Franchise Agreement - Hooters America Inc. and Butterwings of Wisconsin Inc.
Franchise Agreement
between
Hooters America, Inc.
4501 Circle 75 Parkway
Suite E-5110
Atlanta, Georgia 30339
(404) 951-2040
and
Butterwings of Wisconsin, Inc.
c/o Harvey L. Temkin
1st Wisconsin Plaza
1 South Pinckney Street
Madison, Wisconsin 53701-1497
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HOOTERS OF AMERICA, INC. FRANCHISE AGREEMENT
TABLE OF CONTENTS
Page
RECITALS..............................................................1
I. GRANT ............................................................... 2
II. TERM AND RENEWAL .....................................................4
III. HOOTERS OF AMERICA/S OBLIGATIONS .....................................4
IV. FEES ................................................................6
V. DUTIES OF FRANCHISEE..................................................8
VI. PROPRIETARY MARKS....................................................19
Vii. HOOTERS OF AMERICA'S MANUALS.........................................22
Viii. CONFIDENTIAL INFORMATION.............................................23
IX. ACCOUNTING AND RECORDS...............................................23
X. ADVERTISING..........................................................26
Xi. INSURANCE............................................................29
Xii. TRANSFER OF INTEREST.................................................31
Xiii. DEFAULT AND TERMINATION..............................................37
XIV. OBLIGATIONS UPON TERMINATION OR EXPIRATION...........................43
XV. COVENANTS............................................................45
XVI. TAXES, PERMITS, AND INDEBTEDNESS.....................................48
XVII. INDEPENDENT CONTRACTOR...............................................48
XVIII. INDEMNIFICATION......................................................49
XIX. APPROVALS AND WAIVERS................................................52
XX. NOTICES..............................................................52
XXI. ENTIRE AGREEMENT.....................................................53
XXII. SEVERABILITY AND CONSTRUCTION........................................53
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XXIII. FORCE MAJEURE........................................................54
XXIV. APPLICABLE LAW.......................................................55
XXV. ACKNOWLEDGMENTS......................................................55
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HOOTERS OF AMERICA, INC.
FRANCHISE AGREEMENT
THIS AGREEMENT is made and entered into October 31, 1993, between
HOOTERS OF AMERICA, INC. , f /k/a Neighborhood Restaurants of America, Inc. , a
Georgia corporation with offices at 4501 Circle 75 Parkway, Suite E-5110,
Atlanta, Georgia 3 03 3 9 (hereinafter "Hooters of America" or "Franchisor") ,
and BUTTERWINGS OF WISCONSIN, INC. hereinafter "Franchisee").
RECITALS
1. Hooters of America has entered into an exclusive license with
Hooters, Inc., a Florida corporation, dated July 21, 1984, as amended, to use
certain trademarks, service marks and other property in connection with the
operation of restaurants (the "License Agreement") and has developed a
distinctive system (the "Hooters System 11) for the establishment and operation
of a franchised restaurant offering a limited menu featuring seafood and chicken
wings along with beer and wine.
2. The Hooters System features a distinctive exterior and interior
restaurant design, trade dress decor and color scheme; uniform standards,
specifications, and procedures for operations; procedures for quality control;
training and ongoing operational assistance; advertising and promotional
programs; all of which may be changed, improved, and further developed by
Hooters of America from time to time.
3. Hooters of America identifies the Hooters System by means of certain
trade names, service marks, trademarks, logos, emblems, trade dress and other
indicia of origin, including but not limited to the mark "Hooters." and such
other trade names, service marks, trademarks and trade dress as are now
designated (and may hereafter be designated by Hooters of America in writing)
for use in connection with the Hooters System (hereinafter referred to as
"Proprietary Marks"
4. Hooters of America continues to develop, use, and control the use of
such Proprietary Marks to identify for the public the source of services and
products marketed thereunder and under the Hooters System, and to represent the
Hooters System's high standards of consistent quality, appearance, and service.
5. Franchisee desires to enter into the business of operating a Hooters
Restaurant under the Hooters System and wishes to obtain a franchise from
Hooters of America for that purpose, as well as to receive the training and
other assistance provided by Hooters of America in connection therewith.
6. Franchisee understands and acknowledges the importance of Hooters of
America's high standards of. quality, cleanliness, appearance, and service and
the necessity of operating the franchised business. in conformity with Hooters
of America's standards and specifications.
In consideration of these premises and the commitments set forth herein,
the parties hereby agree as follows:
I. GRANT
A. Hooters of America hereby grants to Franchisee, upon the terms and
conditions herein contained and subject to the License Agreement, the
right, license, and privilege, and Franchisee undertakes the
obligation, to operate a Hooters Restaurant (hereinafter referred to
as the "Restaurant" or the "Franchised Business") and to use solely in
connection therewith the Proprietary Marks and the Hooters System, as
they may be changed, improved, and further developed from time to
time, only at the approved location as provided in Section I.B.
B. The address of the location approved hereunder is: Approved location
to be determined at a later date (hereinafter the "Approved
Location"). Franchisee shall not relocate the Franchised Business
without the express prior written consent of Hooters of America.
During the term of this Agreement, Hooters of America shall not
establish, nor license another party or entity to establish, a Hooters
Restaurant under the Hooters System within a radius of five (5) miles
from the Approved Location (hereinafter the "Protected Territory").
C. Franchisee shall complete the construction of the Restaurant in
accordance with the provisions and requirements of Section V(G) hereof
(the "Construction") and shall open the Restaurant for business within
six (6) months of the date of execution of this Franchise Agreement
(the "Opening Date") ; provided ' however, that Franchisee shall have
the right to substitute a different site, if such different site is
acceptable to Franchisor, within sixty (60) days of execution of this
Agreement. Franchisor may grant Franchisee one thirty (30) day
extension past the six months allotted within which to open the
Restaurant; provided, however, that Franchisee shall pay Hooters of
America a non-refundable extension fee of Five Thousand ($5,000)
Dollars for such right contemporaneously with the grant of such
extension by Hooters of America.
Provided that the Franchisee has made full and complete application
for all building permits, beer and wine licenses, and all other
permits required to open a Hooters restaurant, within 60 days of the
execution date of this agreement, Franchisor may agree to grant up to
three (3) thirty (30) day extensions to obtain all necessary permits
if the delay was due to causes beyond the reasonable control of
Franchisee ' which agreement of Hooters of America will not be
unreasonably withheld. Franchisee must submit documentation of the
status of the applications) ten (10) days prior to the date of each
thirty (30) day extension requested. Upon the grant of such
extensions) by Hooters of America, the Opening Date will be
commensurately extended.
Should the Franchisee be unable to obtain all necessary permits and
licenses during the stated period and extension time period or periods
as a result of causes beyond the reasonable control of Franchisee
(unless the requirement for the issuance of such permits and licenses
is waived in writing by Franchisor), this Agreement, and any Option
Addendum, shall be deemed terminated upon written notice from either
Franchisee or Franchisor to the other, without the necessity of
further action by either party or further documentation. Upon such
termination, the Franchisor shall retain one-third (1/3) of the
Franchise Fee as a Termination Fee, two-thirds (2/3) of the Franchise
Fee and one hundred percent (100%) of any pre-paid option fees will be
refunded to the Franchisee within thirty (30) days of the notice by
Franchisor of the termination of this Agreement.
D. During the term of this Agreement, the Approved Location shall be used
exclusively for the purpose of operating a franchised Hooters
Restaurant. In the event the building shall be damaged or destroyed by
fire or other casualty, or be required to be repaired or reconstructed
by any governmental authority, Franchisee shall commence the required
repair or reconstruction of the building within ninety (90) days from
the date of such casualty or notice of such governmental requirement
(or such lesser period as shall be designated by such governmental
requirement) and shall complete all required repair or reconstruction
as soon as possible thereafter, in continuity, but in no event later
than one hundred eighty (180) days from the date of such casualty or
requirement of such governmental notice. The minimum acceptable
appearance for the restored building will be that which existed just
prior to the casualty; however, every effort should be made to have
the restored building include the then-current image, design and
specifications of new entry Hooters Restaurants. If the building is
substantially destroyed
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by fire or other casualty, Franchisee may, with Franchisor's agreement
and upon payment of an amount equal to six percent (6%) of all
insurance proceeds as a consequence of such casualty to the Franchisor
as a royalty, terminate this Agreement in lieu of Franchisee's
reconstructing the building.
