for your Premises in writing before
beginning any construction of improvements. We will provide one on-site
evaluation in response to your request for site selection assistance and
approval. However, we will not provide this on-site evaluation for any proposed
site before receipt of the materials required in the Manuals. We will not
unreasonably withhold approval of any site that meets our standards for
demographic characteristics, traffic patterns, parking, the predominant
character of the neighborhood, competition from other businesses providing
similar services within the area, the proximity to other businesses, the nature
of other businesses in proximity to the site and other commercial
characteristics, the size, appearance and other physical characteristics of the
site, and any other factors that we consider relevant in approving or
disapproving a site. We will review site approval submissions on a first-in
basis. If we do not approve the selected site, you have 30 days to submit a new
site within the Reserved Area for our written approval. WE DO NOT REPRESENT THAT
WE HAVE ANY SPECIAL EXPERTISE IN SELECTING SITES. OUR APPROVAL OF A SITE IS NOT
A REPRESENTATION OR WARRANTY THAT THE HEALTHY BITES GRILL FRANCHISE WILL BE
PROFITABLE OR THAT YOUR SALES WILL ATTAIN ANY PREDETERMINED LEVELS. APPROVAL IS
INTENDED ONLY TO INDICATE THAT THE PROPOSED SITE MEETS OUR MINIMUM CRITERIA FOR
IDENTIFYING SITES. YOU AGREE THAT OUR APPROVAL OR DISAPPROVAL OF A PROPOSED SITE
DOES NOT IMPOSE ANY LIABILITY ON US.
SECTION 2.2 LEASE ASSISTANCE
If you intend to lease your Premises from a third party, we may assist
you in your lease negotiations. Any lease must provide that it is subject to,
and you must obtain, our written approval. The landlord, you and us must sign
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our form of Agreement with Landlord set forth in Exhibit D to the Franchise
Offering Circular. WE DO NOT REPRESENT THAT WE HAVE ANY SPECIAL EXPERTISE IN
NEGOTIATING LEASES. YOU AGREE THAT OUR APPROVAL OR DISAPPROVAL OF A PROPOSED
LEASE DOES NOT IMPOSE ANY LIABILITY ON US. APPROVAL IS INTENDED ONLY TO INDICATE
THAT THE PROPOSED SITE MEETS OUR MINIMUM CRITERIA FOR IDENTIFYING SITES. YOU
AGREE THAT OUR APPROVAL OR DISAPPROVAL OF A PROPOSED SITE DOES NOT IMPOSE ANY
LIABILITY ON US.
SECTION 2.3 PLANS AND SPECIFICATIONS
(a) We will loan to you:
(i) A sample set of standard building plans and
specifications and/or standard recommended floor plans prepared by a
licensed architect;
(ii) Specifications of our requirements for design,
decoration, layout, equipment, furniture, fixtures and signs for the
Healthy Bites Grill Franchise (collectively, the "Design
Specifications"); and
(iii) Specifications for Healthy Bites Grill uniforms for your
employees to be purchased directly from our approved suppliers.
(b) On or before the Opening Date, you must return to us the plans and
specifications described in Subsection 2.3(a).
SECTION 2.4 ACCOUNTING, COST CONTROL, PORTION CONTROL
AND INVENTORY CONTROL SYSTEMS.
We will provide standardized accounting, cost control, portion control
and inventory control systems.
SECTION 2.5 LISTS, FORMS AND SCHEDULES
We will loan to you:
(a) A list of required equipment, supplies, materials, inventory and
other items necessary to open and operate your Healthy Bites Grill Franchise and
a list of approved suppliers of these items;
(b) An initial set of forms, including the standard brochure and
various operational forms, standardized periodic reporting forms for reporting
accounting information, cost analysis and purchase order forms;
(c) A schedule of items that must be purchased from us including
inventory business forms, brochures and other items; and
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(d) A schedule of recommended equipment and supplies that can be
purchased from third-party suppliers.
These forms and schedules are set forth in the Manuals.
SECTION 2.6 EMPLOYEE INFORMATION AND ASSISTANCE
We will give to you employee hiring information including pay scale
guidelines. You are solely responsible for the hiring, disciplining,
supervising, promoting and firing of your employees and the establishment of
their salaries as further provided in Section 4.9.
SECTION 2.7 INITIAL TRAINING
(a) INITIAL TRAINING. We will provide up to 320 hours of Initial
Training over 8 weeks for 3 Trainees at our training facilities in Boca Raton,
Florida. Unless otherwise agreed in writing, at least 1 Trainee must be the
Franchise Owner. All Trainees must be acceptable to us. Initial Training
includes instruction in marketing, promotion and advertising, sales techniques
and computer applications. Training programs may differ in content and length
for you, your Manager, ▇▇▇▇, prep ▇▇▇▇ and juice bar person. We will provide, at
our expense, as Initial Training is included in the Initial Franchise Fee,
instructors, facilities, training materials and technical training tools for
Initial Training. You are responsible for all expenses of the Trainees in
attending Initial Training including all travel, lodging and meal expenses. You
will pay all expenses incurred to have your additional employees or agents
attend Initial Training, including reasonable training fees.
(b) FAILURE TO COMPLETE INITIAL TRAINING. If any Trainee fails to
complete satisfactorily Initial Training, as reasonably determined by us, we
may, at your expense and direction, retrain the Trainee or train another
Trainee.
SECTION 2.8 LOAN OF THE MANUALS
We will loan to you one registered copy of each volume of the Manuals
(with revisions as required). Our practice is to deliver the Manuals to you at
or shortly before Initial Training.
SECTION 2.9 PRE-OPENING INSPECTION
We will provide periodic on-site assistance and inspection of the
installation of the equipment and will generally inspect the Premises. We will
provide you with advice, as we deem appropriate to insure that you conform to
applicable standards before the Opening Date.
SECTION 2.10 PRE-OPENING ON-SITE TRAINING
We will provide you our opening supervisor to provide pre-opening,
on-site training of 80 hours over 10 days, in most instances to be conducted at
your Healthy Bites Grill Franchise shortly before the Opening Date, as we deem
appropriate. The on-site training program will cover material aspects of the
operation of the Healthy Bites Grill Franchise including financial control,
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marketing techniques, maintenance of quality standards, employee hiring and
motivation, inventory control, security standards, merchandising techniques,
promotional techniques, operations, purchasing and sales.
SECTION 2.11 GRAND OPENING ASSISTANCE
In addition to the on-site training, we will coordinate the expenditure
of the Grand Opening Advertising Fee.
SECTION 2.12 CONTINUED ASSISTANCE AND SUPPORT
Upon the opening of your Healthy Bites Grill Franchise, we will or may
provide to you the following:
(a) FIELD VISITS. We will provide assistance to you in the development
and operation of your Healthy Bites Grill Franchise by means of periodic visits
by one of our field representatives (not less than 12 times per year).
(b) TELEPHONE ASSISTANCE. We will informational assistance by telephone
including consultation on matters involving operations, advertising, promotion
and business methods.
(c) ADVERTISING AND PUBLIC RELATIONS CAMPAIGNS. We will generally
promote our franchisees' business through advertising and public relations
campaigns through the Marketing Fund.
(d) LOCAL ADVERTISING. We will provide you advice on Local Advertising.
(e) PROMOTIONAL METHODS AND MATERIALS. We will provide you with
promotional methods and materials that we develop.
(f) PERIODIC ASSISTANCE. We may provide advisory assistance in the
operation and promotion of the Healthy Bites Grill Franchise, as we deem
advisable. Advisory assistance may include additional training and assistance,
communication of new developments, improvements in equipment and supplies, and
new techniques in advertising, service and management relevant to the operation
of the Healthy Bites Grill Franchise.
(g) REFRESHER OR ADDITIONAL TRAINING. We will provide up to 2 days of
refresher training programs per year at our principal training facility. We may
also provide additional seminars or advanced management training for you and
your employees at our principal training facility (or any other location we
designate provided the other location is closer to your Healthy Bites Grill
Franchise), which may be required at our option. However, if you receive an
unsatisfactory inspection report from us and fail to promptly remedy the
deficiencies, we may require your Manager and designated employees to attend
refresher training as soon as reasonably possible. You are solely responsible
for all expenses associated with these programs and all travel, meals and
lodging costs of your attendees.
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(h) SPECIAL ASSISTANCE. If you request, we will furnish non-routine
guidance and assistance to address your unusual or unique operating problems at
our reasonable per diem fees, charges and out-of-pocket expenses we establish.
(i) RESEARCH AND DEVELOPMENT. We will continue to research and develop
new products and services, introductions and techniques, as we deem appropriate
in our sole discretion. We may conduct market research and testing to determine
consumer trends and the salability of new products and services. If we choose
you, and if you agree, you will participate in our market research programs, in
test marketing new products and services in the Healthy Bites Grill Franchise
and by providing us with timely reports and other relevant information regarding
that market research. If you participate in any test marketing, you agree to
purchase a reasonable quantity of the products or services being tested and to
effectively promote and make a good faith effort to sell them.
SECTION 2.13 LICENSE OF INTELLECTUAL PROPERTY
Subject to this Agreement, we license to you the right to use the
"Healthy Bites Grill(R)" trade name and the other Intellectual Property.
SECTION 2.14 OUR TEMPORARY OPERATION OF YOUR UNIT
At our option, if:
(a) you fail to keep your Healthy Bites Grill Franchise open for
business during normal business hours;
(b) you are absent from your Healthy Bites Grill Franchise more than 5
days or abandon the Premises;
(c) you or the Franchise Owner dies or becomes permanently
incapacitated and the franchise or the ownership interest in the Franchisee is
not assigned promptly under Section 11.4;
(d) you materially breach any of our standards and specifications for
the operation of your Healthy Bites Grill Franchise; or
(e) your Healthy Bites Grill Franchise is terminated and we elect to
purchase your business assets as provided in Section 13.4;
then, we are entitled (but have no obligation) to enter your Premises and to
operate and manage your Healthy Bites Grill Franchise for your (or your
estate's) account until the Healthy Bites Grill Franchise is terminated,
transferred to a party under Subsection 11.2(f), purchased by us, or until you
resume control over your Healthy Bites Grill Franchise and operate it in
accordance with this Agreement. Our operation and management will not continue
for more than 90 days without your written consent or the consent of the
representatives of your estate. If we operate your Healthy Bites Grill
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Franchise, we will account to you or your estate for all net income from the
operation less our reasonable expenses incurred in, and a reasonable management
fee for, our operation of your Healthy Bites Grill Franchise.
SECTION 2.15 DUTIES SOLELY TO YOU
All of our obligations under this Agreement are only to you. No other
party is entitled to rely on, enforce, or obtain relief for breach of the
obligations either directly or by subrogation.
SECTION 2.16 OUR RIGHT TO DELEGATE DUTIES
You agree to our right to delegate our duties under this Agreement to a
Designee. You must discharge your duties with the Designee to the extent we
request, as you must do with us. We remain responsible for our obligations under
this Agreement even if delegated to the Designee.
ARTICLE 3 - FEES AND PAYMENTS
SECTION 3.1 TYPES OF FEES
In consideration of our signing this Agreement, you must pay to us the
following fees, in addition to any others required under this Agreement, all
payable in United States currency at our principal office:
(a) INITIAL FRANCHISE FEE. You must pay to us an Initial Franchise Fee
of $30,000; payable at the same time this Agreement is signed. The Initial
Franchise Fee is fully earned by us on receipt and is non-refundable upon
signing this Agreement.
(b) ROYALTY FEE. You will pay a continuing non-refundable Royalty Fee
during the Term equal to 4% of Gross Revenues payable weekly by electronic funds
transfer.
(c) GRAND OPENING ADVERTISING FEE. A Grand Opening Advertising Fee of
$5,000 must be paid at the same time you sign this Agreement. The Grand Opening
Advertising Fee is held for your benefit to fund special grand opening
advertising expenditures.
(d) ADVERTISING CONTRIBUTIONS. You must also pay a continuing monthly
Advertising Contribution to the Marketing Fund during the Term in an amount
equal to 2% of Gross Revenues payable weekly by electronic funds transfer. We
have the sole right to enforce your obligations and all other franchisees that
make Advertising Contributions. Neither you, nor any other franchisee obligated
to make Advertising Contributions, is a third party beneficiary of the funds or
has any right to enforce any obligation to contribute the funds. We reserve the
right to increase the Advertising Contributions paid by you provided: (i) the
increase is reasonably necessary to provide greater advertising and promotional
assistance to the Chain; (ii) that we and a majority of the Franchise Units
agree to the increase; (iii) that all other Franchise Units and Company Units
are subject to the same relative percentage increase in the Advertising
Contributions; and (iv) the increase is approved by a majority of the
franchisees.
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SECTION 3.2 PAYMENT SCHEDULE
The Royalty Fee and Advertising Contribution must be paid to us,
together with any required weekly reports, by the 5th day of each succeeding
week during the Term for the previous week. All other amounts due to us from you
will be paid as specified in this Agreement. If no time is specified, these
amounts are due upon receipt of an invoice from us. Any payment or report not
actually received by us on or before the due date is overdue.
SECTION 3.3 PAYMENT SYSTEM
(a) All payments by you to us, upon our request, will be effectuated by
a Payment System by the use of pre-authorized transfers from your operating
account through the use of special checks or electronic fund transfers, that we
will process at the time any payment is due or through the use of any other
payment system we designate. You will cooperate with us to implement the Payment
System within 15 days before the Opening Date. You agree to cooperate with us in
maintaining the efficient operation of the Payment System, including depositing
all Gross Revenues you receive in your operating account accessed by the Payment
System within 1 Business Day of receipt.
(b) You will give your financial institution instructions in a form we
provide or approve and will obtain the financial institution's agreement to
follow these instructions. You will provide us with copies of these instructions
and agreement. The financial institution's agreement may not be withdrawn or
modified without our written approval and approval is within our sole
discretion. You will also sign all other forms for funds transfer as the
financial institution or we may request.
(c) We may require your financial institution to send a monthly
statement of all activity in the designated account to us at the same time as it
sends these statements to you, and any other reports of the activity in the
operating account as we reasonably determine and request.
(d) If you maintain any other bank accounts for your Healthy Bites
Grill Franchise, you must identify these accounts to us and provide to us copies
of the monthly statements for all these accounts and the details of all deposits
and withdrawals to them.
(e) You will pay all charges imposed by your financial institution. We
will pay the charges imposed by our financial institution for the Payment
System.
(f) You agree that your obligations to make payments under this
Agreement and any other agreement entered into with us for your Healthy Bites
Grill Franchise, and our rights and those of our Affiliates, if any, to receive
these payments, are absolute and unconditional, and are not subject to any
abatement, reduction, setoff, defense, counterclaim or recoupment due or alleged
to be due to, or by reason of, any past, present or future claims that you have
or may have against us for any reason.
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SECTION 3.4 INTEREST ON LATE PAYMENTS; LATE CHARGE
Although each failure to pay monies when due is an Event of Default, to
encourage prompt payment and to cover the costs involved in processing late
payments, if any payment under this Agreement or any other agreement between us
and you for your Healthy Bites Grill Franchise is overdue for any reason, you
must pay to us, on demand, in addition to the overdue amount, any insufficient
funds (NSF) charges we incur and interest on the overdue amount from the date it
was due until paid equal to the lesser of: (i) 18% per annum; or (ii) the
maximum rate of interest permitted by law. You must also pay a late charge of
$100 for each payment that is overdue. If we owe you money, we will pay the same
interest and late charge, if we pay you late.
SECTION 3.5 APPLICATION OF PAYMENTS
We have sole discretion to apply any payments you make to your past due
indebtedness including the Royalty Fee, Advertising Contributions, purchases
from us, interest, insufficient funds (NSF) charges, or any other indebtedness
of you to us in any manner we choose regardless of your designation.
SECTION 3.6 SECURITY INTEREST
(a) As security for the full, prompt and complete payment and
performance by you of all of your obligations to the us under this Agreement or
otherwise including all costs, expenses, advances and liabilities which may be
incurred by us in connection with this Agreement, including reasonable
attorneys' fees to enforce the rights of the Franchisor under this Agreement
(the "Secured Obligations"), you grant to us a first priority security interest
under the applicable Uniform Commercial Code in the state in which the
Franchised Business is located and a security interest under any other
applicable law in and to the Business Assets. You will: (i) sign any financing
statements (including the form attached as Exhibit G to the FOC) or renewals,
substitutions or corrections or other documents, or provide any document, and
pay all connected costs necessary to perfect the security interest granted in
this Section against the rights or interest of third parties and you appoint us
as your true and lawful attorney, and in its name, place and stead, to make,
sign, acknowledge and file all documents, instruments and forms, whether
notarized or otherwise, which in the opinion of our counsel, are reasonably
required to perfect the security interest granted in this Section; (ii) except
in the ordinary course of its business, not sell, transfer, assign, mortgage,
encumber or otherwise dispose of, or create, assume, or suffer to exist any
security interest (other than as created under this Agreement) in any of the
Business Assets; and (iii) at all times keep accurate and complete records of
the Business Assets at its place of business and we or any of out agents have
the right to call at your place of business at intervals we determine, and,
without hindrance or delay, to inspect the Business Assets and to inspect,
audit, check and make copies and extracts from the books, records, journals,
orders, receipts, magnetic computer disks and records, correspondence and other
data relating to the Business Assets. Upon the occurrence of any Event of
Default, we may declare the Secured Obligations, or any of them immediately due
and payable without demand or notice, and we may proceed to exercise any one or
more of the rights or remedies afforded by the applicable Uniform Commercial
10
Code or other applicable law of any jurisdiction, and any other remedies or
right provided in this Agreement, all of which may be exercised, cumulatively or
consecutively in our sole discretion.
(b) Upon an occurrence of an Event of Default, we will send you notice
and, upon the sending of the notice, we have the right to notify all of your
account debtors obligated on any or all of the accounts receivable to make
payment thereof directly to us. Moreover, we have the right to enforce and
collect all amounts due with respect to the accounts receivable for purposes of
satisfying the Secured Obligations. You constitute and appoint us as your lawful
attorney-in-fact, and in your place and stead, with full power of substitution
either in our name (i) to ask for, demand, ▇▇▇ for, collect, receive, receipt
and give acquittance for any of the accounts receivable; (ii) to endorse checks,
drafts, orders and other instruments for payment of monies payable with respect
to the accounts receivable; and (iii) to settle, compromise, extend the date for
payment, prosecute or defend any action or proceeding with respect to the
accounts receivable, all without notice or consent to you and without
discharging or affecting your obligations under this Agreement.
(c) We agree to subordinate our security interest to: (i) the
landlord's lien; (ii) the security interest of a reputable institutional lender
for a loan to you for working capital purposes; (iii) the purchase money
security interest of an approved equipment vendor for any equipment you purchase
or lease and use in the operation of your Healthy Bites Grill Franchise; or (iv)
the purchase money security interest of a supplier of approved products sold at
your Healthy Bites Grill Franchise. You pay all filing fees and costs for
perfecting our security interest.
SECTION 3.7 NO WITHHOLDING
You agree that under no circumstances will you withhold or suspend
payment of, or reduce the amount of the Royalty Fee or Advertising Contributions
payable under this Agreement. Notwithstanding the foregoing, if you dispute in
good faith the amount of an individual payment due under this Agreement, you may
pay only the amount you believe is due, provided that you give us prompt notice
of the reasons you dispute the amount of the payment and proceed to make good
faith efforts to resolve the dispute.
ARTICLE 4 - YOUR DUTIES
SECTION 4.1 ACQUISITION OF THE SITE
(a) SITE APPROVAL. You are solely responsible for selecting the site.
If a site for your Healthy Bites Grill Franchise has not been selected on the
Agreement Date, you must complete the acquisition or lease arrangements for your
Premises located in the Reserved Area, at your expense within 3 months of the
Agreement Date, after obtaining our written approval under Section 2.1. If a
site has not been approved within 6 months of the Agreement Date, we may
terminate this Agreement and retain the Initial Franchise Fee.
(b) PURCHASE OF THE SITE. If you intend to purchase the site, the
purchase agreement must be submitted to us for our written approval. You will be
solely responsible for securing any necessary acquisition, construction,
permanent or other financing of the site and the Premises.
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(c) LEASE OF THE SITE. We must approve any lease of the Premises. You
must deliver a copy of the proposed lease to us at least 15 days before it is
signed by you. You and the landlord must sign our form of Agreement with
Landlord, the form of which is attached as Exhibit D to the FOC.
SECTION 4.2 CONSTRUCTION PLANS AND PERMITS
For the construction of your Premises, you will do the following:
(a) You must employ a qualified licensed architect or engineer with
adequate errors and omissions insurance to prepare a site plan and plans and
specifications adapting our standard plans and specifications to your approved
location and to applicable laws, lease requirements and restrictions, and market
conditions. The architect or engineer must be especially mindful of all zoning,
signage, seating capacity, parking requirements and storage requirements. Any
material modification to the standard plans and specifications must be sealed
and stamped by the architect or engineer and approved by us. The modified plans
and approvals, once approved by us, will not be materially changed or modified
without our written approval;
(b) You will employ professional supervision satisfactory to us over
preparation of the site layout and plan and over construction of your Premises;
and
(c) You must obtain all permits and certifications required for the
lawful construction and operation of your Healthy Bites Grill Franchise,
together with certifications from all governmental authorities having
jurisdiction over your Premises and your Healthy Bites Grill Franchise. You must
provide us with evidence that all necessary permits have been obtained and that
all requirements for construction and operation have been met, including zoning,
access, sign, fire, health, environmental and safety requirements.
SECTION 4.3 CONSTRUCTION REQUIREMENTS
You must begin construction within 60 days after a site is obtained and
provide written notice to us of the date construction of your Healthy Bites
Grill Franchise begins. You will construct the Premises in accordance to the
approved plans described in Section 4.2 and the Design Specifications. You must
maintain continuous construction of the Premises and must complete construction,
including all exterior and interior carpentry, electrical, painting and
finishing work and installation of all with the approved fixtures, equipment and
signs, in accordance with the site plans and Design Specifications, at your
expense, within 12 months of the Agreement Date. You agree that our
representatives and we have the right to inspect the construction at all
reasonable times. You will within 10 days after completion of construction
obtain a certificate of occupancy, and after obtaining our approval for opening,
will open your Healthy Bites Grill Franchise within 7 days after the date of the
certificate of occupancy. You and we agree that time is of the essence in
constructing and opening your Healthy Bites Grill Franchise.
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SECTION 4.4 OPENING
You agree not to open your Healthy Bites Grill Franchise for business
until: (a) all your obligations under Sections 4.1 through 4.3 have been
fulfilled; (b) we determine that your Healthy Bites Grill Franchise has been
constructed, furnished, equipped, and decorated in accordance with approved
plans and specifications; (c) the training of the Trainees has been completed to
our reasonable satisfaction; (d) the Initial Franchise Fee and all amounts due
to us under this Agreement have been paid in full; (e) we have been furnished
with certificates of insurance and copies of all insurance policies or all other
evidence of insurance coverage as we reasonably request; (f) you have obtained a
certificate of occupancy for your Premises; and (g) you have obtained all
necessary licenses and permits to operate your Healthy Bites Grill Franchise.
Final approval by us of the opening of your Healthy Bites Grill Franchise will
be given in writing. You agree to comply with these conditions and be prepared
to open your Healthy Bites Grill Franchise for business within 12 months after
the Agreement Date.
SECTION 4.5 USE OF THE PREMISES
You must use your Premises only for the operation of your Healthy Bites
Grill Franchise. You must keep your Healthy Bites Grill Franchise open for
business and in normal operation for the minimum hours and days as we reasonably
require in the Manuals or otherwise in writing except as may be limited by local
law or the landlord's rules and regulations. You must refrain from using or
permitting the use of the Premises for any other purpose or activity at any time
without first obtaining our written consent. You may not locate or permit to be
located on or about the Premises any pinball machines, electronic or video
games, jukeboxes, or other types of amusements or vending machines without out
written consent.
SECTION 4.6 MAINTENANCE AND REPAIRS
(a) You must maintain your Healthy Bites Grill Franchise in the highest
and most uniform degree of sanitation, repair, appearance, condition and
security as stated in the Manuals and as a modern, clean, adequately lighted and
efficiently operated Healthy Bites Grill Franchise providing high quality
products and services with efficient, courteous and friendly customer service as
we require. You must make all additions, alterations, repairs and replacements
to your Healthy Bites Grill Franchise (but no others without our written
consent) as reasonably required for that purpose, including all periodic
repainting, changes in appearance, repairs to impaired equipment and replacement
of obsolete signs as we direct subject to Capital Expenditure Limitation stated
in Section 4.21. You must meet and maintain the highest safety standards and
ratings applicable to the operation of your Healthy Bites Grill Franchise, as we
reasonably require, including the maintenance of the highest sanitation rating.
(b) You must maintain contracts with reputable firms for the
maintenance of the Premises and the machinery and equipment and, if we determine
to be appropriate or necessary, for the landscaped areas of the Premises.
Contracts for maintenance of the Premises and the machinery and equipment must
provide for the performance of services, including preventative maintenance
services, and be with financially responsible firms, that: (i) maintain adequate
insurance and bonding; (ii) have personnel who are factory trained to service
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equipment of the type in the Premises; and (iii) maintain an adequate supply of
parts for the machinery, equipment and tools. Contracts for landscape
maintenance must be with financially responsible firms. You will provide us,
upon our request, with a copy of any contract for maintenance that you enter
into with any outside maintenance firm. If you fail to keep these contracts in
full effect, we may do so at your expense.
SECTION 4.7 OPERATIONAL REQUIREMENTS
You agree to operate your Healthy Bites Grill Franchise in conformity
with all uniform methods, standards and specifications required in the Manuals
or otherwise, to ensure that the highest degree of quality and service is
uniformly maintained. You agree to:
(a) Record all Gross Revenues on the approved P.O.S. System;
(b) Comply with the procedures and systems we reasonably institute on a
System-wide basis both now and in the future, including those on sales, good
business practices, advertising and other obligations and restrictions;
(c) Maintain in sufficient supply (as we may reasonably prescribe in
the Manuals or otherwise in writing) and use at all times, only inventory,
equipment, materials, advertising methods and formats, and supplies that conform
with our standards and specifications, if any, at all times sufficient to meet
the anticipated volume of business, and to refrain from deviating from these
requirements without our written consent;
(d) Use menu boards and menus that comply with our specifications for
materials, finish, style, pattern and design;
(e) Adhere to the highest standards of honesty, integrity, fair dealing
and ethical conduct in all dealings with customers, suppliers, employees,
independent contractors, us and the public;
(f) Sell or offer for sale only the menu items that meet our reasonable
uniform standards of quality and quantity; have been expressly approved for sale
in the Manuals or otherwise in writing by us at retail to consumers only from
your Healthy Bites Grill Franchise; not sell any items for redistribution or
resale; sell or offer for sale all approved products and services; refrain from
any deviation from our standards and specifications for providing or selling the
products and services without our written consent; and discontinue selling and
offering for sale any products and services that we reasonably disapprove on a
System-wide basis in writing at any time;
(g) Purchase and install, at your expense, all fixtures, furnishings,
signs and equipment we reasonably specify. The equipment must be maintained in a
condition that meets the operational standards specified in the Manuals. As
equipment becomes obsolete or inoperable, you will replace the equipment with
the equipment that is then approved for use in the Healthy Bites Grill
Franchise. If we determine that additional or replacement equipment is needed on
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a System-wide basis because of a change in menu items or method of preparation
and service, a change in technology, customer concerns or health or safety
considerations, you will install the additional equipment or replacement
equipment within the time we specify, subject to the Capital Expenditure
Limitation in Section 4.21.
(h) The Premises will not be used for the handling, storage,
transportation or disposal of hazardous or toxic materials contrary to any
federal, state or local laws, rules and regulations. You agree to contract with
a licensed waste hauler for the removal and disposal of all hazardous or toxic
material utilized in the operation of the Franchise. You will provide to us a
copy of all waste hauler agreements, EPA monitoring records and
perchloroethylene purchase laws within 5 days of our request. You indemnify,
defend and hold us harmless from any loss, costs, damages or payments (including
attorneys' fees and court costs) we incur as a result of past, present or future
use, handling, storage, transportation or disposal of hazardous or toxic
materials. The indemnity in this Subsection survives the termination, expiration
or transfer of this Agreement.
SECTION 4.8 P.O.S. SYSTEM; E-MAIL
(a) Before the Opening Date you must procure and install at your
Healthy Bites Grill Franchise the P.O.S. System we specify in the Manuals or
otherwise. You will provide any assistance we require to bring the P.O.S. System
"on-line" with our computer. You agree that we have the right to retrieve all
data and information from your P.O.S. System, as we, in our sole discretion,
deem necessary, with the telephonic cost of retrieval to be paid by you. All of
the specified items to be installed or purchased, or activities specified to be
accomplished by you, and the delivery of all hardware and software, are at your
sole expense.
(b) You must install and maintain, at your own expense, an E-mail link
with us and all other Healthy Bites Grill Franchisees. Reasonable minimum
hardware and software standards for these connections will be set by us and may
be periodically revised, and you will have reasonable time to upgrade when
standards change. Standards will include current uniform communications software
in use by the System; word processing and spreadsheet software that is either
the same as that in use at our office or capable of reading and converting files
created by our office; and a computer capable of running the software and
containing reasonable minimums for memory and data storage and a modem connected
via network links to our System. You will be responsible for all normal
communications charges from the networks making connection to our System, for
example, phone bills or bills from an on-line service. Information important to
the Chain will be sent to your computer address electronically. In order to stay
informed on developments affecting the System and your Healthy Bites Grill
Franchise, you agree to check your electronic mailbox for system communications
on a regular basis.
(c) You agree that computer systems are designed to accommodate a
certain maximum amount of data and terminals, and that, as limits are achieved,
and/or as technology and/or software is developed in the future, we in our sole
discretion may require you to add memory, ports and other accessories and/or
peripheral equipment and/or additional, new or substitute software to the
original P.O.S. System you purchased. You agree that at a certain point in time
it may become necessary for you to replace or upgrade the entire P.O.S. System
with a larger system capable of assuming and discharging all of those
computer-related tasks and functions as we specify. You agree that computer
15
designs and functions change periodically and that we may be required to make
substantial modifications to our computer specifications, or to require
installation of entirely different systems, during the Term. To ensure full
operational efficiency and communication capability between our computers and
your computers, you will keep the P.O.S. System in good maintenance and repair
and to install all additions, changes, modifications, substitutions and/or
replacements to your computer hardware, software, telephone and power lines and
other computer-related facilities as we direct on those dates and within those
times we specify, in our sole discretion, in the Manuals or otherwise on a
System-wide basis subject to the Capital Expenditure Limitation in Section 4.21.
Upon termination or expiration of this Agreement, all software, disks, tapes and
other magnetic storage media provided to you by us must be returned to us in
good condition (reasonable wear and tear excepted). You will delete all software
and applications from all memory and storage.
SECTION 4.9 HIRING, TRAINING AND APPEARANCE OF EMPLOYEES
You will maintain a competent, conscientious staff and employ the
minimum number of employees necessary to meet the anticipated volume of business
and to achieve the goals of the System. You will take all steps necessary to
ensure that your employees meet the employment criteria and keep a neat
appearance and comply with any dress code we require. You are solely responsible
for the terms of their employment and compensation and, except for training
required under this Agreement, for the proper training of the employees in the
operation of your Healthy Bites Grill Franchise. You are solely responsible for
all employment decisions and functions, including hiring, firing, establishing
wage and hour requirements, disciplining, supervising and record keeping. You
will not recruit or hire any employee of a Healthy Bites Grill Franchise
operated by us or another franchisee within the System without obtaining the
employer's written permission, which will not be unreasonably withheld, subject
to any covenant not to compete, the provisions of which will be respected and
not challenged.
..
SECTION 4.10 MANAGEMENT OF YOUR HEALTHY BITES GRILL FRANCHISE
(a) If this Agreement is signed by 2 or more individuals, you agree to
designate in writing 1 individual as the Manager upon signing this Agreement. We
have the right to rely solely on instructions of the Manager concerning the
operation of the Healthy Bites Grill Franchise until we receive a duly signed
written notice changing the designated Manager.
(b) The Manager must devote his or her best full-time efforts to the
management and operation of your Healthy Bites Grill Franchise. You agree that
your Healthy Bites Grill Franchise requires the day-to-day supervision of the
Manager at all times your Healthy Bites Grill Franchise is open for business.
The Manager, and all successive Managers, if any, are required to complete
Initial Training before managing your Healthy Bites Grill Franchise, unless we
otherwise agree in writing.
(c) If we have permitted the Manager to be an individual other than the
Franchise Owner, and the Manager fails to satisfy his or her obligations
provided in Subsection 4.10(b) due to death, disability, termination of
employment or for any other reason, the Franchise Owner will satisfy these
obligations until you designate a new Manager of your Healthy Bites Grill
Franchise acceptable to us who has successfully completed Initial Training. You
16
are solely responsible for the expenses associated with Initial Training,
including the then-prevailing standard training fee we charge (currently
$1,500).
SECTION 4.11 APPROVED SPECIFICATIONS AND SOURCES OF SUPPLY
(a) AUTHORIZED SPECIFICATIONS AND SUPPLIERS. You must purchase or lease
equipment, supplies, inventory, advertising materials, construction services and
other products and services used for the operation of your Healthy Bites Grill
Franchise solely from authorized manufacturers, contractors and other suppliers
who demonstrate, to our continuing reasonable satisfaction: (i) the ability to
meet our standards and specifications for these items; (ii) possess adequate
quality controls and capacity to supply your needs promptly and reliably; and
(iii) have been approved in writing by us and not later disapproved. We will use
our best reasonable efforts to negotiate agreements with suppliers that, in our
good faith belief, are in the best interest of all Healthy Bites Grill
franchisees. We may approve a single supplier for any brand and may approve a
supplier only as to a certain brand or brands. In approving suppliers for the
System, we may take into consideration factors like the price and quality of the
products or services and the supplier's reliability. We may concentrate
purchases with 1 or more suppliers to obtain the lowest prices and/or the best
advertising support and/or services for any group of Franchise Units or Company
Units within the Chain. Approval of a supplier may be conditioned on
requirements on the frequency of delivery, standards of service, warranty
policies including prompt attention to complaints, and concentration of
purchases, as stated above, and may be temporary, pending our additional
evaluation of the supplier. We reserve the right to derive revenue as the result
of your purchases from authorized suppliers and Secret Recipe Products.
(b) APPROVAL OF NEW SPECIFICATIONS AND SUPPLIERS. If you propose to
purchase or lease any equipment, supplies, inventory, advertising materials,
construction services or other products or services from an unapproved supplier,
you must submit to us a written request for approval, or request the supplier to
do so. We will have the right to require, as a condition of our approval, that
our representatives be permitted to inspect the supplier's facilities, and that
samples from the supplier be delivered, at our option, either to us or to an
independent, certified laboratory designated by us for testing. We are not
liable for damage to any sample that results from the testing process. You will
pay a charge not to exceed the reasonable cost of the inspection and the actual
cost of the testing. We reserve the right, at our option, to reinspect the
facilities and products of any approved supplier and continue to sample the
products at the supplier's expense and to revoke approval upon the supplier's
failure to continue to meet our standards and specifications. We may also
require as a condition to our approval, that the supplier present satisfactory
evidence of insurance, for example, product liability insurance, protecting us
and our franchisees against all claims from the use of the item within the
System.