E. It is understood and agreed that, ' except as expressly provided
herein, this franchise is non-exclusive and includes no right of
Franchisee to subfranchise others.
TERM
A. Except as otherwise provided herein, the term of this Agreement shall
commence on the date of execution and acceptance of this Franchise
Agreement by Hooters of America and shall expire twenty (20) years
from such date. There are no renewal rights, options or obligations on
the part of either party.
III. HOOTERS OF AMERICA'S OBLIGATIONS
A. Hooters of America shall provide Franchisee with advice in locating
and opening a completed restaurant, including, but not limited to,
providing approved supplier lists, acceptable site criteria, approved
renovation criteria and, at Hooters, of America's option, a set of
architectural plans of an existing Hooters Restaurant.
B. Hooters of America shall provide a management training program for up
to four (4) management personnel of Franchisee, and shall make
available such other training programs as it deems appropriate. All
training provided by Hooters of America shall be subject to the terms
set forth in Section V.H. of this Agreement.
C. Hooters of America shall also offer training resources to assist
franchisees at their restaurant location for hourly employees. All
pre-opening employee training shall be subject to the terms set forth
in Section V.I. of this Agreement.
D. Hooters of America shall provide, as Hooters of America deems
necessary, a minimum of eight (8) weeks of management training at a
designated restaurant prior to the opening of the Franchisee's
restaurant, by a representatives) of Hooters of America, subject (as
to timing) to the availability of personnel, as well as approximately
one (1) week to ten (10) days of preopening employee training at the
Franchisee Is restaurant.
E. Hooters of America shall provide such continuing advisory assistance
to Franchisee in the operation, advertising and promotion of the
Franchised Business as Hooters of America deems advisable.
F. Hooters of America shall also provide refresher training programs for
Franchisee and to Franchisee's employees as Hooters of America deems
appropriate. All refresher training programs provided by Hooters of
America shall be subject to the terms set forth in Section V.H. of
this Agreement.
G. Hooters of America may, from time to time, provide to Franchisee, at
Franchisees expense, such advertising and promotional plans and
materials for local advertising as described in Section X.A. of this
Agreement and may direct the discontinuance of such plans and
materials, from time to time. All other advertising and promotional
materials which Franchisee proposes to use must be reviewed and
approved by Hooters of America, pursuant to Section X.B. hereof.
H. Hooters of America shall provide. Franchisee, on loan, one copy of the
Hooters Training Manual and Videos (hereinafter "Manuals") as more
fully described in Section VII. hereof.
I. Hooters of America may provide Franchisee, from tire to time, as
Hooters of America deems appropriate, such merchandising, marketing
and other data and advice as may from time to time be developed by
Hooters of America and deemed by Hooters of America to be helpful in
the managing and operation of the Franchised Business.
J. Hooters of America may provide such periodic individual or group
advice, consultation and assistance, rendered by personal visit or
telephone, or by newsletter or bulletins made available from time to
time to all Hooters of America franchisees, as Hooters of America may
deem necessary or appropriate.
K. Hooters of America may provide such bulletins, brochures, manuals and
reports, if any, as may from time to time be published by or on behalf
of Hooters regarding its plans, policies, developments and activities.
In addition, Hooters of America may provide such communication
concerning new developments, techniques and improvements in the food
preparation, equipment, food products, packaging and restaurant
management which Hooters of America feels are relevant to the
operation of the Restaurant.
L. Hooters of America shall provide the requirements for a standardized
system for accounting, cost control and inventory control.
M. Hooters of America shall seek to maintain the high standards of
quality, appearance, and service of the Hooters System, and to that
end shall conduct, as it deems advisable, inspections of the
Restaurant franchised hereunder, and evaluations of the products sold
and services rendered therein.
N. All obligations of Hooters of America under this Agreement shall
benefit only the Franchisee, and no other party is entitled to rely
on, enforce, benefit from or obtain relief for breach of such
obligations, either directly or by subrogation.
IV. FEES
A. Franchisee shall pay to Hooters of America an initial franchise fee in
the amount of Seventy-Five Thousand Dollars ($75,000.00), which is due
upon execution of this Agreement and receipt of which is hereby
acknowledged by Hooters of America. The initial franchise fee shall be
paid in a lump sum in immediately available bank funds and shall be
deemed fully earned and nonrefundable in consideration of
administrative and other expenses incurred by Hooters of America in
granting this franchise and for Hooters of America's lost or deferred
opportunity to franchise others, except as described above in Section
I.C.
B. During the term of this Agreement, Franchisee shall pay to Hooters, of
America a continuing Royalty Fee which shall be equal to six percent
(6%) of the Gross Sales of the Restaurant, without counterclaim or
set-off. The term Gross Sales is defined in Section IV.G. of this
Agreement. Continuing Royalty Fees shall be payable by Franchisee and
actually received by Franchisor within ten (10) days from the end of
each four week accounting period as provided in Section IX hereof.
C. During the term of this Agreement, Franchisee shall spend a minimum of
three percent (3%) of the Gross Sales of the Restaurant on local
advertising and promotion; provided, however, that Franchisor shall
have the right to approve or disapprove any advertising proposed for
use by Franchisee. In the event Hooters of America establishes a Local
Advertising Cooperative within Franchisee's Area of Dominant Influence
(as defined by Arbitron Corporation, or such other entity as shall be
designated by Hooters of America, from time to time) , Franchisee
shall be obligated to contribute a minimum of up to one third of such
three percent (3%) [one percent (1%) of Gross Sales] for local
advertising and promotion expenditure described above to such
Cooperative, to be actually received within ten (10) days from the end
of each four week accounting period. Such percentage contribution to
such Cooperative shall be designated by Hooters of America from time
to time.
D. Franchisee shall pay to Hooters of America, to be actually received
within ten (10) days from the end of each four-week accounting period,
a National Advertising Fee equal to one percent (1%) of Franchisee's
Gross Sales of the Restaurant. The National Advertising Fee shall be
maintained and ad-ministered in a National Advertising Fund by Hooters
as provided in Section X.D. hereof.
E. The obligation of Franchisee to pay the Continuing Royalty Fee and the
National Advertising Fee (collectively the "Fees") shall not be
altered by the occurrence of any casualty or event which would cause a
temporary closing of the Restaurant for a period of more than five (5)
days. In the event that such a casualty or event occurs, the
Continuing Royalty and National Advertising Fees to be paid by
Franchisee for each month in which such temporary closing occurs shall
be the average of all monthly Fees payable by Franchisee during the
immediately preceding period of twelve (12) months, or such lesser
period as the Restaurant has been open, if the Restaurant has been
open less than twelve (12) months. All payments due to Hooters of
America hereunder shall be payable without counterclaim or set-off.
F. Any payment or report not actually received by Hooters of America on
or before' the specified date shall be deemed overdue. If any payment
is overdue, in addition to the right to exercise all rights and
remedies available to Hooters of America under Section XIII of this
Agreement, Franchisee shall pay Hooters of America, in. addition to
the overdue amount, interest on such amount from the date it was due
until paid at the lesser of the rate of eighteen (18%) percent per
annum and the maximum rate allowed by the laws of the State of
Georgia, or any successor or substitute law (hereinafter the "Default
Rate"), until paid in full.
G. As used in -this Agreement, "Gross Sales" shall include all revenue
accrued from the sale of all products and performance of services in,
at, upon, about, through or from the Franchised Business, whether for
cash or credit and regardless of collection in the case of credit, and
income of every kind and nature related to the Franchised Business
including insurance proceeds and/or condemnation awards for loss of
sales, profits or business; provided, however, that "Gross Sales"
shall not include revenues from any sales taxes or other add on taxes
collected from customers by Franchisee for transmittal to the
appropriate taxing authority, (the retail value of any complimentary
services or trade-outs or credit card discounts from Gross Sales up to
a maximum of 2% of Gross sales in the aggregate) , and the amount of
cash refunds to, and coupons used by customers, provided such amounts
have been included in gross sales. The sale and delivery of products
and services away from the Restaurant is strictly prohibited; however,
should Hooters of America approve such sales in the future, these
sales will be included in computing Gross Sales.