SECTION 4.12 SECRET RECIPE PRODUCTS
You agree that we have already developed the Secret Recipe Products and
may continue to develop for use in the System certain additional products that
are all highly confidential, secret recipes and trade secrets. Due to the
importance of quality control and uniformity of these products and the
significance of the proprietary products to the System, it is to the mutual
benefit of the parties that we closely control the production and distribution
17
of the Secret Recipe Products. Accordingly, you will use the Secret Recipe
Products and will purchase from an approved source we designate and license all
of your supplies of the Secret Recipe Products, all in accordance with our
requirements then in effect.
SECTION 4.13 CREDIT CARDS AND OTHER METHODS OF PAYMENT
You will maintain credit card relationships with VISA and MasterCard
and check verification services, financial center services, and electronic fund
transfer systems as we designate in order that you may accept customers' credit
and debit cards, checks, and other methods of payment. We reserve the right to
require the addition or deletion of credit card relationships and other methods
of payment if implemented on a System-wide basis. You will subscribe to an
approved credit verification service.
SECTION 4.14 TELEPHONES AND ANSWERING SERVICE
You will:
(a) Maintain continuously a sufficient number of operating telephone
lines and telephone numbers to be used exclusively for the operation of your
Healthy Bites Grill Franchise as we reasonably require, with sufficient staff to
handle telephone calls in an efficient and courteous manner at all times during
normal business hours;
(b) Maintain continuously a dedicated operating telephone line and
telephone number at your Healthy Bites Grill Franchise that only we can use, and
that permits us to monitor accounting and operational information via a modem;
and
(d) Have a pay telephone installed in the public area of the Premises.
SECTION 4.15 COMPLIANCE WITH LAWS, RULES AND REGULATIONS
You will comply with all federal, state, and local laws, rules and
regulations, and will timely obtain, maintain and renew when required all
permits, certificates, licenses or franchises necessary for the proper conduct
of your Healthy Bites Grill Franchise under this Agreement, including
qualification to do business, fictitious, trade or assumed name registration,
building and construction permits, occupational licenses, sales tax permits,
health and sanitation permits and ratings, and fire clearances.
SECTION 4.16 TAX PAYMENTS; CONTESTED ASSESSMENTS
You will promptly pay when due all taxes required by any federal, state
or local tax authority including unemployment taxes, withholding taxes, sales
taxes, use taxes, income taxes, tangible commercial personal property taxes,
real estate taxes, intangible taxes and all other indebtedness you incur in the
conduct of your Healthy Bites Grill Franchise. You will pay to us an amount
equal to any sales tax, goods and services taxes, gross receipts tax, or similar
tax imposed on us for any payments to us required under this Agreement, unless
the tax is measured by or involves the net income or our corporate status in a
state. If we pay any tax for you, you will promptly reimburse us the amount
18
paid. If there is any bona fide dispute as to liability for taxes assessed or
other indebtedness, you may contest the validity or the amount of the tax or
indebtedness in accordance with procedures of the taxing authority or applicable
law. However, you will not permit a tax sale or seizure by levy or execution or
similar writ or warrant, or attachment by a creditor, to occur against the
Premises or any assets used in your Healthy Bites Grill Franchise.
SECTION 4.17 CUSTOMER SURVEYS
You will present to customers any evaluation forms we require and will
participate and/or request your customers to participate in any marketing
surveys performed by or for us.
SECTION 4.18 INSPECTIONS
You will permit us and/or our representatives to enter your Premises or
office at any time during normal business hours upon reasonable notice, for
purposes of conducting inspections. You will cooperate fully with us and/or our
representatives in inspections by rendering assistance as they may reasonably
request and by permitting them, at their option, to observe how you are selling
the products and rendering the services, to monitor sales volume, to conduct a
physical inventory, to confer with your employees and customers and to remove
samples of any products, supplies and materials in amounts reasonably necessary
to return to our office for inspection and record-keeping. A portion of a sample
we take will be given to you for safekeeping in a tamper-proof container. The
inspections will be performed in a manner that minimizes interference with the
operation of your Healthy Bites Grill Franchise. We and/or you may videotape the
inspections. Upon notice from us, and without limiting our other rights under
this Agreement, you will take all steps necessary to correct immediately any
deficiencies detected during inspections, including immediately stopping use of
any equipment, advertising, materials, products, supplies or other items that do
not conform to our then-current requirements. If you fail or refuse to correct
any deficiency, we have the right, without any claim to the contrary by you, to
enter your Premises or office without being guilty of trespass or any other
tort, for the purposes of making or causing to be made all corrections as
required, at your expense, payable by you upon demand.
SECTION 4.19 NOTICES TO US
(a) You must notify us in writing and supply us copies of all relevant
documents within 5 days of any of the following events:
(i) The start of, any action, suit, implemented or other
proceeding against you or any of your employees that may have a
material adverse effect on the Franchise Business or the System;
(ii) Any communication by any governmental entity relating to
the conduct of your Healthy Bites Grill Franchise that indicates your
material non-compliance with any applicable law, rule or regulation; or
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(iii) The issuance of any order, writ, injunction, award or
decree of any court, agency or other governmental instrumentality
against you or any of your employees that may have a material adverse
effect on the Franchise Business or the System.
(d) You will provide us with any information we request, within 5 days
of request, about the progress and outcome of these events.
SECTION 4.20 OPERATIONAL SUGGESTIONS
You are encouraged to submit suggestions in writing to us for improving
elements of the System, including products, services, equipment, service format,
advertising and any other relevant matters, that we consider adopting or
modifying standards, specifications and procedures for the System. You agree
that any suggestions you make are our exclusive property. We have no obligation
to use any suggestions. If we implement any suggestion, we will negotiate with
you on a reasonable fee for your suggestions based on its value to the System.
You may not use any suggestions inconsistent with your obligations under this
Agreement without our written consent.
SECTION 4.21 RENOVATION AND UPGRADING
You will abide by our requirements for alterations, remodeling,
upgrading or other any improvements to your Healthy Bites Grill Franchise to
achieve the strategic marketing goals of the System. Generally, the standards to
comply satisfactorily will not exceed those applicable to new Franchise Units
and new Company Units. These requirements will not impose an undue economic
burden or occur more frequently than every 4 years. You will bear the entire
cost of changes or additions, for any changes in, or additions of, equipment,
furnishings, fixtures, lighting, carpeting, painting or the taking of other
actions we specify to satisfy our then-current standards for image, positioning,
marketing strategy, cleanliness or appearance but not to exceed total capital
expenditures of $25,000 every 4 years (the "Capital Expenditure Limitation").
SECTION 4.22 LIQUIDATED DAMAGES FOR SALE OF PROHIBITED
PRODUCTS OR SERVICES.
The Franchisee agrees that the offer to sell or the sale of
unauthorized or prohibited products and services will result in damages to the
Franchisor. The Franchisee agrees these damages will be measured as $1,000 for
each day of the prohibited offer or sale, payable to the Franchisor upon demand.
These damages are in addition to the Franchisor's other rights or remedies,
including the Franchisor's right strictly to enforce or terminate this Agreement
as provided in this Agreement and obtain injunctive relief, except to the extent
any other rights are excluded by law in light of this Section. The parties agree
that a precise calculation of the full extent of the damages that the Franchisor
will incur from the offer or sale of unauthorized products and services is
difficult to determine and the Franchisor and the Franchisee desire certainty in
this matter and agree that the liquidated damages are reasonable and are not a
penalty.
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SECTION 4.23 PUBLICITY
You grant us the right to freely use, without your consent, any
pictures, financial information, or biographical material relating to you or
your Healthy Bites Grill Franchise for use in promotional literature or in any
other way beneficial to the Healthy Bites Grill organization as a whole. You
will cooperate in securing photographs, including obtaining consents from any
persons appearing in photographs. If we publish anything you feel reflects
unfairly or inaccurately on your Healthy Bites Grill Franchise or yourself, we
will take all reasonable steps in our power to retract the material.
ARTICLE 5 - INTELLECTUAL PROPERTY
SECTION 5.1 OUR REPRESENTATIONS AS TO THE INTELLECTUAL PROPERTY
We represent to you that:
(a) Healthy Bites Grill, Inc. is the sole owner of the Intellectual
Property;
(b) Healthy Bites Grill, Inc. has licensed the Intellectual Property to
us for sublicensing to Healthy Bites Grill Franchisees; and
(c) We will take all steps necessary to preserve and protect the
ownership and validity of the Intellectual Property.
SECTION 5.2 YOUR USE OF THE INTELLECTUAL PROPERTY
You may use the Intellectual Property only in accordance with standards
and specifications we reasonably determine and implement on a System-wide basis.
You agree that:
(a) You will use the Intellectual Property only for the operation of
your Healthy Bites Grill Franchise at the Premises;
(b) You agree not to employ any of the Intellectual Property in signing
any contract, check, purchase agreement, negotiable instrument or legal
obligation, application for any license or permit, or in a manner that may
result in liability to us for any indebtedness or obligation of yours;
(c) You have no right to pre-package or sell pre-packaged food products
or beverages using the Intellectual Property unless approved in writing by us;
(d) You will use the Intellectual Property as the sole service ▇▇▇▇
identifications for your Healthy Bites Grill Franchise and will display
prominently the Intellectual Property on and/or with all materials we designate
and authorize, and in the manner we require;
(e) You will not use any of the Intellectual Property as security for
any obligation or indebtedness;
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(f) You will comply in filing and maintaining any required fictitious,
trade or assumed name registrations for the "Healthy Bites Grill" trade name,
and will sign all documents we or our counsel deem reasonably necessary to
obtain protection for the trademarks and our interest in the trademarks, for
example, ▇▇▇▇ ▇▇▇▇▇ d/b/a "Healthy Bites Grill" or ABC, Inc. d/b/a "Healthy
Bites Grill;"
(g) You will maintain a suitable sign or graphics package on the
Premises, on any pylon sign or other area identifying the Premises only as
"Healthy Bites Grill." The signage must conform in all respects to our
requirements except to the extent prohibited by local governmental restrictions
or landlord regulations;
(h) All materials including place mats, menus, matchbook covers, order
books, plastic or paper products and other supplies and packaging materials used
in the System will bear our Intellectual Property, as required by us;
(i) Without our prior written approval, you will not use any of our
trademarks as part of any e-mail address, Web Site, domain name or any other
electronic media (including use with any prefix, suffix or other modifying
words, term designs, or symbols), or in any other manner connected with a Web
Site, advertisements on a Web Site, or other similar electronic media; and
(j) You will exercise caution when using the Intellectual Property to
ensure that the Intellectual Property is not jeopardized in any manner.
SECTION 5.3 INFRINGEMENT BY YOU
You acknowledge that the use of the Intellectual Property outside the
scope of this Agreement, without our written consent, is an infringement of our
rights in the Intellectual Property. You agree that during the Term, and after
the expiration or termination of this Agreement, you will not, directly or
indirectly, commit an act of infringement or contest or aid in contesting the
validity of, or our right to, the Intellectual Property, or take any other
action in derogation of our rights.
SECTION 5.4 CLAIMS AGAINST THE INTELLECTUAL PROPERTY
If there is any claim of infringement, unfair competition or other
challenge to your right to use any Intellectual Property, or if you become aware
of any use of, or claims to, any Intellectual Property by persons other than us
or our franchisees, you will promptly (within 7 days) notify us in writing. You
will not communicate with anyone except us and our counsel on any infringement,
challenge or claim except under judicial process. We have sole discretion as to
whether we take any action on any infringement, challenge or claim, and the sole
right to control any litigation or other proceeding arising out of any
infringement of, challenge or claim to any Intellectual Property. You must sign
all documents, render all assistance, and do all acts that our attorneys deem
necessary or advisable in order to protect and maintain our interest in any
litigation or proceeding involving the Intellectual Property or otherwise to
protect and maintain our interests in the Intellectual Property.
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SECTION 5.5 YOUR INDEMNIFICATION.
We indemnify you against and will reimburse you for all damages you are
held liable in any proceeding from your use of any Intellectual Property in
accordance with this Agreement, but only if you: (a) have timely notified us of
the claim or proceeding in accordance with Section 5.4; (b) have otherwise
complied with this Agreement; (c) allow us sole control of the defense and
settlement of the action in accordance with Section 5.4; and (d) cooperate fully
with us and our counsel in the defense of the action.
SECTION 5.6 OUR RIGHT TO MODIFY THE INTELLECTUAL PROPERTY
(a) If we deem it advisable to modify or discontinue the use of any of
the Intellectual Property and/or use 1 or more additional or substitute names or
marks, including due to the rejection of any pending registration or revocation
of any existing registration of any of the Intellectual Property, due to the
rights of senior users, due to our negligence or due to a radical change in
direction of the System unilaterally caused or mandated by us, you are obligated
to do so at your expense within 30 days of our request. We will only be liable
to reimburse you for your reasonable direct printing and signage expenses in
modifying or discontinuing the use of the Intellectual Property and substituting
different Intellectual Property (these expenses will not include any
expenditures made by you to promote the modified or substitute Intellectual
Property).
(b) If the modification or discontinuation of the use of any of the
Intellectual Property is due to a continuing need to modernize the System, you
will be liable for all expenses in substituting the modified or new Intellectual
Property in your Healthy Bites Grill Franchise.
SECTION 5.7 OUR RESERVATION OF RIGHTS
You agree that the license of the Intellectual Property granted to you
has limited exclusivity and that, in addition to our right to use and grant
others the right to use the Intellectual Property outside the Protected
Territory, all rights not expressly granted in this Agreement to you concerning
the Intellectual Property or other matters are expressly reserved for us,
including the right to:
(a) Establish, develop, license or franchise other systems, different
from the System licensed by this Agreement within or outside the Protected
Territory, without offering or providing you any rights in, to, or under the
other systems; and
(b) Sell similar Healthy Bites Grill products and services authorized
for the Healthy Bites Grill Franchise using our trademarks such as "Hip
Pockets," Buffalo Burgers, and apple and key lime pies through dissimilar
channels of distribution including supermarkets, grocery stores, mail order,
Internet and institutional sales such as schools, hospitals, workplace
cafeterias, etc., and under any terms that Healthy Bites Grill deems appropriate
within or outside the Protected Territory, without offering or providing you the
right to participate.
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If we acquire a Competitive Business and units of the Competitive Business
encroach upon your Protected Territory, we will have 1 year from the date of
acquisition of the Competitive Business to sell the encroaching units without
being in default under this Agreement.
SECTION 5.8 OWNERSHIP; INUREMENT SOLELY TO US
You agree that: (a) you have no ownership or other rights in the
Intellectual Property, except as expressly granted in this Agreement; and (b) we
are the owner or authorized licensor of the Intellectual Property. You agree
that all good will associated with the Healthy Bites Grill Franchise inures
directly and exclusively to our benefit and is our sole and exclusive property
except through profit received from the operation or possible permitted sale of
your Healthy Bites Grill Franchise during the Term. You will not in any manner
prohibit, or do anything that would restrict, us or any existing or future
franchisee of a business either similar or dissimilar to the Franchise Business
from using the names or the Intellectual Property or from filing any trade name,
assumed name or fictitious name registration with respect to any business to be
conducted outside the Protected Territory or any business within the Protected
Territory that is permitted by this Agreement. If you secure in any jurisdiction
any rights to any of the Intellectual Property (or any other Intellectual
Property) not expressly granted under this Agreement, you will immediately
notify us and immediately assign to us all of your right, title and interest to
the Intellectual Property (or any other Intellectual Property).
ARTICLE 6 - THE MANUALS AND OTHER
CONFIDENTIAL INFORMATION
SECTION 6.1 IN GENERAL
To protect our reputation and good will and to maintain uniform
standards of operation under the Intellectual Property, you will conduct your
Healthy Bites Grill Franchise in accordance with the Manuals. The Manuals are
deemed an integral part of this Agreement with the same effect as if fully
stated in this Agreement.
SECTION 6.2 CONFIDENTIAL USE
(a) You will treat and maintain the Confidential Information as our
confidential trade secrets. The Manuals will be kept in a secure area within the
Premises. You will strictly limit access to the Confidential Information to your
employees, to the extent they have a "need to know" in order to perform their
jobs. You will report the theft, loss or destruction of the Manuals immediately
to us. Upon the theft, loss or destruction of the Manuals, we will loan to you a
replacement copy at a fee of $200 for each Manual. A partial loss or failure to
update any Manual is considered a complete loss.
(b) You agree that, during and after the Term, you, your owners and
employees will:
(i) Not use the Confidential Information in any other business
or capacity, including any derivative or spin-off of the Healthy Bites
Grill concept;
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(ii) Maintain the absolute secrecy and confidentiality of the
Confidential Information during and after the Term;
(iii) Not make unauthorized copies of any portion of the
Confidential Information disclosed or recorded in written or other
tangible form; and
(iv) Adopt and implement all procedures that we prescribe to
prevent unauthorized use or disclosure of, or access to, the
Confidential Information.
(c) All persons whom you permit to have access to the Manuals or any
other Confidential Information must first be required by you to sign our form of
confidentiality agreement set forth in the Manuals.
SECTION 6.3 PERIODIC REVISIONS
We may change the contents of the Manuals. You will comply with each
new or changed provision beginning on the 30th day (or any longer time as we
specify) after our written notice. Revisions to the Manuals will be based on
what we, in our sole discretion, deem is in the best interests of the System,
our interest and the interest of our Franchisees, including to promote quality,
enhance good will, increase efficiency, decrease administrative burdens, or
improve profitability subject to the Capital Expenditure Limitation stated in
Section 4.21. You agree that because complete and detailed uniformity under many
varying conditions may not be possible or practical, we reserve the right, in
our sole discretion and as we may deem in the best interests of all concerned in
any specific instance, to vary standards for any franchisee due to the
peculiarities of the particular site or circumstances, density of population,
business potential, population of trade area, existing business practices or any
condition that we deem important to the successful operation of that
franchisee's Healthy Bites Grill Franchise. You are not entitled to require us
to grant to you a similar variation under this Agreement. You will ensure that
your copy of the Manuals contains all updates you receive from us. In any
dispute as to the contents of the Manuals, the terms contained in our master
copy of each of the Manuals we maintain at our home office is controlling.