V. DUTIES OF FRANCHISEE
A. Franchisee understands and acknowledges that every detail of the
Franchised Business, including the uniformity of appearance ' service,
products and advertising of the Hooters System, is important to
Franchisee, Hooters of America, the Hooters System, and other Hooters
of America franchisees in order to maintain high and uniform operating
standards, to increase the demand for the products and services sold
by all franchisees- and to pr6tect Hooters of America's reputation and
goodwill.
B. If Franchisee is or becomes a corporation, the Franchisee corporation
must comply with the following requirements:
1. Franchisee shall confine its activities to the establishment and
operation of the Franchised Business.
2. Franchisee's Certificate or Articles of Incorporation and Bylaws
(or comparable governing documents) shall at all times provide
that its activities are confined exclusively to operation of the
Franchised Business and that the issuance and transfer of voting
stock, or other ownership interest therein, is restricted by the
terms of this Agreement.
3. Franchisee shall furnish Hooters of America promptly upon request
copies of Franchisee's Articles of Incorporation, Bylaws, and
other governing documents, and any other documents Hooters of
America may reasonably request, and any amendments thereto, from
time to time.
4. Franchisee shall maintain stop transfer instructions against the
transfer on its record of any equity securities except in
accordance with the provisions of Article XV. All securities
issued by Franchisee shall bear the following legend, which shall
be printed legibly and conspicuously on each stock certificate or
other evidence of ownership interest:
THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE TERMS AND
CONDITIONS OF A FRANCHISE AGREEMENT WITH HOOTERS OF AMERICA, INC.
DATED REFERENCE IS MADE TO SAID AGREEMENT AND TO THE RESTRICTIVE
PROVISIONS OF THE ARTICLES AND BYLAWS OF THIS CORPORATION.
5. Franchisee shall maintain a current list of all owners of record
and all beneficial owners of any class of voting stock of
Franchisee and shall furnish the list to Hooters of America upon
request, from time to time.
C. If Franchisee is or becomes a partnership, Franchisee shall furnish
Hooters of America promptly upon request a copy of its partnership
agreement and any other documents Hooters of America may reasonably
request, and any amendments thereto, from time to time.
D. Franchisee shall maintain a current list of all general and limited
partners and all owners of record and all beneficial owners of any
class of voting stock of Franchisee and -shall furnish the 'list to
Hooters of America promptly upon request, from time to time.
E. Each individual who or entity which holds a ten percent (10%) or
greater ownership or beneficial ownership interest in Franchisee,
directly or indirectly, (including each individual holding a fifty
(50%) or greater interest in any partnership or corporation having a
controlling interest in Franchisee) shall enter into a continuing
guaranty agreement under seal, in the form attached as Exhibit A, as
such form may be amended or modified by Hooters of America, from time
to time (if such guaranty agreement is to be executed subsequent to
the date hereof in accordance with the terms of this Franchise
Agreement).
F. Franchisee assumes all costs, liability, expense, and responsibility
for locating, obtaining, and developing a site for the Restaurant to
be established under the Franchise Agreement and for constructing and
equipping the Restaurant at such site. Franchisee shall not make any
binding commitment to a prospective vendor or lessor of real estate
with respect to the Approved Location for the Restaurant unless such
Approved Location is approved in accordance with the procedure herein
set forth and which provides, without limitation, for (a) thirty (30)
days prior written notice of any default thereunder specifying such
default and the right (but with no obligation) of Franchisor to cure
any such default within said period, and (b) approval of the
Franchisor as an assignee of Franchisee's interest thereunder.
FRANCHISEE ACKNOWLEDGES THAT HOOTERS OF AMERICA'S APPROVAL OF A
PROSPECTIVE SITE AND THE RENDERING OF ASSISTANCE IN THE SELECTION OF A
SITE DOES NOT CONSTITUTE A REPRESENTATION, PROMISE, WARRANTY, OR
GUARANTEE BY HOOTERS OF AMERICA THAT A HOOTERS RESTAURANT OPERATED AT
THAT SITE WILL BE PROFITABLE OR OTHERWISE SUCCESSFUL.
G. Before commencing the Construction of the Restaurant, Franchisee, at
its expense, shall comply, to Hooters of America's satisfaction, with
all of the following requirements:
1. Franchisee shall submit a site plan to Hooters of America,
including a footprint of the proposed building, and
architectural, kitchen and signage drawings for approval by
Hooters of America. Franchisee, at its option, may use any
architect or engineer currently used by Hooters of America to
prepare detailed plans and specifications for the Construction of
the Hooters Restaurant;
2. Franchisee shall use a qualified general contractor or
construction supervisor to oversee the Construction of the
Restaurant and completion of all improvements, and Franchisee
shall submit to Hooters of America a statement identifying the
general contractor or construction supervisor; and
3. Franchisee shall obtain all licenses, permits and certifications
required for lawful construction and operation of the Hooters
Restaurant including, without limitation, building, zoning',
access, parking, driveway access, sign permits and licenses, and
shall certify in writing to Hooters of America that all such
permits, licenses and certifications have been obtained.
Franchisee shall obtain all health, life safety, alcoholic and
other permits and licenses required for operation of the
Restaurant and shall certify that all such permits and licenses
have been obtained prior to the Opening Date.
4. Franchisee shall cause such Construction to be performed only in
accordance with the site plan, and plans and specifications,
approved by Hooters of America, and no changes will be made to
said approved plans and specifications, or the design thereof, or
any of the materials used therein, or to interior and exterior
colors thereof, without the express written consent of Hooters of
America.
H. Prior to Franchisee's opening of the Franchised Business to the
public, Franchisee and/or up to four (4) management personnel of
Franchisee (or, if Franchisee is a corporation or partnership, a
principal of Franchisee) shall complete to Hooters of America's
satisfaction the management training program offered by Hooters of
America. At Hooters of America's option, key personnel subsequently
employed by Franchisee shall also complete to Hooters of Americas
satisfaction, the management training program. Hooters of America may,
at its discretion, make available additional training programs,
seminars, as well as refresher courses to Franchisee and/or
Franchisee's designated individual (s) from time to time. Hooters of
America may, at any time, discontinue management training and decline
to certify Franchisee and/or Franchisee's designated individuals) who
fail to demonstrate an understanding of the management training
acceptable to Hooters, of America. If Franchisee or Franchisee's
designated individual's management training is discontinued by Hooters
of America, Franchisee shall have thirty (30) days to present an
alternative acceptable candidate for management training to
Franchisor. If Franchisee's new candidate does not adequately complete
the management training, then Hooters of America has the option of
terminating this Agreement. Hooters of America shall provide
instructors and training materials for all required training programs;
and Franchisee or its employees shall be responsible for all other
expenses incurred by Franchisee or its employees in connection with
any training programs, including, without limitation, the cost of
transportation, lodging, meals, and wages. Franchisor offers training
resources if as described below,, to assist franchisees at their
restaurant location for hourly employees. All jump starters shall be
deemed employees of the Franchisee during the period(s) of service to
the Franchisee, as herein provided. Franchisee shall give Franchisor
not less than thirty (30) days notice of when training should begin.
In order for training to begin, Franchisee shall have received a
Certificate of Occupancy and Health Department approval for the
building, and all refrigeration, kitchen and cooking equipment shall
be functioning.
Pre-Opening Training (FIRST UNIT)
Prior to the opening of Franchisee's first Restaurant unit hereunder, Franchisor
shall furnish the following training assistance, upon not less than thirty (30)
days prior written notice received by Franchisor from Franchisee:
opening coordinator (one)
An opening coordinator. for five days of training prior to
opening. Franchisor is responsible for all costs of the opening
coordinator.