ARTICLE 7 - ADVERTISING
Recognizing the value of advertising, and the importance of the
standardization of advertising programs to the good will and public image of the
System, the parties agree:
SECTION 7.1 LOCAL ADVERTISING
(a) You must spend during each month during the Term, beginning on the
Opening Date, at least 3% of monthly Gross Revenues for Local Advertising. You
must submit to us, not later than October 31 of each year, a local store
marketing plan for the following year. We will approve, disapprove, or provide
comments and suggestions to the marketing plan within 30 days of receipt. You
will implement any changes to the proposed marketing plan requested by us.
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(b) You must submit to us for our approval, all materials to be used
for Local Advertising, unless they have been approved before or they consist
only of materials we provide. All materials containing the Intellectual Property
must include the applicable designation - service ▇▇▇▇ sm, trademark (TM),
registered (R) or copyright (C), or any other designation we specify. If you
have not received the written approval of materials submitted, the materials are
deemed disapproved. We may require you to withdraw and/or discontinue the use of
any promotional materials or advertising, even if previously approved, if in our
judgment, the materials or advertising may injure or be harmful to the System.
We must make this requirement in writing, and you have 5 days after receipt of
notice to withdraw and discontinue use of the materials or advertising, unless
otherwise agreed in writing. The submission of advertising to us for our
approval does not affect your right to determine the prices you sell your
products or services.
(c) Subject to any legal restrictions, you must include a sign
(supplied by us) in a conspicuous place within the Premises as well as on all
menus, containing substantially the following statement: "Healthy Bites Grill
Franchise Opportunities Available." All responses must be immediately referred
to us at (▇▇▇) ▇▇▇-▇▇▇▇ or any other number we designate and include our
corporate address. You have no authority to act for us in franchise sales.
(d) You must maintain a listing or listings in The Real Yellow Pages of
the telephone directories servicing the location of the Healthy Bites Grill
Franchise under the "Restaurants" section, in the form and size we specify in
the Manuals or otherwise in writing.
SECTION 7.2 GRAND OPENING ADVERTISING PROGRAM
We will implement a grand opening advertising and promotional program
for your Healthy Bites Grill Franchise sometime during the first 60 days after
the opening of your Healthy Bites Grill Franchise using the Grand Opening
Advertising Fee that will contain our standard opening activities and publicity,
and advice and guidance with regard to staffing, decoration, and operation of
your Healthy Bites Grill Franchise during the grand opening period.
SECTION 7.3 REGIONAL COOPERATIVE ADVERTISING
You agree that we have the right, in our discretion, to establish a
regional advertising cooperative in any ADI. You will immediately upon our
request become a member of the Cooperative for the ADI where some or all of the
Protected Territory is located. Your Healthy Bites Grill Franchise is not
required to be a member of more than 1 Cooperative. The Cooperative will be
governed in the manner required by us. The Cooperative has the right to require
each of its members to make contributions to the Cooperative, not to exceed 2%
of that member's monthly Gross Revenues. All contributions to the Cooperative
are credited against your Local Advertising requirement under Subsection 7.1(a).
The following provisions apply to each Cooperative:
(a) The Cooperative will be organized and governed in a form and
manner, and will begin operation on a date, approved in advance by us in
writing;
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(i) The Cooperative will be organized for the exclusive
purpose of administering advertising programs and developing, subject
to our approval, standardized promotional materials for use by the
members in Local Advertising in the Cooperative's ADI;
(ii) The Cooperative may adopt its own rules and procedures,
but the rules or procedures must be approved by us and will not
restrict nor expand your rights or obligations under this Agreement.
Except as otherwise provided in this Agreement, and subject to our
approval, any lawful action of the Cooperative at a meeting attended by
2/3s of the members, including assessments for Local Advertising, is
binding upon you if approved by 2/3s of the members present, with each
Healthy Bites Grill Franchise and Company Unit having 1 vote; however
no franchisee (or controlled group of franchisees) has more than 25% of
the vote in the Cooperative regardless of the number of Healthy Bites
Grill Franchises you own;
(iii) No advertising or promotional plans or materials may be
used by the Cooperative or furnished to its members without our written
approval. All plans and materials must be submitted to us in accordance
with the procedure stated in Section 7.1;
(iv) The Cooperative has the right to require its members to
make a contribution to the Cooperative in any amount the Cooperative
determines. This amount will be credited against your obligation for
Local Advertising as provided by Section 7.1; but you are not required
to contribute to the Cooperative in excess of 2% of your monthly Gross
Revenues;
(v) Each member will submit to the Cooperative, no later than
the 10th day of each month, for the preceding calendar month, his or
her contribution as provided in Subsection 7.3(a)(iv), together with
all other statements or reports required by us or by the Cooperative
with our written approval;
(vi) If an impasse occurs owing to the inability or failure of
the Cooperative members to resolve within 45 days any issue affecting
the establishment or effective functioning of the Cooperative, the
issue will, upon request of a member of the Cooperative, be submitted
to the Independent Association of Healthy Bites Grill Franchisees (or
us, if the association does not exist) for consideration and its
resolution of the issue will be final and binding on all members of the
Cooperative; and
(vii) The Cooperative will render quarterly reports to us of
its advertising expenditures.
(b) We, in our sole discretion, may grant to any franchisee an
exemption for any length of time from the requirement of membership in the
Cooperative, upon written request of the franchisee stating reasons supporting
the exemption. Our decision concerning the request for exemption is final. If an
exemption is granted to a franchisee, that franchisee must expend on Local
Advertising the full amount provided in Section 7.1.
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SECTION 7.4 SPECIAL ADVERTISING EXPENDITURES
If you fail to meet your requirements for Local Advertising during any
period specified in this Agreement, upon our request and in addition to our
rights and remedies for failure of you to make the proper expenditures, you will
contribute the amount that you failed to spend on Local Advertising directly to
the Marketing Fund.
SECTION 7.5 MARKETING FUND
(a) We have created a special fund called the "Healthy Bites Grill
Marketing Fund" (the "Marketing Fund"), into which the Advertising Contributions
are deposited for the general benefit of all Franchise Units and Company Units
who contribute to the Marketing Fund.
(b) We administer the Marketing Fund. The Marketing Fund is maintained
and operated by us and used to meet the costs of conducting regional and/or
national advertising and promotional activities (including the cost of
advertising campaigns, test marketing, marketing surveys, public relations
activities and marketing materials) we deem beneficial to the System. We are
authorized to charge the Marketing Fund fees at reasonable market rates for
advertising, marketing or promotional services actually provided by us, in lieu
of engaging third party agencies to provide these services. We will use none of
the funds to offer to sell, or sell, Healthy Bites Grill Franchises to
prospective franchisees.
(c) All expenditures are at our sole discretion. We may spend in any
calendar year more or less than the total Advertising Contributions to the
Marketing Fund in that year. We may borrow from us or other lenders on behalf of
the Marketing Fund to cover deficits of the Marketing Fund or cause the
Marketing Fund to invest any surplus for future use by the Marketing Fund.
(d) You authorize us to act as your sole agent to enter into contracts
with parties offering promotion, discount or other programs whereby you would
receive rebates or marketing allowances ("Rebates") from handling items offered
for sale by the parties. All Rebates will be paid to us and we will contribute
them to the Marketing Fund. By signing this Agreement, you assign all of your
right, title and interest in all Rebates to us, and authorize us to furnish any
proof of purchase evidence as may be required in accordance with the contracts.
All Rebates received by us from our Company-Units will also be contributed to
the Marketing Fund.
(e) We will retain our independent certified public accountants to
prepare an annual audit of the Marketing Fund, at the expense of the Marketing
Fund, and send a copy of the audit to you and all other Franchisees within 90
days after the end of each fiscal year.
SECTION 7.6 CONTENT AND CONCEPTS
(a) We retain sole discretion over all advertising, marketing and
public relations programs and activities financed by the Marketing Fund,
including the creative concepts, materials and endorsements used and the
geographic market, media placement and allocation. You agree that the Marketing
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Fund may be used to pay the costs of preparing and producing associated
materials and programs as we determine, including video, audio and written
advertising materials employing advertising agencies; sponsorship of sporting,
charitable or similar events, administering regional and multi-regional
advertising programs including purchasing direct mail and other media
advertising, and employing advertising agencies to assist with marketing
efforts; and supporting public relations, market research and other advertising,
promotional and marketing activities.
(b) You acknowledge that the Advertising Contributions are intended to
maximize general public recognition of and the acceptance of the Intellectual
Property for the benefit of the System as a whole. The MFC undertakes no
obligation, in administering the Marketing Fund, to make expenditures for you
that are equivalent or proportionate to your contribution, or to insure that any
particular franchisee or Company Unit benefits directly or pro rata from
advertising or promotion conducted with the Advertising Contributions.
SECTION 7.7 TERMINATION OF EXPENDITURES
We maintain the right to terminate the collection and disbursement of
the Advertising Contributions and the Marketing Fund. Upon termination, we will
disburse the remaining funds for the purposes authorized under this Agreement.
SECTION 7.8 ADVERTISING CONTRIBUTIONS BY US
Company Units are required to contribute to the Marketing Fund and any
Cooperative on the same basis, as you are required to contribute.
ARTICLE 8 - ACCOUNTING AND RECORDS
SECTION 8.1 RECORDS
You will maintain complete and accurate records for the operations of
your Healthy Bites Grill Franchise. Records must be segregated from all other
records that do not concern your Healthy Bites Grill Franchise. You must
preserve the records for at least 6 years from the dates of their preparation
(including after the termination, transfer or expiration of this Agreement).
SECTION 8.2 REPORTS AND STATEMENTS; CONFIDENTIALITY
(a) WEEKLY REPORTS. You will submit to us by the 5th day of each
succeeding week during the Term, in the form that we require, accurate records
reflecting all Gross Revenues of the previous week and all other information we
require. If you must collect and remit sales taxes, you must also supply to us
copies of your sales tax returns.
(b) ANNUAL FINANCIAL STATEMENTS. You must submit within 90 days of the
end of your elected fiscal year: a balance sheet as of your fiscal year end, and
annual statements of operations, owners' equity, and cash flows. These
statements must be prepared in accordance with Generally Accepted Accounting
Principles, but footnotes are not required. These statements must be accompanied
by an Accountant's Compilation Report, prepared in accordance with Statements on
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Standards for Accounting and Review services, and signed by a CPA acceptable to
us. In addition, the financial statements must be signed by you or by your
treasurer or chief financial officer attesting that the financial statements are
true and correct and fairly present your financial position at and for the times
indicated. You will also supply to us copies of your federal and state income
tax returns at the time these returns are filed with the appropriate tax
authorities. The financial statements and/or other periodic reports described
above must be prepared to segregate the income and related expenses of your
Healthy Bites Grill Franchise from those of any other business that you may
conduct.
(c) CONFIDENTIALITY. We agree to maintain the confidentiality of all
financial information we obtain about your operations, and will not disclose
this financial information to any third party who is not bound to maintain the
confidentiality of the information; provided however, that: (i) we may use the
information in preparing any earnings claims or other information required or
permitted by federal or state franchise law; and (ii) we may prepare a composite
list of financial performances by our franchisees for dissemination among the
franchisees, identifying your Gross Revenues and advertising expenditures. This
composite list will not include your identity nor will the information be
presented in such a manner that your identity can be easily ascertained.
SECTION 8.3 REVIEW AND AUDIT
We and our representatives have the right at all reasonable times to
examine and copy, at our expense, your records and inspect all cash control
devices and systems and conduct a physical inventory. We have the right to
access your P.O.S. System to determine, among other things, sales activity and
Gross Revenues. We also have the right, at any time, to have an independent
audit made of your records but no more frequently than 2 times a year, provided
you are not in default. If an inspection reveals that any financial information
reported to us (including Gross Revenues or payments owed to us) has been
understated in any report to us, you must immediately pay to us, upon demand,
the amount understated in addition to interest at the maximum rate permitted by
law beginning from the time the required payment was due. If any inspection
discloses an intentional understatement of 2% or more of Gross Revenues you
must, in addition, reimburse us for the expenses for the inspection (including
reasonable accounting and attorneys' fees and costs). In addition, we reserve
the right to require that all your future year-end financial statements be
audited by an independent certified public accountant reasonably acceptable to
us at your expense. These remedies are in addition to any other remedies we have
under this Agreement or under applicable law. If the audit discloses an
overpayment in any amount you paid to us, we will promptly pay you the amount of
the overpayment or offset the overpayment against any amounts owed to us.
SECTION 8.4 YOUR NAME, ADDRESS AND TELEPHONE NUMBER
Under federal and state franchise laws and other applicable laws, we
are required to disclose your name, address and telephone number (home address
and telephone number if you are no longer a franchisee) and you agree to the
disclosure of your name, address and telephone number. You must notify us of any
change in your name, address and telephone number within 10 days of the change.
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You release us and our officers, directors, stockholders, agents and legal
successors and assigns from all causes of action, suits, debts, covenants,
agreements, damages, judgments, claims and demands, in law or in equity, that
you ever had, now have, or that you later may have, from our disclosure of your
name, address and telephone number.
ARTICLE 9 - INSURANCE
SECTION 9.1 TYPES AND AMOUNTS OF COVERAGE
You must obtain and maintain the following insurance, at your expense,
as we require, in addition to any other insurance that may be required by
applicable law, your landlord, lender or otherwise. All policies must be written
by an insurance company reasonably satisfactory to us with a Best rating of "A"
or better and include the types and amounts of insurance as stated in the
Manuals. We may periodically adjust the amounts of coverage required under the
insurance policies and require different or additional kinds of insurance at any
time, including excess liability insurance, to reflect inflation, identification
of new risks, changes in law or standards of liability, higher damage awards, or
other relevant changes in circumstances, if the changes are required throughout
the System including any Company Units.
SECTION 9.2 EVIDENCE OF INSURANCE
At least: (i) 30 days before the date any construction is begun; (ii)
10 days from the Agreement Date if the Premises is constructed and presently
owned or leased by you; or (iii) 10 days after a lease of the Premises is signed
and you take occupancy, whichever is applicable, you must furnish to us a
certificate of insurance issued by an approved insurance company showing
compliance with these requirements and a paid receipt showing the policy number.
The certificate of insurance must include a statement by the insurer that the
policy will not be canceled, subject to nonrenewal or materially altered without
at least 30 days' written notice to us. Copies of all insurance policies and
proof of payment will be submitted promptly to us upon our request. You will
send to us current certificates of insurance and copies of all insurance
policies on an annual basis.
SECTION 9.3 REQUIREMENTS FOR CONSTRUCTION AND RENOVATION
For any construction, renovation, refurbishment, or remodeling of the
Premises, you must require the general contractor to maintain with an approved
insurer commercial general liability insurance (with comprehensive automobile
liability coverage for both owned and non-owned vehicles, builder's risk,
product liability, and independent contractor's coverage) for at least
$1,000,000, with you and us as additional named insureds, as their interests may
appear, together with workers' compensation and employer's liability insurance
required by law.
SECTION 9.4 OUR RIGHT TO PARTICIPATE IN CLAIMS PROCEDURE
Our insurer or we have the right to participate in discussions with
your insurance company or any claimant (with your insurance company) regarding
any claim. You agree to adopt our reasonable recommendations to your insurance
carrier regarding the settlement of any claims.
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SECTION 9.5 WAIVER OF SUBROGATION
The parties agree that, for any loss that is covered by insurance then
being carried by them, their respective insurance companies have no right of
subrogation against the other.
SECTION 9.6 EFFECT OF OUR INSURANCE
Your obligation to maintain the policies in the amounts required is not
limited by reason of any insurance we maintain, nor will our performance of your
obligations relieve you of liability under the indemnity provisions in this
Agreement.
SECTION 9.7 FAILURE TO MAINTAIN INSURANCE
If either party fails to maintain the insurance required by this
Agreement, the other party has the right and authority (without any obligation
to do so) immediately to procure the insurance and to charge the cost of the
insurance to the party obligated to maintain the insurance, plus interest at the
maximum rate permitted by law, these charges, together with a reasonable fee for
the party's expenses in so acting, the other party agrees to pay immediately
upon notice.
SECTION 9.8 GROUP INSURANCE
If we make available to you insurance coverage through group or master
policies we arrange including property and casualty, workers' compensation,
liability and health, life and disability insurance, you may participate, at
your expense, in this group insurance program.
ARTICLE 10 - INDEPENDENT ASSOCIATION OF HEALTHY BITES GRILL FRANCHISEES
SECTION 10.1 YOUR RIGHT TO JOIN THE INDEPENDENT ASSOCIATION
OF HEALTHY BITES GRILL FRANCHISEES
We recognize your right and the other franchisees' right to freely
associate. You and the other franchisees have the right to create an independent
franchise association to be known as the "Independent Association of Healthy
Bites Grill Franchisees" (the "Franchisee Association"). The decision to join
the Franchisee Association is solely your decision.
SECTION 10.2 OUR DEALINGS WITH THE FRANCHISEE ASSOCIATION.
Once at least 10 franchisees, representing at least 51% of the total
franchisees within the System, are members of the Franchisee Association, we
will recognize the Franchisee Association as the official body representing the
franchisees as a group. Any material changes to the renewal form of this
Agreement must be collectively negotiated with the Franchisee Association with
both parties agreeing to negotiate in good faith.
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ARTICLE 11 - TRANSFER OF INTEREST
SECTION 11.1 TRANSFER BY US
We have the right to assign this Agreement to any person without your
consent provided the transfer is part of a merger or sale of the entire System
and the transferee has sufficient business experience, aptitude and financial
resources to competently assume our obligations under this Agreement.
SECTION 11.2 TRANSFER BY YOU
(a) PERSONAL RIGHTS. You agree that, unless otherwise expressly
permitted by this ARTICLE, you will not sell, assign, transfer, convey or give
voluntarily, involuntarily, directly or indirectly, by operation of law or
otherwise (collectively "transfer") any direct or indirect interest in this
Agreement, the Franchisee, or a major portion of the Business Assets without our
written consent. Any sale of all or a substantial portion of the assets must
include an assignment and assumption of this Agreement. However, our written
consent is not required for: (i) a transfer of less than a 5% interest in a
publicly held corporation; or (ii) a transfer of all or any part of any interest
in you to one of your other original shareholders or partners. A transfer of 50%
or more of the voting or ownership interests in your corporation, partnership or
limited liability company, individually or in the aggregate, directly or
indirectly, is, for all purposes of this Agreement, considered a transfer of an
interest in this Agreement by you. Any purported transfer by you, by operation
of law or otherwise in violation of this Agreement, is void and is an Event of
Default on your part.
(b) TRANSFER TO YOUR CORPORATION. This Agreement may be assigned to a
corporation where you own a majority of the issued and outstanding capital stock
if:
(i) You or a Manager approved by us actively manages the
corporation and continues to devote his or her best efforts and full
and exclusive time to the day-to-day operation of your Healthy Bites
Grill Franchise. You must advise us of the name of the Manager and the
Manager must meet our standards including training;
(ii) The corporation cannot use the trade name "Healthy Bites
Grill" in any derivative or form in the corporate name;
(iii) An authorized officer of the corporation signs a
document in a form we approve, agreeing to become a party bound by all
the provisions of this Agreement; and
(iv) All stock certificates representing shares bear a legend
that they are subject to this Agreement.
You understand that, if you transfer this Agreement to your corporation, you
remain personally liable for all the monetary and non-monetary obligations under
this Agreement.
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(c) NO SUBFRANCHISING RIGHTS. You have no right to grant a
subfranchise.
(d) NO ENCUMBRANCE OF FRANCHISE RIGHT AND CONTROLLING INTEREST. While
you may encumber the assets comprising your Franchise Business subject to
Section 3.6, you may not encumber your interest in this Agreement nor encumber a
controlling interest in a business entity if this Agreement is assigned to a
business entity. You agree that your rights under this Agreement and any voting
or ownership interest of more than 50% in you (or any Franchise Owner) may not
be pledged, mortgaged, hypothecated, given as security for an obligation or in
any manner encumbered. Any attempted encumbrance is void and is an Event of
Default on your part.
(e) "FOR SALE" RESTRICTIONS. You will not permit to be placed upon the
Premises a "Business For Sale" or "For Sale" sign, or any sign of a similar
nature or purpose, nor in any manner use the Intellectual Property to advertise
the sale of your Healthy Bites Grill Franchise or the sale or lease of the
Premises. These prohibitions apply to any activities under a listing agreement
that you may enter into with a real estate or business broker.
(f) PERMITTED TRANSFER. We will consent to a transfer of this Agreement
if the following requirements are satisfied or waived by us in our sole
discretion:
(i) We have not exercised our right of first purchase as
provided in Section 11.5;
(ii) You are not in default of any term of this Agreement or
any other agreement between you and us or our Affiliates;
(iii) The transferee interviews at our principal office
without expense to us and demonstrates to our reasonable satisfaction
that the transferee has the business and personal skills, reputation
and financial capacity we require;
(iv) The transferee satisfactorily completes our application
procedures for new franchisees;
(v) The transferee demonstrates to our reasonable satisfaction
that he or she has properly assumed your obligations under this
Agreement and will be able to comply with all of his or her obligations
to the Healthy Bites Grill Franchise, including an assumption of the
lease, if the Premises is leased. You will remain liable for all
obligations to us under this Agreement before the effective date of the
transfer and will sign all instruments we reasonably request to
evidence these liabilities;
(vi) At the transferee's expense, the transferee or
transferee's Manager completes Initial Training then in effect for new
franchisees upon all terms as we reasonably require; and
(vii) You will reimburse us for our direct out-of-pocket costs
in approving the transfer and in training the transferee. If the
transferee is a wholly owned corporation, spouse or child of the
transferor, or another Franchisee within the System, no transfer fee
will be charged.
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No disapproval of the transferee for failure to satisfy the transfer
conditions described in this Subsection, or of any other condition to transfer
stated in this Agreement that causes any liability of us to the transferee.
Our consent to a transfer is not a waiver of any claims we may have
against you, nor is it a waiver of our right to demand the transferee's exact
compliance with this Agreement. No transfer (even if we approve) relieves you of
liability for your conduct before the transfer, including conduct in breach of
this Agreement.
SECTION 11.3 TRANSFER UPON DIVORCE OR PARTNERSHIP DISSOLUTION
If this Agreement is in the name of two persons who are husband and
wife or two or more persons who are partners as franchisees, this Section
describes the policies to be applied upon divorce or dissolution of the
partnership. During the period when a divorce or partnership dissolution action
is pending, you must adopt one of the following methods of operation:
(a) If one of the parties is willing to relinquish his or her right and
interest in the Franchise, thereby leaving his or her spouse or partner(s) to
carry on the Franchise Business, he or she may do so by assigning the interest
to the spouse or to his or her partner(s) provided the remaining spouse or
partner has successfully completed Initial Training.
(b) If the parties to a divorce or dissolution action agree that,
despite their difficulties, they can continue to operate the Franchise Business
jointly on a "business-as-usual" basis during the proceeding, they may do so.
(c) If the parties in a divorce action or in a partnership dissolution
are not agreeable to operate under alternates (a) or (b) then they must make
arrangements to have their Franchise Business operated by a third party as a
Manager until the divorce or dissolution has been completed. The Manager must be
approved by us and have satisfactorily completed Initial Training.
(d) Divorcing parties may, after a final order or judgment, continue to
operate their Franchise Business in the form of a partnership or other business
entity even though they are no longer husband and wife. In such a case, however,
they must enter a formal agreement, which defines their respective rights and
obligations, file a signed copy with us, assign this Agreement to the new
entity, and comply with all other requirements for establishing the Franchise
Business as a partnership or other business entity.
SECTION 11.4 TRANSFER UPON DEATH OR DISABILITY
(a) If any Franchise Owner becomes disabled from any cause and is
unable to perform his or her obligations under this Agreement for a continuous
period in excess of 3 consecutive months, or on the death of the Franchise
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Owner, you (or your legal representative) will within 30 days after the 3 months
of disability or death, provide and maintain a replacement satisfactory to us to
perform the obligations. If a replacement is not provided or maintained as
required, we may hire and maintain your replacement. You will compensate the
replacement for his or her services at the rate we establish in our reasonable
discretion. For all purposes of this Agreement, any period of disability that is
interrupted by a return to active work and proper performance of duties under
this Agreement for 14 days or more is deemed continuous.
(b) If: (i) any individual who holds a 50% or greater voting or
ownership interest in the Franchisee (or in any Franchise Owner); or (ii) you
die during the Term, your interests in the Franchisee (or in any Franchise
Owner) or in this Agreement are required to be transferred within 12 months of
the death to an approved transferee in accordance with the terms of this
ARTICLE.
SECTION 11.5 OUR RIGHT OF FIRST PURCHASE
(a) If during the Term you or any person who owns at least a 50%
ownership or voting interest in a corporation or other entity that owns your
Healthy Bites Grill Franchise (or in any entity with an ownership interest in a
corporation or other entity that owns your Healthy Bites Grill Franchise) desire
to sell your Healthy Bites Grill Franchise, (whether as a sale of assets or a
sale of stock or other equity interests), you must first approach us with a
specific price and terms and offer us the opportunity to purchase your Healthy
Bites Grill Franchise. We have 30 days to accept or reject your offer at the
designated price. If we reject your offer and you and we cannot otherwise reach
agreement within the 30-day period, you then have the right to list the Healthy
Bites Grill Franchise and offer it for sale to third parties (either in or
outside the System) at or above the designated price and on terms no less
favorable than offered to us, for a period of 120 days, with a closing to take
place within 60 days after the date of the purchase agreement. If a third party
purchases your Healthy Bites Grill Franchise at a price or terms equal or more
favorable (higher) to you than offered to and rejected by us; the sale can
proceed, provided you and the third party comply with the terms of Subsection
11.2(f).
(b) If you decide within the 120-day period to offer your Healthy Bites
Grill Franchise or accept an offer from a third party (the "Offeror") at a lower
price and/or terms less favorable to you (the "Offer") than offered to and
rejected by us, you must then give us a right of first refusal.
(c) If we give notice of acceptance of the Offer, then you will sell
the Healthy Bites Grill Franchise to us and we will purchase the Healthy Bites
Grill Franchise for the consideration and upon the terms stated in the Offer.
Our creditworthiness is deemed at least equal to the creditworthiness of any
proposed purchaser. If we are, or our Affiliate is, a public company at that
time having shares traded on a national securities exchange, the Offeror must
accept a quantity of stock at our then-current value or our, or our Affiliate's,
registered shares in lieu of cash or Unique Consideration.
(d) If an independent third party's written Offer (and the Offeror's
corresponding offer to us) provides for the purchaser's payment of a Unique
Consideration that is of a nature that cannot reasonably be duplicated by us, we
may, in our notice of exercise, in lieu of the Unique Consideration, substitute
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cash or stock (if a public company with registered shares) consideration
determined by mutual agreement of you and us within 45 days after the Offer is
made or, failing agreement, by an independent appraiser selected by us.
(e) If the proposed sale includes assets of the Offeror that are not
part of the operation of the Healthy Bites Grill Franchise, we may, at our
option, elect to purchase only the assets that are part of the operation of the
Healthy Bites Grill Franchise and an equitable purchase price will be determined
in our reasonable discretion and allocated to each asset included in the sale.
(f) We will purchase your Healthy Bites Grill Franchise subject to all
customary warranties given by a seller of the assets of a business or voting
stock of a corporation, as applicable, including warranties as to ownership,
condition and title to the shares and/or assets, liens and encumbrances on the
shares and/or assets, validity of contracts and liabilities of the corporation
whose stock is purchased and affecting the assets, contingent or otherwise.
(g) Unless otherwise agreed by you and us, the closing of the purchase
of your Healthy Bites Grill Franchise will be held at our then principal office
or other location designated by us, no later than the 60th day after the Offer
is delivered to us. The closing of any purchase where a cash or stock
consideration is determined in accordance with Subsection 11.5(d) will be held
on the 15th day after the cash or stock consideration is finally determined. At
any closing, the Offeror must deliver to us an assignment and other documents
reasonably requested by us representing a transfer of ownership of your Healthy
Bites Grill Franchise free and clear of all liens, claims, pledges, options,
restrictions, charges and encumbrances, in proper form for transfer and with
evidence of payment by the Offeror of all applicable transfer taxes. We will
simultaneously make payment of any cash consideration for your Healthy Bites
Grill Franchise by a cashier's check drawn on a bank or thrift doing business in
the county of our principal place of business or payment by the issuance of our
or our Affiliate's registered shares, after set off against the amount due to
the Offeror for all amounts you owe us, if any. The remaining terms of the
purchase and sale will be stated in the Offer.
(h) If we do not accept the Offer, you are free, for 90 days after we
have elected not to exercise our option, to sell your Healthy Bites Grill
Franchise to the prospective purchaser for the consideration and upon the terms
stated in the prospective purchaser written Offer, subject to full compliance
with all terms of transfer required under this Agreement, including those in
Section 11.2. Before any sale of the shares to a prospective purchaser, there
must be delivered by the prospective purchaser an acknowledgment that the shares
purchased by the prospective purchaser is subject to the terms of this Agreement
and that the prospective purchaser agrees to be bound to the terms of this
Section on transferring the shares, in the same manner as the Offeror. If you do
not sell your Healthy Bites Grill Franchise within the 90-day period, then any
transfer by you of your Healthy Bites Grill Franchise is again subject to the
restrictions stated in this Agreement.
(i) If a proposed transferee is to a corporation wholly owned by you or
to your spouse or child, we will not have any right of first purchase.
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(j) All transferees are subject to all of the restrictions on transfer
of ownership imposed on you under this Agreement.
ARTICLE 12 - DEFAULT AND TERMINATION
SECTION 12.1 TERMINATION BY YOU
If you have substantially complied with this Agreement and we
materially breach this Agreement, you have the right to terminate this Agreement
if we do not cure the breach within 30 days after we receive a written notice of
default from you. However, if the breach cannot reasonably be cured within 30
days, you have the right to terminate this Agreement if, after our receipt of a
written notice of default from you, we do not within 30 days undertake and
continue efforts to cure the breach until completion. You may also terminate
this Agreement upon the mutual written agreement with us. Any termination of
this Agreement by you other than as stated above, is a wrongful termination by
you.
SECTION 12.2 TERMINATION BY US - WITHOUT NOTICE
(a) Subject to applicable law, this Agreement automatically terminates
without notice to you or your having an opportunity to cure on the date of the
occurrence of any of the following Events of Default: if you damage the Healthy
Bites Grill System through violation of federal, state or local environmental
laws; if you make a general assignment for the benefit of creditors; a petition
in bankruptcy is filed by you or a petition is filed against or consented to by
you and the petition is not dismissed within 45 days; you are adjudicated as
bankrupt; a ▇▇▇▇ in equity or other proceeding for the appointment of your
receiver or other custodian for your business or assets is filed and consented
to you; a receiver or other custodian (permanent or temporary) of your business
or assets is appointed by any court of competent jurisdiction; proceedings for a
composition with creditors under federal or any state law is begun by or against
you; a final judgment in excess of $25,000 remains unsatisfied or of record for
30 days or longer (unless a supersedeas bond is filed); execution is levied
against your operation or property, or suit to foreclose any lien or mortgage
against the Premises or your assets is begun against you and not dismissed
within 45 days; or a substantial portion of your real or personal property used
in your Healthy Bites Grill Franchise is sold after levy by any sheriff, marshal
or constable.
(b) You will notify us within 3 days of the occurrence of any of the
events described in Subsection 12.2(a).
SECTION 12.3 TERMINATION BY US - AFTER NOTICE
We may, at our option, terminate all rights granted to you under this
Agreement, without affording you any opportunity to cure the default, effective
immediately upon notice to you, upon the occurrence of any of the following
Events of Default:
(a) If you cease to do business at the Premises for more than 14 days
in any calendar year or for more than 7 consecutive days, or lose the right to
possession of the Premises after the expiration of all redemption periods and
38
have not satisfied the provisions of Section 1.4, if applicable, or otherwise
forfeit the right to do or transact business in the jurisdiction where your
Healthy Bites Grill Franchise is located;
(b) If a serious or imminent threat or danger to public health or
safety results from the construction, maintenance or operation of your Healthy
Bites Grill Franchise and the threat or danger remains uncorrected for 5 days
after your receipt of written notice from a governmental authority or us. If a
cure cannot be reasonably completed in this time, then all reasonable steps to
cure must begin within this time, but a cure must be completed promptly within
30 days after receipt of written notice;
(c) If you fail or refuse to comply with any mandatory specification,
standard or operating procedure required by us in this Agreement, in the Manuals
or otherwise in writing, on the cleanliness or sanitation of your Healthy Bites
Grill Franchise or violates any health, safety, or sanitation law, ordinance, or
regulation and does not correct the failure or refusal within 3 days after
written notice from us or a governmental authority. If a cure cannot be
reasonably completed in this time, then all reasonable steps to cure must begin
within this time, but a cure must be completed within 30 days after receipt of
written notice;
(d) If you, or your officer, director, owner or managerial employee are
convicted of a felony, a crime of moral turpitude or any other crime or offense
that we reasonably believe is likely to have a material adverse effect on the
System, the Intellectual Property, the good will associated with the
Intellectual Property, or our interest in any of the Intellectual Property,
unless you immediately and legally terminate the individual as your officer,
director, owner and employee;
(e) If you deny us the right to inspect your Healthy Bites Grill
Franchise or to audit your records;
(f) If you engage in conduct that is deleterious to or reflects
unfavorably on you or the System in that the conduct exhibits a reckless
disregard for the physical or mental well being of employees, customers, our
representatives or the public at large, including battery, assault, sexual
harassment or discrimination, racial harassment or discrimination, alcohol or
drug abuse or other forms of threatening, outrageous or unacceptable behavior as
determined in our sole discretion;
(g) If you, contrary to this Agreement, purport to encumber or transfer
any rights or obligations under this Agreement (including transfers of any
interest in a corporation or other entity which owns your Healthy Bites Grill
Franchise), without our written consent;
(h) If any breach occurs under Sections 6.2 or 14.1 concerning
confidentiality and non-competition covenants;
(i) If you knowingly maintain false records, or knowingly submit any
false reports to us; or
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(j) If you misuse or make any unauthorized use of the Intellectual
Property or otherwise materially impairs the good will associated with the
Intellectual Property or our rights in the Intellectual Property.
SECTION 12.4 TERMINATION BY US - AFTER NOTICE AND RIGHT TO CURE
Except as otherwise provided above, you have 30 days after delivery
from us of a written Notice of Default specifying the nature of the default to
remedy any default and provide evidence of cure satisfactory to us. If any
default is not cured within that time, or any longer time as applicable law may
require, an Event of Default has occurred by you and all your rights under this
Agreement terminate without additional notice to you effective immediately upon
the expiration of the 30 days or any longer time as applicable law may require.
In addition to the Events of Default specified in Sections 12.2 and 12.3, an
Event of Default by you occurs if you fail to comply with any of the
requirements imposed by this Agreement, as it may be revised or supplemented by
the Manuals, or to carry out this Agreement in good faith. You have the burden
of proving that you properly and timely cured any default, to the extent a cure
is permitted under this Agreement.
ARTICLE 13 - YOUR OBLIGATIONS UPON TERMINATION
DUE TO YOUR DEFAULT OR ON NONRENEWAL
Upon the termination of this Agreement due to your default or upon
expiration and nonrenewal of the Agreement, the Sections of this ARTICLE apply
to the rights and obligations of the parties.