Certified front-of-house trainers (up to four, as designated by Hooters of
America)
Front-of-house trainers, whose compensation shall be paid by
Franchisor, shall be furnished for five days of training prior to
opening.
Back-of-house trainers (up to two, as designated by Hooters of America)
Back-of-house trainers, whose compensation shall be paid by
Franchisor, shall be furnished for five days of training prior to
opening.
Jumpstarters (up to six, as requested by Franchisee)
Franchisor, at Franchisee's request, may furnish up to six
jumpstarters to actually work in the restaurant commencing on
opening day. Waitress jumpstarters work for the prevailing local
wage rates and customer's tips. Franchisee shall guarantee such
jumpstarters $45. 00 minimum total compensation (including tips)
for lunch and $65.00 minimum total compensation (including tips)
for dinner, as such minimum total compensation may be increased
by Franchisor, from time to time, with prior written notice to
Franchisee. Franchisee shall pay cook jumpstarters $75.00 per
shift, as such minimum total compensation may be increased by
Franchisor, from time to time, with prior written notice to
Franchisee. It is contemplated that such jumpstarters shall
normally work in the Restaurant during the first seven days after
opening.
Costs shall include: travel costs, per them and lodging costs for
all trainers and jumpstarters, which shall be borne by
Franchisee. Travel within 400 miles of a Franchisor restaurant is
by automobile and drivers are paid $0.20 cents per mile. Travel
further than 400 miles is by commercial airline with tickets
booked to minimize fares, subject to availability. Per them is
currently $20.00 per day. Lodging rates can be negotiated locally
at Franchisee's discretion; however, lodging shall be selected
and designated by Franchisee with consideration for safety,
security, cleanliness and proximity to the Restaurant. The above
stated rates may be changed by Franchisor, from time to time,
upon prior written notice to Franchisee.
Pre-opening Training (SECOND OR ADDITIONAL UNITS FOR A FRANCHISEE, IF PERMITTED
PURSUANT TO THIS FRANCHISE AGREEMENT)
Prior to the opening of Franchisees second or additional units
hereunder, Franchisor shall furnish the following training
assistance, upon not less than thirty (30) days prior written
notice received by Franchisor from Franchisee:
Franchisor shall furnish an opening coordinator for five days for
training prior to opening. Franchisor shall pay for the travel,
lodging, per them and compensation of the opening coordinator.
Prior to the time Franchisee opens its second or any additional
Restaurant units, Franchisee shall cause key employees from the
first unit of the Franchisee to be trained as certified trainers
in accordance with the Manuals. Franchisee's certified trainers
and junpstarters shall then conduct the training of new employees
in the second or additional units.
Franchisee shall be responsible for the compensation, travel,
lodging and per them of their certified trainers and jumpstarters
utilized in opening the second or additional units.
J. Franchisee shall use the Restaurant premises solely for the operation
of the Franchised Business; keep the business open and in normal
operation for a minimum of seven (7) days a week, fifty-two (52) weeks
per year, during hours from 11:30 a.m. to 12:00 midnight Monday
through Thursday, 11:30 a.m. to 1:00 a.m. Friday and Saturday and from
1:00 p.m. to 10:00 p.m. on Sundays, except Thanksgiving and Christmas.
Such minimum hours and days of operation may be changed as Hooters of
America may from time to time specify in the Manual or as Hooters of
America may otherwise approve in writing (subject to local ordinances
or lease restrictions, if any) ; and refrain from using or permitting
the use of the premises for any other purpose or activity at any time
without first obtaining the written consent of Hooters of America.
Franchisee shall not locate or permit to be located on or about the
Hooters Restaurant premises any slot machines or gambling devices, or
coin-operated machine for vending of any merchandise, or entertainment
devices, the playing of electronic or manual games or for any other
similar purpose except as prescribed in the Manual or otherwise
approved by Hooters of America in writing; nor shall Franchisee permit
the sale of products or services not included in the Hooters System
without Franchisor's prior express written consent, provided that
Franchisor, in its sole discretion, may prescribe conditions under
which such products or services may be sold.
K. Franchisee shall maintain the Restaurant in a first class repair and
condition, in accordance with all maintenance and operating standards
set forth in the Manual. In connection therewith, Franchisee shall
make such additions, alterations, repairs, and replacements thereto
(but no others without Hooters of America's prior written consent) as
may be required for that purpose, including, without limitation, such
periodic repainting, repairing, and replacing of obsolete signs,
fixtures, and furnishings as Hooters of America may reasonably direct.
L. Franchisee agrees to display all signs and other promotional materials
provided by Hooters of America, to the extent permitted by applicable
codes, laws, ordinances, rules and regulations of all federal, state
and local governmental authorities having jurisdiction over the
Restaurant (hereinafter collectively the "Laws") . The color, size,
design and location of said signs shall be as specified and/or
approved by Hooters of America. Franchisee shall not place additional
signs, posters or other decor items in, on, or about the Approved
Location without the prior written consent of Hooters of America.
M. Franchisee shall operate and maintain the Restaurant and all exterior
areas at the Approved Location in a clean and neat manner.
N. Franchisee shall, at Franchisee's sole expense, comply (or cause
compliance of the Restaurant and the Approved Location) with all
applicable Laws. Franchisor's standards may exceed the requirements of
the Laws.
0. At Hooters of America's request, which shall not be more often than
once every three (3) years, Franchisee shall refurbish the Restaurant
at its expense, to conform to the building design, trade dress, color
schemes, and presentation of trademarks and service marks consistent
with Hooters of America's designated image, including, without
limitation, remodeling, redecoration, and modifications to existing
improvements.
P. Franchisee shall operate the Restaurant in strict conformity with such
methods, standards, and specifications as Hooters of America may from
time to time prescribe in the Manual or otherwise in writing, to
maintain maximum efficiency and productivity and to insure that the
highest degree of quality and service is uniformly maintained.
Franchisee agrees:
1. To maintain in sufficient supply, and use at all times, only such
products, materials, supplies, ingredients, methods of
preparation and service, weight and dimensions of products
served, standards of cleanliness, health and sanitation and
methods of service as conform to Hooters of America's standards
and specifications; and to refrain from deviating therefrom by
using non-conforming items or methods without Hooters of
America's prior written consent;
2. To purchase such equipment, supplies, or products as may be
required by Hooters of America, for the appropriate handling and
selling of any food or beverage products that become approved for
offering in the Hooters System;
3. To require clean uniforms conforming to such specifications as to
color, design, etc. as Franchisor may designate, from time to
time, to be worn by all of Franchisee's employees at all times
while in attendance at the Restaurant, and to cause all employees
to present a clean, neat appearance and render competent and
courteous service to customers, as may be further detailed in the
Manual;
4. To permit Hooters of America or its agents, at any reasonable
time, to remove from the Restaurant samples of items without
payment therefor, in amounts reasonably necessary for testing by
Hooters of America or an independent laboratory to determine
whether said samples meet Hooters of America's then-current
standards and specifications. In addition to any other remedies
it may have under this Agreement, Hooters of America requires
Franchisee to bear the cost of such testing if the supplier of
the item has not previously been approved by Hooters of America,
or if the sample fails to conform to Hooters of America's
specifications;
5. Not to install or permit to be installed on or about the
Restaurant premises, without Hooters of America's prior written
consent, any fixtures, furnishings, signs, equipment, or other
improvements not previously approved as meeting Hooters of
America's standards and specifications;
6. To employ a sufficient number of employees and maintain
sufficient inventories as necessary to operate the Restaurant at
its maximum capacity as prescribed or approved by Hooters of
America and to comply with all applicable Laws with respect to
such employees.
Franchisee further acknowledges that complete and detailed uniformity
among Hooters Restaurants under varying conditions may be inadvisable,
impractical or impossible and, accordingly, agrees that Hooters of
America, at its sole discretion, may modify or vary aspects of the
Hooters 'System 'with respect to any franchisee or group of franchisees
based on (by way of example and not limitation) local site conditions,
sales potential, demographics, competition, local business practices,
or any other condition or circumstances that Hooters of America deems a
reasonable basis for such variances. Franchisee further agrees that
Hooters of America shall have no obligation to disclose or offer the
same or similar variances to Franchisee.
R. Franchisor reserves the right to require Franchisee to purchase
designated proprietary items and products, and products bearing the
Proprietary Marks, as specified in the Manuals from time to time, from
Franchisor or its related or affiliated entities or from sources
designated or approved by Franchisor, to the extent permitted by law.
S. Hooters of America shall have the right to require that certain
equipment, fixtures, furnishings, signs, supplies, and other products
and materials required for the operation of the Restaurant be
purchased solely from suppliers (including manufacturers,
distributors, and other sources), who demonstrate, to the continuing
reasonable satisfaction of Hooters of America, the ability to meet
Hooters of America's then-current standards and specifications for
such items; who possess adequate quality controls and capacity to
supply Franchisee's needs promptly and reliably; and who have first
been approved in writing by Hooters of America and not thereafter
withdrawn from the approved supplier list. Such items shall be listed
in the Manual, as well as in periodic bulletins and newsletters
supplied by Hooters of America. If Franchisee desires to purchase any
items from an unapproved supplier, Franchisee shall submit to Hooters
of America a written request for Franchisor's consent to use such
supplier, and have such supplier acknowledge in writing that
Franchisee is an independent entity from Hooters of America and that
Hooters of America is not liable for debts incurred by Franchisee.
Hooters of America shall have the right to require that its
representatives be permitted to inspect the supplier's facilities, and
that samples from the supplier be delivered ' at Hooters of America's
option, either to Hooters of America or to an independent laboratory
designated by Hooters of America for testing. A charge not to exceed
the reasonable cost of the inspection and the actual cost of the test
shall be paid by Franchisee. Hooters of America may also require that
the supplier comply with such other reasonable requirements as Hooters
of America may deem appropriate, including payment of the cost of
reasonable continuing inspection fees and administrative costs.,
Hooters of -America --reserves the right, following consent to use any
supplier and at its option, to reinspect the facilities and products
of any such supplier and to revoke its consent upon the supplier's
failure to continue to meet any of Hooters of America's then-current
criteria and standards. If, in providing services to Franchisee, any
third party may obtain access to confidential information as defined
in Section VIII. herein, Hooters of America may require, as a
condition of approval of such provider, the execution of covenants of
non-disclosure and non-competition in a form provided by Hooters of
America.
T. Franchisee -shall grant Hooters of America and its agents the right to
enter upon the Restaurant premises at any reasonable time to inspect,
photograph, audiotape or videotape the Restaurant, equipment, and
operations therein to insure compliance with the provisions of this
Agreement and the "Manual"; provided, that Hooters of America, in the
exercise of such rights, shall utilize all reasonable efforts to
prevent disruption or interference with the business of the
Franchisee. Franchisee shall cooperate with Hooters of Americas
representatives in such inspections by rendering such assistance as
they nay reasonably request and shall enforce and comply with all
inspection systems established by Franchisor from time to time; and,
upon reasonable notice from Hooters of America or its agents, and
without limiting Hooters of America's other rights under this
Agreement, take such steps as may be necessary to correct immediately
the deficiencies detected during any such inspection, including,
without limitation, immediately desisting from the further use of any
equipment, advertising materials, products, or supplies that do not
conform with Hooters of America's then-current specifications,
standards, or requirements.
U. Franchisee shall not engage in any trade practice or other activity or
sell any product or literature which Franchisor determines to be
harmful to the goodwill or to reflect unfavorably on the reputation of
Franchisee or Hooters of America, the Restaurant, or the products sold
thereat; or which constitutes deceptive or unfair competition, or
otherwise is in violation of any applicable laws.
The above limitations are closely related to the restaurant image, purpose and
marketing strategy of the Hooters System, and therefore any change therefrom
would fundamentally change the nature of the business.
V. Franchisee shall give Hooters of America advance written notice of
Franchisee's intent to institute legal action against Hooters of
America, specifying the basis for such proposed action, and shall
grant Hooters of America thirty (30) days from receipt of said notice
to cure the alleged act upon which such legal action is to be based.
W. During the term of this Agreement, except as otherwise approved in
writing by Hooters of America, Franchisee and/or Franchisees
designated manager must devote his or her full time, energy and best
efforts to the management and operation of the Franchised Business.
X. In any. real. property or equipment or trade fixture lease or
financing that Franchisee executes in connection with the Franchised
Restaurant, Franchisee shall include a provision approving Franchisor
as transferee without any right to accelerate or to modify said lease
or financing, and requiring the lessor or lender to send notice of any
default by the Franchisee on said lease or financing to Franchisor at
the address provided herein and to give Franchisor thirty (30) days
from the date notice of default is delivered to Franchisor to cure
said default. Franchisor is under no duty or obligation whatsoever to
cure said default, but should Franchisor elect to cure said default,
Franchisee agrees to re-pay and to indemnify Franchisor for any costs
and expenses incurred by Franchisor in connection with the cure of
said default upon demand by Franchisor.
VI. PROPRIETARY MARKS
A. Hooters of America represents with respect to the Proprietary Marks
that:
1. Pursuant to a license agreement originally dated July 21, 1984
and subsequently amended between Hooters of America and Hooters,
Inc., a Florida corporation, Hooters of America has been granted
the exclusive right to use and to license others to use the
Proprietary Marks to establish Hooters restaurants in the United
States, except in the following areas: Hillsboro, Pasco, Citrus,
Hernando and Pinellas Counties, Florida, Dupage, Kane, Will,
Lake, McHenry and Cook Counties, Illinois.
2. Hooters of America has taken, shall take or cause to be taken all
steps reasonably necessary to preserve and protect the ownership
and validity of the Proprietary Marks.
3. Hooters of America shall permit Franchisee and other franchisees
to use the Proprietary Marks only in accordance with the Hooters
System and the standards and specifications attendant thereto
which underlie the goodwill associated with and symbolized by the
Proprietary Marks.
B. With respect to Franchisee's licensed use of the Proprietary Marks
pursuant to this Agreement, Franchisee agrees that:
1. Franchisee shall use only the Proprietary Marks designated by
Hooters of America, and shall use them only in the manner
authorized and permitted by Hooters of America. Franchisee's
right to use the Proprietary Marks is limited to such uses as are
authorized under this Agreement, and any unauthorized use thereof
shall constitute an infringement of Hooters of America's rights.
2. Franchisee shall use the Proprietary Marks only for the operation
of the Franchised Business and only at the Approved Location
authorized hereunder, or in advertising for the business
conducted at or from the Approved Location.
3. Unless otherwise authorized or required by Hooters of America,
Franchisee shall operate and advertise the ' Franchised Business
only under the name "Hooters" without prefix or suffix, except to
describe the location of their franchise. Franchisee shall not
use the Proprietary Marks as part of its corporate or other legal
name.
4. During the term of this Agreement and any renewal hereof,
Franchisee shall identify itself as the owner of the Franchised
Business in conjunction with any use of the Proprietary Marks,
including, but not limited to, on invoices, order forms,
receipts, and contracts, as well as at such conspicuous locations
on the premises of the Franchised Business as Hooters of America
may designate in writing. The form and content of such
identification shall comply with standards set forth in the
Manual.
5. Franchisee shall not use the Proprietary Marks to incur any
obligation or indebtedness on behalf of Hooters of America.
6. Franchisee shall file and maintain requisite trade name or
fictitious name registrations as shall be required and directed
by Franchisor and/or by law, and shall execute any documents
deemed necessary by Hooters of America or its counsel to obtain
protection for the Proprietary Marks or to maintain their
continued validity and enforceability.
7. In the event that litigation involving the Proprietary Marks is
instituted or threatened against Franchisee, Franchisee shall
promptly notify Hooters of America and shall cooperate fully in
defending or settling such litigation, as determined exclusively
by Franchisor.