SECTION 13.1 CEASE OPERATIONS
You will immediately cease to operate your Healthy Bites Grill
Franchise. You will not, directly or indirectly, use any of the Intellectual
Property nor represent yourself as a present or former franchisee of us or in
any other way affiliate yourself with the System. You will immediately cease
using all stationery, signage and other materials containing the Intellectual
Property. You will also immediately cease using all telephone numbers for the
Healthy Bites Grill Franchise used at any time before termination or expiration,
and empower us to take whatever actions are necessary to comply with this
Section. You must cease using the URL and Internet addresses used for your
business and immediately cause the URL and Internet addresses to be transferred
to us.
SECTION 13.2 PAYMENT OF OUTSTANDING AMOUNTS
We may retain all fees paid under this Agreement except for refunds
expressly required in this Agreement. In addition, within 10 days after the
effective date of the termination or any later dates as we determine that
amounts are due to us, you must pay to us all Royalty Fees, Advertising
Contributions, amounts owed for products or services you purchased from us or
our Affiliates, and all other amounts owed to us, our Affiliates and your other
creditors that are then unpaid.
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SECTION 13.3 DISCONTINUANCE OF USE OF TRADE NAME
You will cancel any fictitious, trade or assumed name registration that
contains our trademark, trade name or service ▇▇▇▇ or colorable imitation of our
trademark, trade name or service ▇▇▇▇. You will furnish us with evidence of
compliance with this obligation to cancel the registration within 30 days after
termination or expiration of this Agreement. If you fail to cancel, you appoint
us as your attorney-in-fact to do so.
SECTION 13.4 OUR OPTION TO PURCHASE YOUR HEALTHY BITES GRILL FRANCHISE
(a) We have the option, exercisable by giving written notice within 30
days from the date of termination, to purchase from you all the assets used in
your Healthy Bites Grill Franchise. As used in this Section, "assets" means
leasehold improvements, equipment, vehicles, furnishings, fixtures, signs,
inventory (non-perishable products, materials and supplies) and the lease or
sublease for the Premises. We have the unrestricted right to assign this option
to purchase. We or our assignee are entitled to all customary warranties given
by a seller of a business, including: (i) ownership, condition and title to the
assets; (ii) the absence of liens and encumbrances on the assets; and (iii)
validity of contracts and liabilities, inuring to us or affecting the assets,
contingent or otherwise. The purchase price for the assets of your Healthy Bites
Grill Franchise is their fair market value, determined as of the effective date
of purchase in a manner consistent with reasonable depreciation of your
leasehold improvements and the equipment, vehicles, furnishings, fixtures, signs
and inventory of your Healthy Bites Grill Franchise. The purchase price will
take into account the termination of the Healthy Bites Grill Franchise granted
under this Agreement and will not contain any factor or increment for any
trademark, service ▇▇▇▇ or other commercial symbol used in the operation of your
Healthy Bites Grill Franchise.
(b) If the parties cannot agree on the fair market value of the assets
within 30 days after your receipt of our notice exercising our option, the fair
market value will be determined by an independent appraiser the parties
selected. If they are unable to agree on an independent appraiser within 10 days
after expiration of the 30-day period, the parties will each select one
independent appraiser, who will select a third independent appraiser (the "Third
Appraiser"), and the fair market value will be the value determined by the Third
Appraiser. If either party fails to select an appraiser and give notice to the
other of the identity of the appraiser within the 10-day period, the appraiser
selected by the other party will select the Third Appraiser. The Third Appraiser
will be given full access to your Healthy Bites Grill Franchise, the Premises
and your records during customary business hours to conduct the appraisal and
must value the leasehold improvements, equipment, furnishings, fixtures, signs
and inventory in accordance with the standards of this Section. The Third
Appraiser's costs will be paid equally by the parties.
(c) The purchase price will be paid in cash equivalent, or our
marketable securities or the marketable securities of an Affiliate of equivalent
value at the closing of the purchase, which will take place no later than 90
days after your receipt of notice of exercise of the option to purchase. At the
closing, you will deliver instruments transferring to us or our assignee: (i)
good and merchantable title to the assets purchased, free and clear of all liens
and encumbrances (other than liens and security interests acceptable to us or
41
our assignee), with all your sales and other transfer taxes paid; (ii) all
licenses and permits of your Healthy Bites Grill Franchise that may be assigned
or transferred; and (iii) the lease or sublease for the Premises. If you cannot
deliver clear title to all of the purchased assets, or if there are other
unresolved issues, the closing of the sale will be accomplished through an
escrow. The parties will comply with all applicable legal requirements,
including the bulk sales provisions of the Uniform Commercial Code of the state
where your Healthy Bites Grill Franchise is located, if any, and the bulk sales
provisions of any applicable tax laws and regulations. You will, before or
simultaneously with the closing of the purchase, pay all tax liabilities
incurred in the operation of your Healthy Bites Grill Franchise. We have the
right to set off against and reduce the purchase price by all amounts you owe to
us, and the amount of any encumbrances or liens against the assets or any
obligations we assume.
(d) If our assignee or we exercise the option to purchase, pending the
closing of the purchase, we have the right to appoint a manager to maintain the
operation of your Healthy Bites Grill Franchise under Section 2.14.
Alternatively, we may require you to close your Healthy Bites Grill Franchise
during this time period without removing any assets. You will maintain in force
all insurance policies required in this Agreement until the date of closing. If
the Premises is leased, we agree to use reasonable efforts to effect a
termination of the existing lease for the Premises and enter into a new lease on
reasonable terms with the landlord. If we are unable to enter into a new lease
and your rights under the existing lease are assigned to us or we sublease the
Premises from you, we indemnify you from any ongoing liability under the lease
that occurs after the date we assume possession of the Premises. If you own the
Premises, upon purchase of the assets, you, at your option, may enter into a new
lease with us under a standard lease on terms comparable to those for similar
commercial properties in the area that are then being leased, for a term of at
least 10 years and for a rental equal to the fair market rental value of the
Premises. If the parties cannot agree on the fair market rental value of the
Premises, then the rental value will be determined by the Appraiser (selected in
the manner described above).
SECTION 13.5 DISTINGUISHING OPERATIONS
(a) If we do not exercise our option under Section 13.4 and you desire
to remain in possession of the Premises and operate a noncompetitive business,
you must make all modifications or alterations to the Premises immediately upon
termination of this Agreement as necessary to distinguish the appearance of the
Premises from that of other Healthy Bites Grill Franchisees operating under the
System. You will make all specific additional changes to the Premises as we
reasonably request for that purpose including a change of use of the Premises.
You agree to refrain from taking any direct or indirect action to reduce the
good will of your customers or potential customers toward us, our franchisees or
any other aspect of the System.
(b) You must remove immediately all identifying architectural
superstructure and signage on or about the Premises bearing the name or logos of
Healthy Bites Grill (or any name or logo similar to Healthy Bites Grill), in the
manner we specify. You will hold all property belonging to us for delivery to
us, at our expense, upon request. Any signage that you are unable to remove
within 1 Business Day of the termination of this Agreement must be completely
covered by you until the time of its removal. If you fail or refuse to comply
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with this obligation, we have the right to enter upon the Premises, without
being guilty of trespass or any other tort for the purpose of removing the
signage and storing it at another location, at a reasonable expense (for signage
not owned by us) payable by you on demand.
(c) Until all modifications and alterations required by this Section
are completed, you must: (i) maintain a conspicuous sign at the Premises in a
form specified by us stating that your business is no longer associated with our
System; and (ii) advise all customers or prospective customers telephoning your
business that the business is no longer associated with our System.
(d) If you fail or refuse to comply with the requirements of this
Section, we have the right to enter upon the Premises for the purpose of making
or causing to be made, all changes as may be required, at a reasonable expense
(this expense you must pay upon demand) and at your sole risk and expense,
without responsibility for any actual or consequential damages to your property
or others, and without liability for trespass or other tort or criminal act. You
agree that your failure to make these alterations will cause irreparable injury
to us.
SECTION 13.6 UNFAIR COMPETITION
You agree, if you continue to operate or later begin to operate any
other business, not to use any reproduction or colorable imitation of the
Intellectual Property, Trade Dress, methods of operation or undertake any other
conduct either in any other business or the promotion of any other business,
that is likely to cause confusion, mistake or deception, or that is likely to
dilute our rights in and to the Intellectual Property. In addition, you agree
not to utilize any designation of origin or description or representation that
falsely suggests or represents an association or connection with us, or any of
our Affiliates. This Section does not relieve, directly or indirectly, your
obligations under ARTICLE 14.
SECTION 13.7 RETURN OF MATERIALS
You will immediately deliver to us all tangible Intellectual Property
in your possession or control, and all copies and any other forms of
reproductions of these materials. You agree that all these materials are our
exclusive property.
SECTION 13.8 OUR PURCHASE RIGHTS OF ITEMS BEARING INTELLECTUAL PROPERTY
Even if we do not exercise our option under Section 13.4, we have the
option (but not the obligation) to exercise by notice of intent to do so within
30 days after termination to purchase any items bearing the Intellectual
Property owned by you including signs, advertising materials, supplies,
inventory or other items at a price equal to the lesser of your cost or fair
market value. If the parties cannot agree on fair market value within a
reasonable time, we will designate an independent appraiser whose cost will be
paid equally by the parties, and the appraiser's determination will be binding.
The fair market value of tangible assets will be determined without reference to
good will, going concern value, or other intangible assets. If we elect to
exercise our option to purchase, we will have the right to set off all amounts
due from you under this Agreement, and 1/2 the cost of the appraisal, if any,
against any payment to you. If you fail to sign and deliver the necessary
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documents to transfer good title to your assets to us or our nominee, we are
entitled to apply to any court of competent jurisdiction for a mandatory
injunction to compel you to comply with the rights granted in this Agreement.
All expenses, including our reasonable attorneys' fees, you will pay to us and
may be credited by us to the agreed purchase price.
SECTION 13.9 LIQUIDATED DAMAGES FOR PREMATURE TERMINATION
If termination is the result of your default, you will pay to us a lump
sum payment (as liquidated damages for causing the premature termination of this
Agreement and not as a penalty) equal to the total of all Royalty Fees for: (i)
the 36 calendar months of operation of your Healthy Bites Grill Franchise
preceding your default; (ii) the period of time your Healthy Bites Grill
Franchise has been in operation preceding the notice, if less than 36 calendar
months, projected on a 36-calendar month basis; or (iii) any shorter period as
equals the unexpired Term at the time of termination. The parties agree that a
precise calculation of the full extent of the damages that we will incur on
termination of this Agreement as a result of your default is difficult and the
parties desire certainty in this matter in the extreme, and agree that the lump
sum payment provided under this Section is reasonable in light of the damages
for premature termination that we will incur in this event. This payment is not
exclusive of any other remedies that we have including attorney's fees and
costs.
ARTICLE 14 - YOUR INDEPENDENT COVENANTS
SECTION 14.1 DIVERSION OF BUSINESS; COMPETITION AND
INTERFERENCE WITH US.
(A) COVENANT NOT TO COMPETE. You agree that we would be unable to protect the
Confidential Information against unauthorized use or disclosure and would be
unable to encourage a free exchange of ideas and information among the
franchisees within the System if franchisees were permitted to hold interests in
any Competitive Business.
(i) IN-TERM. You covenant that during the Term, except as we
otherwise approve in writing, you will not, directly or indirectly:
A. Solicit or otherwise attempt to induce, by
combining or conspiring with, or attempting to do so, or in
any other manner influence any Business Associate to terminate
or modify his, her or its business relationship with us or to
compete against us;
B. As owner, officer, director, employee, agent,
lender, broker, consultant, franchisee or in any other
capacity be connected with the ownership, management,
operation, control or conduct of a Competitive Business (this
restriction will not apply to a 5% or less beneficial interest
in a publicly-held corporation); or
C. Interfere with, disturb, disrupt, decrease or
otherwise jeopardize our business or the business of any of
our franchisees.
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(ii) POST-TERM. You also covenant that, for 24 months after
the termination of this Agreement due to your default, for 24 months
after the expiration and non-renewal of this Agreement, or for 24
months after you transfer your Healthy Bites Grill Franchise, except as
we otherwise approve in writing, you will not, directly or indirectly:
A. Solicit or otherwise attempt to induce, by
combining or conspiring with, or attempting to do so, or in
any other manner influence any Business Associate to terminate
or modify his, her or its business relationship with us or to
compete against us;
B As owner, officer, director, employee, agent,
lender, broker, consultant, franchisee or in any other
capacity be connected with the ownership, management,
operation, control or conduct of a Competitive Business within
the Protected Territory 10 miles of the Premises or within 10
miles of any Healthy Bites Grill Franchise or Company-Owned
Unit then in operation; or
C. Interfere with, disturb, disrupt, decrease or
otherwise jeopardize our business or the business of any of
our franchisees.
If you violate this Subsection and compete with us, we have the right to require
that all sales made by the Competitive Business be reported to us. You will also
pay to us, on demand, a weekly fee of $1,000 without being deemed to revive or
modify this Agreement. These payments are liquidated damages to compensate us
for our damages from your violation of the covenant not to compete and are not a
penalty.
(b) REASONABLENESS OF COVENANT. You agree that the length of the term
and geographical restrictions contained in this Section are fair and reasonable
and not the result of overreaching, duress or coercion of any kind. You agree
that your full, uninhibited and faithful observance of each of the covenants in
this Section will not cause any undue hardship, financial or otherwise, and that
enforcement of each of the covenants in this Section will not impair your
ability to obtain employment commensurate with your abilities and on terms fully
acceptable to you or otherwise to obtain income required for the comfortable
support of yourself and your family, and the satisfaction of your creditors. You
agree that your special knowledge of the business of a Healthy Bites Grill
Franchise (and anyone acquiring this knowledge through you) would cause us and
our franchisees serious injury and loss if you (or anyone acquiring this
knowledge through you) were to use this knowledge to the benefit of a competitor
or were to compete with us or any of our other franchisees.
(c) COURT MODIFICATION. If any court finally holds that the time or
territory or any other provision in this Section is an unreasonable restriction
upon you, you agree that the provisions of this Agreement are not rendered void,
but apply as to time and territory or to any other extent as the court may
judicially determine or indicate is a reasonable restriction under the
circumstances involved.
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SECTION 14.2 INDEPENDENT COVENANTS; THIRD PARTY BENEFICIARIES
(a) INDEPENDENT COVENANTS. The parties agree that the covenants in this
ARTICLE are independent of any other provision of this Agreement. You agree that
the existence of any claim you may have against us or any of our Affiliates,
regardless of whether the claim is brought under this Agreement, is not a
defense to our enforcement of these covenants.
(b) THIRD PARTY BENEFICIARIES. The parties agree that all other
franchisees are third party beneficiaries of the terms of Section 14.1 and have
the right to separately enforce these covenants at their expense, if we are
unwilling or unable to enforce these covenants.
ARTICLE 15 - INDEPENDENT CONTRACTOR AND INDEMNIFICATION
SECTION 15.1 INDEPENDENT STATUS
You are an independent contractor and unless expressly provided to the
contrary, nothing in this Agreement is intended to designate either party an
agent, legal representative, subsidiary, joint venturer, partner, employee,
affiliate or servant of the other party for any purpose. The parties agree that
nothing in this Agreement authorizes either party to make any agreement,
warranty or representation for the other party, nor to incur any debt or other
obligation in the other party's name. You will take all affirmative action as we
request to indicate that you are an independent contractor, including placing
and maintaining a plaque in a conspicuous place within the Premises and a notice
on all stationery, business cards, sales literature, contracts and similar
documents that states that your Healthy Bites Grill Franchise is independently
owned and operated by you. The content of any plaque and notice is subject to
our written approval.
SECTION 15.2 INDEMNIFICATION
You are responsible for all losses or damages from contractual
liabilities to third persons from the possession, ownership and operation of
your Healthy Bites Grill Franchise and for all claims and demands for damages to
property or for injury, illness or death of persons directly or indirectly
resulting from your actions. You indemnify us from all costs, losses and damages
(including reasonable attorneys' fees and costs, even if incident to appellate,
post-judgment or bankruptcy proceedings) from claims brought by third parties
involving the ownership or operation by you of your Healthy Bites Grill
Franchise unless caused by our negligence or intentional misconduct. This
indemnity obligation continues in full effect even after the expiration,
transfer or termination of this Agreement. We will notify you of any claims and
you will be given the opportunity to assume the defense of the matter. If you
fail to assume the defense, we may defend the action in the manner we deem
appropriate and you will pay to us all costs, including attorneys' fees, which
we incur in effecting the defense, in addition to any sum that we may pay by
reason of any settlement or judgment against us. Our right to indemnity under
this Agreement arises and is valid regardless of any joint or concurrent
liability that may be imposed on us by statute, ordinance, regulation or other
law.
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ARTICLE 16 - REPRESENTATIONS AND WARRANTIES
SECTION 16.1 OUR REPRESENTATIONS
We make the following representations and warranties to you that are
true and correct upon the signing of this Agreement:
(a) ORGANIZATION. We are a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida.
(b) AUTHORIZATION. We have the corporate power to sign, deliver, and
carry out the terms of this Agreement. We have taken all necessary action for
proper authorization. This Agreement has been duly authorized, signed and
delivered by us and is our valid, legal and binding agreement and obligation in
accordance with this Agreement, except as may be limited by applicable
bankruptcy, insolvency, reorganization and other laws and equitable principles
affecting creditors' rights generally.
(c) NO VIOLATION. Our performance of our obligations under this
Agreement will not result in: (i) the breach of any term of any contract or
agreement that we are a party to or bound by, or be an event that, with notice,
lapse of time or both, would result in a breach or event of default; nor (ii)
result in the violation by us of any statute, rule, regulation, ordinance, code,
judgment, order, injunction or decree.
SECTION 16.2 YOUR REPRESENTATIONS
You make the following representations and warranties to us that are
true and correct upon signing this Agreement and throughout the Term:
(a) AUTHORIZATION. You have the power to sign, deliver, and carry out
this Agreement. You have taken all necessary action for proper authorization.