C. Franchisee-expressly understands and acknowledges that:
1. As between the parties hereto, Hooters of America has the
exclusive right and interest in and to the Proprietary Marks and
the goodwill associated with and symbolized by them.
2. The Proprietary Marks are valid, distinctive, and serve to
identify Hooters of America as the source of the goods and
services offered pursuant to those marks and by those who are
authorized to operate under the Hooters System.
3. Franchisee shall not directly or indirectly contest the validity,
distinctiveness, the ownership or Hooters of America's right to
license the Proprietary Marks.
4. Franchisee's use of the Proprietary Marks pursuant to this
Agreement does not give Franchisee any ownership interest or
other interest in or to the Proprietary Marks, except the license
granted by this Agreement. In the event Hooters substitutes
different Proprietary Marks, Franchisee shall be responsible for
the costs associated with such a change in connection with the
Franchised Business.
5. Any and all goodwill arising from Franchisee's use of the
Proprietary Marks in its franchised operation under the Hooters
System shall inure solely and exclusively to Hooters of America's
benefit, and upon expiration or termination of this Agreement and
the license herein granted, no monetary amount shall be assigned
as attributable to any goodwill associated with Franchisee's use
of the Hooters System or the Proprietary Marks.
6. The right and license of the Proprietary Marks granted hereunder
to Franchisee is nonexclusive, and Hooters of America thus has
and retains the rights, among others:
a. To use the Proprietary Marks itself in connection with
selling products and services;
b. To grant other licenses for the Proprietary Marks, in
addition to those licenses already granted to existing
franchisees; and
c. To develop and establish other systems using similar
Proprietary Marks, or any other proprietary marks, and to
grant licenses or franchises thereto at any locations)
whatsoever without providing any rights therein to
Franchisee.
7. Franchisee understands and acknowledges that Franchisor and
Hooters, Inc. each has the unrestricted right to engage, directly
or indirectly, through its or their employees, representatives,
licensees, Assigns, agents and others, at wholesale, retail and
otherwise., in the production, distribution and sale of products
bearing the Proprietary Marks licensed hereunder or other names
or marks, including without limitation, products included as part
of the Hooters System. Franchisee shall not under any
circumstances engage in any wholesale trade or sale of Hooters
System products for resale.
VII. HOOTERS OF AMERICA MANUALS
A. In order to protect the reputation and goodwill of Hooters of America
and to maintain high standards of operation under Hooters of America's
Proprietary Marks, Franchisee shall conduct its business in accordance
with this Agreement and Training manuals and/or Videotapes, described
herein as the "Manuals" (one copy of which Franchisee shall
acknowledge in writing upon receipt has been received on loan from
Hooters of America for the term of this Agreement), other written
directives which Hooters of America may issue to Franchisee from time
to time whether or not such directives are made part of the Manuals,
and any other manuals, videotapes, and materials created or approved
for use in the operation of the Franchised Business by Franchisor,
from time to time.
B. Franchisee shall at all times treat the Manuals, any written
directives of Hooters of America, any restaurant plans and
specifications, and any other manuals created for or approved for use
in the operation of the Franchised Business, and any supplements
thereto, and the information contained therein, in trust and as
confidential information, and shall use all reasonable efforts to
maintain such information as secret and confidential. Franchisee shall
not at any time copy, duplicate, record, or otherwise reproduce the
foregoing materials, in whole or in part, nor otherwise make the same
available to any unauthorized person.
C. The Manuals, written directives', other manuals and materials, and any
other confidential communications provided or approved by Hooters of
America, shall at all times remain the sole property of Hooters of
America and shall :it all times be kept and maintained in a secure
place on the Restaurant premises.
D. Hooters of America may from time to time revise the contents of the
Manuals and the contents of any other manuals and materials created or
approved for use in the operation of the Franchised Business, and
Franchisee expressly agrees that each new or changed standard shall be
deemed effective upon receipt by Franchisee or as specified in such
standard.
E. Franchisee shall at all times insure that its copy of the Manuals is
kept current and up-to-date; and, in the event of any dispute as to
the contents of the Manuals/ the master copy of the Manuals maintained
by Hooters of America at Hooters of America's headquarters shall be
controlling..
F. Any suggestions Franchisee may have concerning the improvement of
products, equipment, uniforms, restaurant facilities, service format
and advertising are encouraged and shall be considered by Hooters of
America when adopting or modifying the standards, specifications and
procedures for the Hooters System.
VIII. CONFIDENTIAL INFORMATION
A. Franchisee shall strictly comply with the terms of the Confidentiality
Agreement attached hereto and made a part hereof (hereinafter the
"Confidentiality Agreement").
B. At Hooters of America's request, Franchisee shall require its
principals, managers and any other personnel having access to any
confidential information from Hooters of America to execute and
deliver the Confidentiality Agreement.
C. Franchisee acknowledges that any failure to comply with the
requirements of the Confidentiality Agreement or this Section VIII.
shall cause Hooters of America irreparable injury, and Franchisee
agrees to pay, in addition to other damages, all court costs and
reasonable attorney's fees incurred by Hooters of America in obtaining
specific performance of, or an injunction against violation of, the
requirements of this Section VIII.
IX. ACCOUNTING AND RECORDS
A. Franchisee shall maintain during the term of this Agreement, and shall
preserve for at least two (2) years from the dates of their
preparation, full, complete, and accurate books, records, and accounts
prepared in accordance with generally accepted accounting principles
consistently applied and in the form and manner prescribed by Hooters
of America from time to time in the Manuals or otherwise in writing.
B. Franchisee shall submit to Hooters of America during the term of this
Agreement, after the opening of the Hooters Restaurant, (a) a royalty
report, on a four (4) week accounting period basis in the form
prescribed by Hooters of America from time to time, accurately
reflecting all Gross Sales during each preceding four week accounting
period, and such other data or information as Hooters of America may
require, from time to time, said report to be received by Franchisor
within ten (10) days from the date of expiration of each such four
(4)-week accounting period; and (b) profit and loss statements,
balance sheets and trial balances prepared in accordance with
generally accepted accounting principles, consistently applied, for
each accounting period, to be received by Franchisor within fifteen
(15) days after the date of expiration of each period covered by the
report, (c) copies of all tax returns relating to sales at the Hooters
Restaurant to be received by Franchisor within ten (10) days of the
end of the state sales tax reporting period, and (d) such other data
or information as Hooters of America may require, from time to time.
C. Franchisee shall, at its expense, provide to Hooters of America a
profit and loss statement and balance sheet, accompanied by a review
report certified by the President or Chief Financial Officer of
Franchisee, within ninety (90) days after the end of each fiscal year
of the Franchised Business during the term hereof, showing the results
of operations of the Franchised Business during said fiscal year.
Hooters of America also reserves the right to require Franchisee to
'have such review report prepared by an independent certified public
accountant satisfactory to Hooters of America.
D. Franchisee shall also submit to Hooters of America, for review or
auditing, such other forms, reports, records, sales tax returns
information, and data as Hooters of America may reasonably designate,
in the forms and at the times and places reasonably required by
Hooters of America, upon request and as specified from time to time in
the Manuals or otherwise in writing. Franchisee shall provide to
Hooters of America, or its designee, on forms designated for use by
Hooters of America, reports of daily receipts, vendor purchases,
payroll payments, and such other-forms, reports, records, and
information as Hooter's of America may request from time to time.
Franchisee shall also report all discounts" allowances and premiums
received from vendors.
E. Hooters of America or its designated agents shall have the right, at
all reasonable times, to examine and copy, at Hooters of America's
expense, the books, records, and tax returns of Franchisee and the
Franchised Business. Hooters of America shall also have the right, at
any time, to have an independent audit made of the books of the
Franchised Business. If an inspection should reveal that any payments
to Franchisor have been understated in any report to Hooters of
America, then Franchisee shall immediately pay to Hooters of America
the amount understated upon demand., in addition to interest on such
amount from the date such amount was due until paid, at the Default
Rate, calculated on a daily basis. If an inspection discloses an
understatement in any payment to Franchisor of two percent (2%) or
more, Franchisee shall, in addition, reimburse Hooters of America for
any and all costs and expenses relating to the inspection (including,
without limitation, travel, lodging and wage expenses and reasonable
accounting and legal costs), and, at Franchisors discretion, submit
audited financial statements prepared, at Franchisee' expense, by an
independent certified public accountant satisfactory to Hooters of
America. If an inspection discloses an understatement in any payment
to Franchisor of four percent (4%) or more, such act or omission shall
constitute grounds for immediate termination of this Agreement, as set
forth in Section XIII. hereof. The foregoing remedies shall be in
addition to any other remedies Hooters of America may have pursuant to
this Agreement and as provided at law and in equity.
F. Franchisee hereby grants permission to Hooters of America to release
to Franchisee's landlord, lenders or prospective landlords or lenders!
any financial and operational information relating to Franchisee
and/or the Hooters Restaurant; however, Hooters of America has no
obligation to do so.
G. Franchisee shall follow and adhere to the daily accounting and
reporting procedures as required by Hooters of America, from time to
time, and shall purchase accounting and reporting equipment including,
but not limited to, point of sale equipment as required by Hooters of
America. The point of sale equipment to be used in the Hooters
Restaurant shall possess several important features in order to
facilitate the operation and internal accounting control of the
Franchised Business. The hardware of the point of sale system shall
contain the following, without limitation:
1. A highly sensitive keyboard for fast input;
2. Controlled access to management functions such as item voids,
sales reports, refunds and adjustments;
3. Remote printer to aid in the service of beer and wine;
4. Internal communication among cash registers;
5. Check printer to document the detail of all sales transactions;
6. Capability to provide telecommunications to a central polling
location; and
7. A hard copy slip printer for guest checks.
Additionally, the software of the point of sale system shall contain the
following, without limitation:
1. Security key and password identification for each employee,
allowing the point of sale system to provide detailed sales
information for each employee;
2. Detailed sales tracking ability including, but not limited to,
hourly sales, department sales, customer counts, sales for the
individual employees and accounting period to date sales
information; and
3. communication or polling ability for all sales information to be
retrieved by Franchisee or Franchisor.
X. ADVERTISING
Recognizing the value of advertising and the importance of the standardization
of advertising programs to the furtherance of the goodwill and public image of
the Hooters System, the parties agree as follows:
A. Hooters of America may, from time to time, provide to Franchisee, at
Franchisee's expense, such advertising and promotional plans and
materials as Hooters of America deems advisable for local advertising.
Franchisee shall spend a minimum of three percent (3%) of Franchisee's
Gross Sales. on local advertising and promotion annually. In the event
that Hooters of America establishes a local/regional advertising
cooperative, Franchisee will be required to spend one percent (1%) of
the three percent (3%) local advertising expenditure on or through
such advertising cooperative. In addition, Hooters of America may
develop advertising programs for the promotion of the Proprietary
Marks or merchandise offered at Hooters restaurants.
B. Franchisee may undertake additional advertisement and promotion of the
Restaurant at Franchisee's election. All advertising and promotion by
Franchisee in any manner or medium shall conform to such standards and
requirements as are specified by Hooters of America. Franchisee shall
submit to Hooters of America for its prior written approval (except
with respect to product prices to be charged) , samples of all
advertising and promotional plans and materials that Franchisee
desires to use and which have not been prepared or previously approved
by Hooters of America. Franchisee shall display the Proprietary Marks
in the manner prescribed by Hooters of America on all signs and all
other advertising and promotional materials used in connection with
the Franchised Business.
C. Franchisee shall obtain listings and place advertisements in the white
and yellow pages of local telephone directories, in the form, size and
type of directories specified by Hooters of America.
D. (a) Franchisee agrees to make continuing monthly contributions to the
National Advertising Fund as required by Hooters of America in an
amount equal to one percent (1%) of Franchisee's Gross Sales.
Franchisee agrees that the National Advertising Fund shall be
maintained and administered by Hooters of America, or its designee, on
terms determined by Hooters of America -and that the Franchisor or its
designee will direct all advertising and/or promotional programs with
sole discretion over the concepts, materials and media used in such
programs and the placement and allocation thereof. Franchisee
acknowledges that the National Advertising Fund shall be used to
maximize general public recognition and acceptance of the Proprietary
Marks and all Hooters restaurants, and that Hooters of America is not
obligated in administering the National Advertising Fund to undertake
expenditures for Franchisee which are equivalent to Franchisee's
contribution, or to ensure that any particular franchise owner
benefits directly or pro rata from expenditures by the National
Advertising Fee. Upon written request of --------- Franchisee, Hooters
of America will furnish or cause to be furnished to Franchisee, not
more than once annually, an accounting of receipts and disbursements
of the National Advertising Fund.
(b) The National Advertising Fund, all contributions thereto, and any
earnings thereon, will be used exclusively to meet any and all
costs of maintaining, administering, researching, directing, and
preparing advertising and/or promotional activities.
(c) All sums paid by the Franchisee to the National Advertising Fund
will be maintained in an account separate from the other monies
of the Franchisor, and will not be used to defray any of the
Franchisor's expenses, except for such reasonable administrative
costs and overhead as the Franchisor may incur in activities
reasonably related to the administration or direction of the
National Advertising Fund and advertising programs for the
franchisees under the Hooters System. The National Advertising
Fund will not otherwise inure to the benefit of the Franchisor.
The Franchisor or its designee will maintain separate bookkeeping
accounts for the National Advertising Fund.
(d) It is anticipated that all contributions to and. earnings of the
National Advertising Fund will be expended for advertising and/or
promotional purposes during the taxable year within which the
contributions and earnings are received. if, however, excess
amounts remain in the National Advertising Fund at the end of
such taxable year, all expenditures in the following taxable
year(s) will be made first out of accumulated earnings from
previous years, next out of earnings-in-the-current year, and
finally from contributions.
(e) The National Advertising Fund is not and will not be an asset of
the Franchisor or its designee.
(f) Although the National Advertising Fund is intended to be of
perpetual duration, the Franchisor retains the right to terminate
the National Advertising Fund. The National Advertising Fund will
not be terminated, however, until all monies in the National
Advertising Fund have been expended for advertising and/or
promotional purposes or returned to contributors on the basis of
their respective contributions.
E. Franchisee is encouraged, although not required, to take part in
promotional programs which may be developed by Hooters of America.
However, Franchisee may be required to participate in cooperative
advertising programs with certain suppliers or approved sources of
goods. Franchisee shall have the right to sell its products and offer
services at any price Franchisee may determine, and shall in no way be
bound by any price which may be recommended or suggested by Hooters of
America.
XI. INSURANCE
A. Franchisee shall procure, or cause to be procured, prior to the
commencement of any operations under this Agreement, and shall
maintain, or cause to be maintained, in full force and effect at all
times during the term of this Agreement, at Franchisee's expense, an
insurance policy or policies insuring Franchisee and Hooters of
America, and their respective officers, directors, shareholders,
partners, and employees, as additional insured, against any demand or
claim with respect to personal injury, death, or property damage, or
any loss, liability, or expense whatsoever arising or occurring upon
or in connection with the Franchised Business.
B. Such policy or policies shall be written by an insurance company rated
A-minus or better, in Class 10 or higher, by Best Insurance Ratings
Service and satisfactory to Hooters of America in accordance with
standards and specifications set forth in the Manuals or otherwise in
writing, from time to time, and shall include, at a minimum (except as
additional coverages and higher policy limits may be specified by
Hooters of America from time to time), the following initial minimum
coverage:
1. (i) Commercial General Liability Insurance, including coverages
for products-completed operations, contractual liability,
personal and advertising injury, fire damage, medical expenses,
and liquor liability, having a combined single limit for bodily
injury and property damage of $1,000,000 per occurrence and
$2,000,000 in the aggregate (except for fire damage and medical
expense coverages, which may have different limits of not less
than $50,000 for one fire and $5,000 for one person,
respectively); plus (ii) non-owned automobile liability insurance
and., if Franchisee owns f rents or identifies any vehicles with
any Proprietary Mark or vehicles are used in connection with the
operation of the Franchised Business, automobile liability
coverage for owned, non-owned, scheduled and hired vehicles
having limits for bodily injuries of $100,000 per person and
$300,000 per accident, and property damage limits of $50,000 per
occurrence; plus (iii) excess liability umbrella coverage for the
general liability and automobile liability coverages in an amount
of not less than $5,000,000 per occurrence and aggregate. All
such coverages shall be on an occurrence basis and shall provide
for waivers of subrogation.