This Agreement has been duly authorized, signed and delivered by you and is your
valid, legal and binding agreement and obligation in accordance with this
Agreement, except as may be limited by applicable bankruptcy, insolvency,
reorganization and other laws and equitable principles affecting creditors'
rights generally.
(b) NO VIOLATION. The performance by you of your obligations under this
Agreement will not result in: (i) the breach of any term of, or be a default
under, any term of any contract, agreement or other commitment that you are a
party to or are bound by, or be an event that, with notice, lapse of time or
both, would result in a breach or event of default; nor (ii) result in the
violation by you of any statute, rule, regulation, ordinance, code, judgment,
order, injunction or decree.
(c) NO SPECULATIVE INTENT. You are not obtaining this Healthy Bites
Grill Franchise for speculative or investment purposes and have no present
intention to sell or transfer or attempt to sell or transfer any part of this
Agreement or the Healthy Bites Grill Franchise.
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(d) TRUE COPIES. Copies of all documents you are required to furnish to
us are correct copies of the documents, including all amendments or
modifications, and contain no misleading or incorrect statements or material
omissions.
SECTION 16.3 RECEIPT OF FOC
You agree that you received from us a FOC for the state where your
Healthy Bites Grill Franchise will be located and your state of residence, with
all exhibits and supplements to the FOC, on or before the first personal meeting
with our representatives and at least 10 Business Days before: (a) signing this
Agreement and any other agreement imposing a binding obligation on you; and (b)
any payment by you of any consideration for the sale or proposed sale, of a
franchise.
SECTION 16.4 RECEIPT OF COMPLETED FRANCHISE AGREEMENT
You agree that you received from us a completed copy of this Agreement
and all related agreements, containing all material terms, (except for the date,
signatures and any minor matters not material to the agreements), with all
blanks filled in, at least 5 Business Days before signing this Agreement.
SECTION 16.5 ACKNOWLEDGMENT OF RISK
You agree to the following:
(A) YOUR SUCCESS IN OWNING AND OPERATING YOUR HEALTHY BITES GRILL
FRANCHISE IS SPECULATIVE AND DEPENDS ON MANY FACTORS INCLUDING, TO A LARGE
EXTENT, YOUR INDEPENDENT BUSINESS ABILITY. NO REPRESENTATIONS OR PROMISES,
EXPRESS OR IMPLIED, HAVE BEEN MADE BY US OR ANY OF OUR EMPLOYEES, BROKERS OR
REPRESENTATIVES, TO INDUCE YOU TO ENTER INTO THIS AGREEMENT EXCEPT AS INCLUDED
IN THIS AGREEMENT. NO OFFICER, DIRECTOR, EMPLOYEE, BROKER OR OTHER
REPRESENTATIVE IS AUTHORIZED TO DO OTHERWISE.
(B) YOU AGREE THAT IN ALL OF YOUR DEALINGS WITH US, OUR OFFICERS,
DIRECTORS, EMPLOYEES, BROKERS (IF ANY) AND OTHER REPRESENTATIVES ACT ONLY IN A
REPRESENTATIVE CAPACITY AND NOT IN AN INDIVIDUAL CAPACITY. YOU AGREE THAT THIS
AGREEMENT AND ALL BUSINESS DEALINGS BETWEEN YOU AND ANY INDIVIDUALS AS A RESULT
OF THIS AGREEMENT, ARE ONLY BETWEEN YOU AND US.
(C) IN ADDITION, WE MAKE NO WARRANTY AS TO YOUR ABILITY TO OPERATE THE
HEALTHY BITES GRILL FRANCHISE IN THE JURISDICTION WHERE YOUR HEALTHY BITES GRILL
FRANCHISE IS TO BE OPERATED. IT IS YOUR OBLIGATION TO SEEK OR OBTAIN ADVICE OF
COUNSEL SPECIFICALLY ON THIS ISSUE. IF LEGISLATION ENACTED BY, OR REGULATION OF,
ANY GOVERNMENTAL BODY PREVENTS YOU FROM OPERATING YOUR HEALTHY BITES GRILL
FRANCHISE, WE ARE NOT LIABLE FOR DAMAGES NOR REQUIRED TO INDEMNIFY YOU OR TO
RETURN ANY MONIES RECEIVED FROM YOU.
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ARTICLE 17 - TERM
SECTION 17.1 TERM
The Term of this Agreement is 10 years from the Agreement Date, unless
sooner terminated under ARTICLE 12. The conditions to obtain a Successor Healthy
Bites Grill Franchise Agreement at the expiration of this Agreement are those
stated in Section 17.2.
SECTION 17.2 OPTION TO OBTAIN SUCCESSOR HEALTHY BITES GRILL FRANCHISE
AGREEMENT
(a) EVERGREEN RENEWAL. You are granted unlimited options to obtain a
Successor Healthy Bites Grill Franchise Agreement for terms of 10 years each
provided the following conditions are met at the time the option is exercised
and immediately before the beginning of the Succeeding Term, unless another time
is specified below:
(i) You must give us written notice of your intention to
exercise the option by submitting your application at least 6 months
but not more than 12 months before the end of the Term;
(ii) You cannot be in default of any provision of this
Agreement or any other agreement between you and us or our Affiliates;
(iii) You, within 10 days before the end of the Term, must
sign and deliver to us a Successor Healthy Bites Grill Franchise
Agreement, that agreement will not vary the material business terms
reflected in this Agreement. However, you agree to sign our Successor
Healthy Bites Grill Franchise Agreement, even if materially different
from this Agreement, if the new Agreement was collectively negotiated
and approved by 50% of the Franchisees in the System;
(iv) You must comply with all other requirements imposed by us
under the Successor Healthy Bites Grill Franchise Agreement upon
signing, except that there will be no Initial Franchise Fee; and
(v) You are entitled to continue to occupy the Premises for
the entire Succeeding Term including, if you are then leasing the
Premises from us or a third party, you are entitled to renew the lease
or obtain our approval of a new location for the Healthy Bites Grill
Franchise within the Protected Territory, but not within the protected
territory of a Company Unit or Franchise Unit, in accordance with our
relocation procedures.
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(b) OUR RIGHT NOT TO RENEW. If you have not met all of the conditions
stated in Subsection 17.2(a), we may elect not to enter into a Successor Healthy
Bites Grill Franchise Agreement. If, within 5 days of notice from us that you
have elected not to enter into a Successor Healthy Bites Grill Franchise
Agreement, you request our permission for you to sell your Franchise Business,
then for a 180-day period following this notice (this notice will extend the
Term, as necessary, to the end of the 180-day period, unless we have grounds to
otherwise terminate the Term), we will permit you to sell your Healthy Bites
Grill Franchise to a purchaser subject to our right of first refusal. This
transfer must be in compliance with the provisions of Subsection 11.2(f) and all
the other applicable terms of this Agreement. During this period, you must
continue to operate your Healthy Bites Grill Franchise.
SECTION 17.3 REINSTATEMENTS AND EXTENSIONS
If any termination or expiration of the Term would violate any
applicable law, we may reinstate or extend the Term for the purpose of complying
with the law, for the duration provided by us in a written notice to you,
without waiving any of our rights under this Agreement or otherwise modifying
this Agreement.
ARTICLE 18 - DISPUTE RESOLUTION
SECTION 18.1 MEDIATION
For any dispute involving this Agreement, before any arbitration
proceeding takes place, either party may, at his, her or its option, submit the
controversy or claim to non-binding mediation before the Center for Public
Resources -- National Franchise Mediation Program, the American Arbitration
Association, or another mutually agreeable mediator. Both parties will sign a
confidentiality agreement reasonably satisfactory to us. Upon submission, the
obligation to attend mediation in the county and state where your principal
place of business is then located is binding on both parties. Each party will
bear his, her or its own costs for the mediation except the mediation fee and
the fee for the mediator will be split equally.
SECTION 18.2 ARBITRATION
(a) Except as specifically modified by this ARTICLE and excepting
matters involving remedies in Section 18.3, any controversy or claim under this
Agreement, including any claim that this Agreement, or any part of this
Agreement, is invalid, illegal or otherwise voidable or void, including any
claim of fraud in the inducement, may be submitted to arbitration, if determined
by the parties when the dispute arises, before the American Arbitration
Association in accordance with its commercial arbitration rules, or any other
mutually agreeable arbitration association by one arbitrator.
(b) The provisions of this Section are independent of any other
covenant or provision of this Agreement. If a court of competent jurisdiction
determines that any provisions are unlawful in any way, that court will modify
or interpret the provisions to the minimum extent necessary to have them comply
with the law. All issues of the arbitrability or the enforcement of the
agreement to arbitrate are governed by the United States Arbitration Act (9
U.S.C. ▇▇.▇▇. 1 et seq.) and the federal common law of arbitration.
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(c) All claimants with substantially similar claims may join the
proceedings.
(d) All parties who may be legally responsible agree to participate in
the arbitration and all potential legal claims can be joined in the arbitration
forum.
(e) The rules governing the conduct of the arbitration proceedings are
consistent with generally prevailing standards of due process.
(f) The panel from which the arbitrator is chosen is comprised of
persons knowledgeable in the franchise industry and who have demonstrated a
capability for unbiased decision making consistent with the principles embodied
in the Commercial Rules of the American Arbitration Association for appointment
of neutral arbitrators.
(g) Limited discovery is allowed, consistent with Rule 10 of the
Commercial Rules of the American Arbitration Association and pursuant to a
discovery plan approved by the arbitrator.
(h) Actual hearing on the merits occurs within 6 months of the date of
the filing of the arbitration proceeding.
(i) The arbitrator must issue a reasoned written opinion on the merits
within 30 days of the completion of the hearings on the merits.
(j) Judgment on an arbitration award may be entered in any court having
competent jurisdiction and is binding, final and non-appealable. If any party to
arbitration wishes to appeal any final award (there will be no appeal of interim
awards or other interim relief), the party may appeal, within 30 days of the
final award, to a 3-arbitrator panel appointed by the same organization that
conducted the arbitration. The issues on appeal will be limited to the proper
application of the law to the facts found at the arbitration hearing and will
not include any trial de novo or other fact-finding function. The party
requesting the appeal must pay all expense charged by the arbitration appeal
panel and/or arbitration organization in the appeal and must post any bond
deemed appropriate by the arbitration organization or arbitration appeal panel.
In addition, a party requesting appeal that does not prevail on the appeal will
pay the other party's attorneys' fees and other costs of responding to the
appeal.
(k) Before any arbitration proceeding takes place, either party may, at
his, her or its respective option, elect to have the arbitrator conduct, in a
separate proceeding before the actual arbitration, a preliminary hearing, at
this hearing testimony and other evidence may be presented and briefs may be
submitted, including a brief stating the then applicable statutory or common law
methods of measuring damages in respect of the controversy or claim being
arbitrated.
(l) This arbitration provision is self-executing and remains in full
effect after the expiration, transfer or termination of this Agreement. If
either party fails to appear at any properly noticed arbitration proceeding, an
award may be entered against that party by default or otherwise.
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SECTION 18.3 EXCEPTIONS TO MEDIATION AND ARBITRATION; EQUITABLE RELIEF
(a) The obligation to mediate or arbitrate is not binding on either
party for claims involving the Intellectual Property; claims involving any lease
of real property between the parties or their related entities; the Franchisee's
obligations upon the termination, transfer or expiration of this Agreement; any
encumbrances or transfers restricted under this Agreement concerning interests
in the Franchisee, the Healthy Bites Grill Franchise and this Agreement; matters
involving actions that may impair the good will associated with the Intellectual
Property; matters involving claims of danger, health or safety involving the
Franchisee, the employees, customers or the public; or requests for restraining
orders, injunctions or other procedures in a court of competent jurisdiction to
obtain specific performance when deemed necessary by any court to preserve the
status quo or prevent irreparable injury pending resolution by mediation or
arbitration of the actual dispute between the parties.
(b) The Franchisee recognizes that the Healthy Bites Grill Franchise is
intended to be 1 of a large number of businesses identified by the Intellectual
Property in selling to the public the products and services associated with the
Intellectual Property, and that the failure on the part of a single franchisee
to comply with the terms of his or her franchise agreement is likely to cause
irreparable damage to the Franchisor and damages at law would be an inadequate
remedy. The Franchisee agrees that upon the Franchisee's breach or threatened
breach of any of the terms of this Agreement concerning any matters referenced
in Subsection 18.3(a), the Franchisor is entitled to seek an injunction
restraining the breach and/or to a decree of specific performance, without
showing or proving any actual damage, together with recovery of reasonable
attorneys' fees and costs incurred in obtaining equitable relief. This equitable
remedy is in addition to all remedies that the Franchisor has by virtue of the
Franchisee's breach of this Agreement. The Franchisor is entitled to seek this
relief without the posting of any bond or security or, if a bond is nevertheless
be required by a court of competent jurisdiction, the parties agree that the sum
of $1,000 is a sufficient bond.
SECTION 18.4 JURISDICTION AND VENUE
(a) The parties irrevocably and unconditionally: (i) agree that any
mediation, arbitration or suit, action or legal proceeding involving your
Healthy Bites Grill Franchise or this Agreement and involving just you and us
(and no other franchisees) will be conducted where the Franchise Business is
located or may be brought in the District Court of the United States, in the
district where the Franchise Business is located or, if this court lacks
jurisdiction, the courts of record of the state and county where our principal
place of business is then located; (ii) consent to the jurisdiction of each
court in any suit, action or proceeding; (iii) waive any objection that he, she
or it may have to the laying of venue of any suit, action or proceeding in any
of these courts; and (iv) agree that service of any court paper may be effected
on the party by mail at the last known address, as provided in this Agreement,
or in any other manner as may be provided under applicable laws or court rules
in the state where the Franchise Business is located.
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(b) The parties irrevocably and unconditionally: (i) agree that any
mediation, arbitration or suit, action or legal proceeding involving your
Healthy Bites Grill Franchise or this Agreement and involving you and one or
more other franchisees and us, will be conducted in the county where our
principal place of business is then located or may be brought in the District
Court of the United States, in the district where our principal place of
business is then located or, if this court lacks jurisdiction, the courts of
record of the state and county where our principal place of business is then
located; (ii) consent to the jurisdiction of each court in any suit, action or
proceeding; (iii) waive any objection that he, she or it may have to the laying
of venue of any suit, action or proceeding in any of these courts; and (iv)
agree that service of any court paper may be effected on the party by mail at
the last known address, as provided in this Agreement, or in any other manner as
may be provided under applicable laws or court rules in the state where our
principal place of business is then located.
SECTION 18.5 ENFORCEMENT COSTS
Each party will bear his, her or its own costs in any mediation. If any
arbitration, legal action or other proceeding is begun for the enforcement of
this Agreement, or for an alleged dispute, breach, default or misrepresentation
under any term of this Agreement, the prevailing party is entitled to recover
reasonable pre-institution and post-institution attorneys' fees, court costs and
all expenses even if not taxable as court costs (including all fees and expenses
incident to arbitration, appellate, bankruptcy and post-judgment proceedings),
incurred in the action or proceeding, in addition to any other relief that the
party is entitled. Attorneys' fees include paralegal fees, administrative costs,
investigative costs, costs of expert witnesses, court reporter fees, sales and
use taxes, if any, and all other charges billed by the attorneys to the
prevailing party. If we engage a collection agency or legal counsel for your
failure to pay when due any monies owed under this Agreement or submit when due
any reports, information or supporting records, or for any failure otherwise to
comply with this Agreement, you must reimburse us on demand for all of the
above-listed expenses we incur.
SECTION 18.6 GOVERNING LAW
Except to the extent governed by the United States Trademark Act of
1946 (▇▇▇▇▇▇ Act, 15 U.S.C. ▇▇.▇▇. 1051 et seq. or the United States Arbitration
Act, 9 U.S.C. ▇▇.▇▇. 1 et seq.), this Agreement and any other agreement between
the parties and all transactions contemplated by this Agreement and all disputes
between the parties are governed by the laws of the State of Florida without
regard to principles of conflicts of laws. If there exists state franchise laws
in the state where the Franchise Business is located that provide you with
greater protection than the laws of the state above, then that state's franchise
laws will also govern and apply in the event of conflict.
ARTICLE 19 - DEFINITIONS
SECTION 19.1 DEFINITIONS
As used in this Agreement, the Exhibits attached to this Agreement and
any other document signed incidental to this Agreement and any exhibits to those
documents, the following terms have the following meanings:
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"ADI" means an Area of Dominant Influence, and is a geographic survey
area created and defined by Arbitron based on measurable patterns of television
viewing.
"ADVERTISING CONTRIBUTIONS" means the payments described in Subsection
3.1(d).
"AFFILIATE" means a company related to us as a parent corporation,
brother/sister corporation or subsidiary corporation.
"AGREEMENT" means this Healthy Bites Grill Franchise Agreement, as it
may be amended, supplemented or otherwise modified by an agreement in writing
signed by you and us under Section 20.1.
"AGREEMENT DATE" means the date of signing this Agreement.
"AGREEMENT YEAR" means the annual periods beginning on the Agreement
Date.
"BUSINESS ASSETS" means (a) all of your accounts receivable arising out
of, or in connection with, the operation of the Franchise Business existing as
of the date of this Agreement and which came into existence during the Term,
including notes, negotiable instruments and contracts (the "Accounts
Receivable"); (b) all books and records pertaining to the Accounts Receivable;
(c) all equipment, furniture and fixtures located at the Premises or any other
location owned or controlled by you; and (d) all proceeds upon sale or other
disposition of any of the foregoing.
"BUSINESS ASSOCIATE" means any of our employees, officers, directors,
agents, consultants, representatives, contractors, suppliers, distributors,
franchisees or other business contacts.
"BUSINESS DAY" means a day other than Saturday, Sunday or a U.S.
national holiday. Any time period ending on a Saturday, Sunday or U.S. national
holiday will be extended until 5:00 p.m. on the next Business Day.
"CHAIN" means the group of Company Units and Franchise Units each
operating a Healthy Bites Grill.
"COMPANY UNIT" means a Healthy Bites Grill operated under the System
and owned by us or any Affiliate.
"COMPETITIVE BUSINESS" means a business that is engaged, wholly or
partially (more than 5% of its gross sales), directly or indirectly, in the
sales of healthy or organic food or any other business in which we and our other
franchisees are then engaged.
"CONFIDENTIAL INFORMATION" means all information, knowledge, know-how
and technologies that we designate as confidential, proprietary or trade
secrets. Confidential Information includes the Manuals and Secret Recipe
Products, instruction programs, videocassettes, and computer programs.
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"COOPERATIVE" means the regional advertising cooperative described in
Section 7.3.
"DESIGNEE" means 1 or more of our representatives who are independent
contractors and are appointed by us to perform certain of our duties under this
Agreement as described in ARTICLE 2.
"DESIGN SPECIFICATIONS" means the specifications described in
Subsection 2.3(a)(ii).
"ENFORCEMENT COSTS" means the costs described in Section 18.5.
"EVENT OF DEFAULT" means a breach of this Agreement including those
situations described in Sections 1.4(a), 1.4(c), 3.6, 11.2(a), 11.2(d), 12.2,
12.3 and 12.4, assuming any requirement for the giving of notice, the lapse of
time, or both, or any other condition is satisfied.
"FOC" means our current Franchise Offering Circular and all its
exhibits and supplements.
"FRANCHISE" means the rights granted to you under this Agreement.
"FRANCHISEE" means you upon signing this Agreement, or another person
who is a party with us under another Healthy Bites Grill Franchise Agreement.
"FRANCHISE OWNER" means: (i) if you are an individual, it means you;
(ii) if you are a privately held corporation, the individual who owns a majority
of the voting and ownership interests in the corporation; (iii) if you are a
partnership, the individual who is, or owns a majority of the voting and
ownership interests in an entity that is a general partner of the partnership;
and (iv) if you are a limited liability company, the individual who owns the
majority of the membership interests in the company.
"FRANCHISE UNIT" means a Healthy Bites Grill Franchise owned and
operated under the System by a franchisee.
"FRANCHISEE ASSOCIATION" means the Independent Association of Healthy
Bites Grill Franchisees described in Section 10.1.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means those standards,
conventions and rules accountants follow in recording and summarizing
transactions, and in the preparation of financial statements. Generally accepted
accounting principals derive, in order of importance, from: (i) issuances from
an authoritative body designated by the American Institute of Certified Public
Accountants ("AICPA") Council; other AICPA issuances including AICPA Industry
Guides; (iii) industry practice; and (iv) accounting literature in the form of
books and articles.
"GRAND OPENING ADVERTISING FEE" means the fee described in Subsection
3.1(c).
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"GROSS REVENUES" means the entire amount of all of your revenues from
the ownership or operation of your Healthy Bites Grill Franchise or any business
at or about the Premises including the proceeds of any business interruption
insurance and any revenues received from the lease or sublease of a portion of
the Premises, whether the revenues are evidenced by cash, credit, checks, gift
certificates, scrip, food stamps, coupons and premiums (unless exempted by us)
services, property or other means of exchange, excepting only the amount of any
sales taxes that are collected and paid to the taxing authority (based on the
cash method of accounting). Cash refunded and credit given to customers and
receivables uncollectible from customers will be deducted in computing Gross
Revenues to the extent that the cash, credit or receivables represent amounts
previously included in Gross Revenues where Royalty Fees and Advertising
Contributions were paid. Gross Revenues are deemed received by you at the time
the goods, products, merchandise or services from which they derive are
delivered or rendered or at the time the relevant sale takes place, whichever
occurs first. Gross Revenues consisting of property or services (for example,
"bartering" or "trade outs") are valued at the prices applicable, at the time
the Gross Revenues are received, to the products or services exchanged for the
Gross Revenues.
"HEALTHY BITES GRILL FRANCHISE" means the restaurant you are authorized
to establish and operate under this Agreement.
"INITIAL ADVERTISING CONTRIBUTION" means the fee described in
Subsection 3.1(d).
"INITIAL FRANCHISE FEE" means the fee described in Subsection 3.1(a).
"INITIAL TRAINING" means the training described in Subsection 2.7(a).
"INTELLECTUAL PROPERTY" means our Trademarks, Patents, Confidential
Information and copyrighted information that you are entitled to use under this
Agreement as described in ITEMS 13 and 14 of the FOC.
"LOCAL ADVERTISING" means advertising and promotion you undertake in
media directed primarily in your local market area including television, radio,
newspapers, magazines, billboards, posters, handbills, direct mail, yellow
pages, sports program booklet advertising, church bulletins, collateral
promotional and novelty items (for example, matchbooks, pens and pencils, bumper
stickers, calendars) that prominently display the Intellectual Property,
advertising on public vehicles including cabs and buses, the cost of producing
materials necessary to participate in these media and agency commissions on the
production of the advertising and amounts paid to an approved regional
advertising cooperative or to a merchant's association for advertising where you
are a member. Local Advertising does not include payments to the Marketing Fund
nor payments for permanent on-premises signs, lighting, purchasing or
maintaining vehicles even though the vehicles display in some manner the
Intellectual Property (except the cost of the materials displayed are included),
contributions, sponsorships (unless the Intellectual Property are prominently
displayed by the group or activity receiving the contribution or sponsorship),
premium or similar offers including discounts, price reductions, special offers,
free offers and sweepstake offers (except that the media costs associated with
promoting the premium offers are included), employee incentive programs and
other similar payments that we may determine in our sole discretion should not
be included in determining whether you have met your obligation for Local
Advertising.
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"MANAGER" means the Franchise Owner, unless we otherwise agree in
writing.
"MANUALS" means all manuals produced by, or for the benefit of, us and
loaned to you and any revisions prepared for the internal use of the Healthy
Bites Grill Franchise relating to the operation and management of the Franchise
Business. The Manuals may consist of printed text, computer disks, other
electronically stored media, and videotapes
"MARKETING FUND" means the fund described in Section 7.5 that
Advertising Contributions will be deposited for use in regional and national
marketing activities to promote the System.
"MFC" means the Marketing Fund Committee referred to in Subsection
7.5(b).
"NOTICE OF DEFAULT" means the notices described in Section 12.4.
"OPENING DATE" means the date your Healthy Bites Grill Franchise is
first opened for business to the general public.
"PAYMENT SYSTEM" means the system created by you to make payments to us
as described in Section 3.3.
"P.O.S. SYSTEM" means the computerized cash registers, printer and
modem or other computer hardware you are required to purchase in accordance with
our specifications contained in the Manuals.
"PREMISES" means the entire real property, either owned or leased by
you, where your Healthy Bites Grill Franchise will be located, as described in
Exhibit A.
"PROTECTED TERRITORY" means an area comprised as a 3-mile radius
(approximately 28 square miles) of the Premises.
"REBATES" means the payments described in Subsection 7.5(d).
"RESERVED AREA" means the area where you will undertake your site
selection process to submit proposed sites for our approval in accordance with
our site approval process. The Reserved Area will be
______________________________________________ but excluding any protected
territory of a Company Unit or another Franchise Unit within the Chain who
already has a Healthy Bites Grill Franchise in operation or to be operated in
the Reserved Area.
"ROYALTY FEE" means the fee described in Subsection 3.1(b).
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"SECRET RECIPE PRODUCTS" means signature sauces, seasonings, and
certain menu items such as "Hip Pockets" and "Buffalo Burgers" and all other
recipes and products created by us and deemed secret.
"SECURED OBLIGATIONS" means the obligations referred to in Subsection
3.6(a).
"SUCCEEDING TERM" means the term of the Successor Healthy Bites Grill
Franchise Agreement.
"SUCCESSOR HEALTHY BITES GRILL FRANCHISE AGREEMENT" means the form of
franchise agreement for new Healthy Bites Grill franchisees at the time you
elect to enter into an agreement in accordance with Section 17.2.
"SYSTEM" means our business system for operating a Healthy Bites Grill.
The System includes the Secret Recipe Products and recipes, specific standards
and procedures and the Intellectual Property, that may be changed.
"TERM" means the term of the Agreement described in Section 17.1.
"TRADE DRESS" means the store design and image we developed and own for
Healthy Bites Grill premises as it may be revised and developed by us. The Trade
Dress currently includes the following features: use of colors resembling fruits
and vegetables, ▇▇▇▇▇▇ ▇▇▇▇, and certain architectural features including Roman
columns.
"TRADEMARKS" means the service ▇▇▇▇ and logo "Healthy Bites Grill(R)"
and all other trademarks, service marks, trade names, logos and commercial
symbols authorized by us as part of the System.
"TRAINEES" means the persons approved by us who attend Initial
Training.
"TRANSFER FEE" means the fee described in Subsection 11.2(f)(vii).
"UNIQUE CONSIDERATION" means the consideration described in Subsection
11.5(d).
"UNIT" means either a Company Unit or a Franchise Unit.
SECTION 19.2 OTHER DEFINITIONAL PROVISIONS
(a) All of the words or terms defined in this Agreement have these
defined meanings when used in other documents issued under or delivered under
this Agreement unless the context otherwise requires or unless specifically
otherwise defined in the other document; and
(b) The term "PERSON" includes any corporation, limited liability
company, partnership, estate, trust, association, branch, bureau, subdivision,
venture, associated group, individual, government, institution, instrumentality
and other entity, enterprise, association or endeavor of every kind.
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ARTICLE 20 - GENERAL PROVISIONS
SECTION 20.1 AMENDMENTS
Except as stated in this Agreement, the provisions of this Agreement
cannot be amended, supplemented, waived or changed orally, except by a written
document signed by the party against whom enforcement of any amendment,
supplement, waiver or modification is sought and making specific reference to
this Agreement. Only our President or Chief Operating Officer have the authority
to sign an amendment for us. This Section is expressly limited by the terms of
Sections 20.2 and 20.6.
SECTION 20.2 MODIFICATION OF THE SYSTEM
YOU AGREE THAT AFTER THE AGREEMENT DATE WE MAY MODIFY THE SYSTEM. YOU
AGREE TO ACCEPT AND BE BOUND BY ANY MODIFICATIONS IN THE SYSTEM AS IF THEY WERE
PART OF THIS AGREEMENT AT THE TIME OF SIGNING OF THIS AGREEMENT. YOU WILL MAKE
ALL EXPENDITURES AND MODIFICATIONS OF THE SYSTEM, AS WE REQUIRE SUBJECT TO THE
CAPITAL EXPENDITURE LIMITATION CONTAINED IN SECTION 4.21.
SECTION 20.3 BINDING EFFECT
The provisions of this Agreement are binding upon, benefit and are
enforceable by the parties and their respective personal representatives, legal
representatives, heirs, successors and permitted assigns.
SECTION 20.4 NOTICES
All notices, requests, consents and other communications required or
permitted under this Agreement must be in writing (including telex, telecopied
and telegraphic communication) and must be (as elected by the person giving the
notice) hand delivered by messenger or courier service, telecopied,
telecommunicated, or mailed (airmail if international) by registered or
certified mail (postage prepaid), return receipt requested, addressed to:
If to us: With a copy to:
Health Express Franchise Company ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
Suite 203 One Boca Place, Suite ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to you: With a copy to:
The Junie Corp ▇▇▇▇▇▇,▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Livingston,NJ 07039
Attn:▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Atten:▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
or to any other address any party designates by notice complying with the terms
of this Section. Each notice is deemed delivered: (a) on the date delivered if
by personal delivery; (b) on the date of transmission with confirmed answer back
if by telex, telefax or other telegraphic method; and (c) on the date the return
receipt is signed or delivery is refused or the notice is designated by the
postal authorities as not deliverable if mailed.
SECTION 20.5 HEADINGS
The headings and subheadings in this Agreement are for convenience of
reference only, are not to be considered a part of this Agreement and will not
limit or otherwise affect in any way the meaning or interpretation of this
Agreement.
SECTION 20.6 SEVERABILITY
(a) If any provision of this Agreement or any other agreement entered
into under this Agreement is contrary to, prohibited by or invalid under
applicable law or regulation, that term only will be inapplicable and omitted to
the extent so contrary, prohibited or invalid, but the remainder of this
Agreement will not be invalidated and will be given full effect so far as
possible. If any provision of this Agreement may be construed in two or more
ways, one that would render the term invalid or otherwise voidable or
unenforceable and another that would render the term valid and enforceable, that
provision has the meaning that renders it valid and enforceable.
(b) If any applicable law of any jurisdiction requires a greater notice
of the termination of or non-renewal of this Agreement (if permitted) than is
required under this Agreement, or the taking of some other action not required
under this Agreement, or if under any applicable law of any jurisdiction, any
term of this Agreement or any of our requirements is invalid or unenforceable,
the notice and/or other action required by that law will be substituted for the
comparable provisions of this Agreement. We have the right, in our sole
discretion, to modify any invalid or unenforceable requirement to the extent
required to be valid and enforceable. Any modification to this Agreement will be
effective only in that jurisdiction, unless we elect to give the modification
greater applicability, and this Agreement will be enforced as originally made
and entered into in all other jurisdictions.
SECTION 20.7 WAIVERS
The failure or delay of any party at any time to require performance by
another party of any term of this Agreement, even if known, will not affect the
right of that party to require performance of that provision or to exercise any
60
right or remedy under this Agreement. Any waiver by any party of any breach of
any term of this Agreement is not a waiver of any continuing or later breach of
that term, a waiver of the term itself, or a waiver of any right or remedy under
this Agreement. No notice to or demand on any party in any case, of itself,
entitles that party to any other notice or demand in similar or other
circumstances.
SECTION 20.8 REMEDIES CUMULATIVE
Except as otherwise stated in this Agreement, no remedy in this
Agreement for any party is intended to be exclusive of any other remedy. Each
remedy is cumulative and is in addition to every other remedy given under this
Agreement, now or later existing, at law, in equity, by statute or otherwise. No
single or partial exercise by any party of any right or remedy under this
Agreement precludes any other exercise of any other right or remedy.
SECTION 20.9 EFFECTIVENESS; COUNTERPARTS
This Agreement is not effective or binding and enforceable against us
until it is accepted by us at our home office in ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ and
signed by our President. You are advised not to incur any expenses for opening
your Healthy Bites Grill Franchise until you have received a final signed copy
of this Agreement from our home office. This Agreement may be signed in
counterparts, each is deemed an original, but together are the same instrument.
Confirmation of signing by telex, telecopy, or telefax of a facsimile signature
page is binding upon any party to the confirmation.
SECTION 20.10 REASONABLENESS
We both agree to act reasonably in all dealings with each other
pursuant to this Agreement. Whenever the consent or approval of either party is
required or contemplated under this Agreement, the party whose consent is
required agrees not to unreasonably withhold or delay the consent.
SECTION 20.11 SURVIVAL
All of the parties' obligations that expressly or by their nature
survive the expiration or termination of this Agreement continue in full force
after the transfer, expiration or termination of this Agreement until they are
satisfied or by their nature expire.
SECTION 20.12 FORCE MAJEURE
Neither party is liable for loss or damage or is in breach of this
Agreement if the failure to perform the obligations results solely from the
following causes beyond his, her or its reasonable control, specifically: (a)
transportation shortages, inadequate supply of equipment, merchandise, supplies,
labor, material, or energy; (b) compliance with any applicable law; or (c) war,
strikes, natural disaster or acts of God. Any delay resulting from any of these
causes extends performance accordingly or excuses performance as may be
reasonable, except that these causes do not excuse payments of amounts owed to
us for any reason.
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SECTION 20.13 THIRD PARTIES
Except as provided in this Agreement to the contrary for any Affiliates
or other Healthy Bites Grill franchisees, nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under this
Agreement on any persons (including other Healthy Bites Grill franchisees) other
than the parties and their respective personal representatives, other legal
representatives, heirs, successors and permitted assigns. Except as provided in
this Agreement to the contrary for any Designee of us, nothing in this Agreement
is intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor will any provision give any third
persons any right of subrogation or action over or against any party to this
Agreement.
SECTION 20.14 ENTIRE AGREEMENT
This Agreement, its Exhibits and all other written agreements involving
this Agreement and expressly referenced in this Agreement, represent the entire
understanding and agreement between the parties on the subject matter of this
Agreement and supersede all other negotiations, understandings and
representations, if any, made between the parties. No representations,
inducements, promises or agreements, oral or otherwise, if any, not embodied in
this Agreement, its Exhibits and all other written agreements concerning this
Agreement and expressly referenced in this Agreement are of any effect.
IN WITNESS WHEREOF, the parties have duly signed this Agreement.
YOU OR YOUR:
The Junie Corp
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
WE, US, OUR:
Health Express Franchise Company
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, President
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STATE OF Fl________________
COUNTY OF _____Broward_________
This instrument was acknowledged before me on ____Feb 19______, 2003 by
_Susan D. Greenfield__________, who personally appeared before me at the time of
notarization.
NOTARY PUBLIC - STATE OF __Fl____________
My Commission Expires: 11/19/04
sign ________________________________
print ▇▇▇▇▇ ▇. Greenfield______________
Personally Known __X__ OR Produced Identification ____
Type of Identification Produced:
_______________________________________
STATE OF FLORIDA
COUNTY OF BROWARD
This instrument was acknowledged before me on ____Feb 19, 2003 by
▇▇▇▇▇▇▇ ▇▇▇▇▇ as President of Health Express Franchise Company, a Florida
corporation, for the corporation. He personally appeared before me at the time
of notarization.
NOTARY PUBLIC - STATE OF FLORIDA:
sign ____________________________________
print ▇▇▇▇▇▇▇ ▇. Nevin__________________
Personally Known __X___ OR Produced Identification _____
Type of Identification Produced:
________________________________
My Commission Expires:11/19/04
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