2. Franchisee shall also maintain comprehensive crime and blanket
employee dishonesty insurance in an amount of not less than
$100,000.
3. All-risk property insurance, including theft and flood coverage
(when applicable), written at replacement cost value covering the
building, improvements, furniture, fixtures, equipment, food and
beverage products. Coverage shall be written in a value which
will cover not less than eighty (80%) percent of the replacement
cost of the building and one hundred (100%) percent of the
replacement cost of the contents of the building.
4. Employer's Liability and Worker's compensation Insurance, as
required by state law.
5. Business interruption insurance of not less than Fifty Thousand
Dollars ($50,000.00) per month for loss of income and other
expenses with a limit of not less than six (6) months of
coverage.
C. Franchisee's obligation to obtain and maintain, or cause to be
obtained and maintained, the foregoing policy or policies in the
amounts specified shall not be limited in any way by reason of any
insurance which may be maintained by Hooters of America, nor shall
Franchisee's performance of that obligation relieve it of liability
under the indemnity provisions set forth in Section XVIII of this
Agreement.
D. Prior to the opening of the Hooters Restaurant and thereafter at least
thirty (30) days prior to the expiration of any such policy or
policies, Franchisee shall deliver to Hooters of America certificates
of insurance evidencing the proper coverage with limits not less than
those required hereunder. All certificates shall expressly provide
that not less than thirty (30) days prior written notice shall be
given to Hooters of America in the event of material alteration to
termination, non-renewal, or cancellation of, the coverages evidenced
by such certificates.
XII. TRANSFER OF INTEREST
A. Transfer by Hooters of America:
Hooters of America shall have the right to transfer or assign all or
any part of its rights or obligations herein to any person or legal
entity.
B. Transfer by Franchisee:
1. Franchisee understands and acknowledges that the rights and
duties set forth in this Agreement are personal to Franchisee,
and that Hooters of America has granted this Agreement in
reliance on information provided by Franchisee relating to
Franchisee's business skill, financial capacity, and personal
character. Accordingly, Franchisee agrees that Hooters of
America's express prior written consent shall be a necessary
condition precedent to the sale, assignment, transfer,
conveyance, gift, pledge, mortgage, encumbrance., or
hypothecation of any of the following:
a. any direct or indirect interest in this Agreement or the
franchise and license granted hereunder;
b. any direct or indirect interest in Franchisee, except that,
if the Franchisee is a corporation, the interest of a
stockholder may be transferred to another existing and
approved shareholder of the corporation and, 'if the
Franchisee is a 'partnership,,, the partnership interest of
a partner may be transferred to another existing and
approved partner of the partnership; and
c. Restaurant, the Approved Location, or all or substantially
all of the assets of the Franchised Business.
2.Hooters of America, in its sole discretion, except as herein
specifically provided, may withhold its consent to a transfer of
any interest in Franchisee, this Agreement, or the franchise;
provided, however, in all events, Hooters of America may, at its
sole discretion, require any or all of the following as
conditions of its approval:
a. All of Franchisee's accrued monetary obligations and all
other outstanding obligations to Hooters of America., its
subsidiaries, and its affiliates shall have been satisfied;
b. Franchisee shall have substantially complied with all of the
terms and provisions of this Agreement, any amendment hereof
or successor hereto, or any other agreements between the
Franchisee and Hooters of America, its subsidiaries or
affiliates and, at the time of transfer, shall not be in
default thereof;
c. The transferor shall have executed a general release under
seal, in a form satisfactory to Hooters of America, of any
and all claims against Hooters of America and its officers,
directors', shareholders, and employees, in their corporate
and individual capacities, including, without limitation,
claims arising under federal, state, and local laws, rules,
and ordinances;
d. The transferee (and, if the transferee is .other than an
individual, such principals and/or owners of a beneficial
interest in the transferee as Hooters of America may
request) shall enter into a written assumption agreement, in
a form satisfactory to Hooters of America, assuming and
agreeing to discharge all of Franchisee's obligations under
this Agreement and/or any new franchise agreement, as
hereinafter provided;
e. The transferee shall demonstrate to Hooters of America's
satisfaction that the transferee meets Hooters of America's
educational, managerial, and business standards; possesses a
good moral character, business reputation, and credit
rating; has the aptitude and ability to conduct the
Franchised Business (as may be evidenced by prior related
business experience or otherwise) ; and has adequate
financial resources and capital to operate the Franchised
Business.
f. The transferee (and, if the transferee is other than an
individual, such principals and/or owners of a beneficial
interest in the transferee as Hooters of America may
request) shall execute for a term ending on the expiration
date of this Agreement and with such renewal term, if any,
as may be provided by this Agreement, the standard form
franchise agreement then being offered to new Hooters System
franchisees and such other ancillary agreements as Hooters
of America may require for the Franchised Business, which
agreements shall supersede this Agreement in all respects
and the terms of which agreements may differ from the terms
of this Agreement, including, without limitation, a higher
percentage royalty rate, advertising contribution, and
service charge for goods; provided; however, that the
transferee shall not be required to pay an initial franchise
fee as provided in Section IV. A.;
g. The transferee, at its expense, shall upgrade the Restaurant
to conform to the then-current standards and specifications
of the new entry Hooters System and shall complete the
upgrading and other requirements within the time specified
by Hooters of America;
h. Franchisee shall remain liable for all of the obligations to
Hooters of America in connection with the Franchised
Business prior to the effective date of the transfer and
shall execute any and all instruments reasonably requested
by Hooters of America to evidence such liability;
i. Franchisee shall agree to remain obligated under the
covenants against competition of this Agreement as if this
Agreement had been terminated-on-the-date of the-transfer..
j. At the transferees expense, the transferee and, if
applicable, the transferee's designated individual manager
shall complete any training programs then in effect for
franchisees upon such terms and conditions as Hooters of
America may reasonably require;
k. Except in the case of a transfer to a corporation
wholly-owned by the Franchisee and formed for the
convenience of ownership, transferee shall pay a transfer
fee in an amount equal to twenty (20%) per cent of the then
current initial franchise fee charged by Franchisor.
l. The transferee shall agree to a sublease or to a transfer
and assignment, and assumption of the lease of the
Restaurant site for the original franchisee and shall obtain
the landlord's approval if required prior to any transfer or
sublease, if applicable.
m. The Franchisee and the transferee shall execute and deliver
a transfer agreement in the form attached hereto or the then
current form of transfer agreement approved by the
Franchisor.
3. Franchisee acknowledges and agrees that each condition which must
be met by the transferee is necessary to assure such transferee's
full performance of the obligations hereunder.
4. If the contract of sale between Franchisee and transferee
provides for installment payments of the purchase price of any
such sale of assets or stock of the Franchisee', the terms of any
such transaction must be expressly preapproved in writing by
Franchisor. Franchisee seller shall remain personally liable to
Franchisor for payment of the Fees owed by the transferee until
the installment payments of the purchase price and any related
compensation or remuneration are paid and satisfied. Such
installment payments, compensation and/or remuneration shall be
subordinate to the Fees to be paid to Franchisor under the
Franchise Agreement then if effect for the Restaurant.
C. Transfer to Franchisee's CorDoration:
Franchisee reserves the right to transfer and assign all of its right, title and
interest under this Franchise Agreement relating to an Approved Location to a
corporation or partnership owned and controlled by Franchisee, or shareholders
of the Franchisee, and formed for the convenience of ownership and operation of
the Restaurant, subject to compliance with the requirements otherwise set forth
in this Agreement and the satisfaction of the following additional requirements
as provided in (1) below to be delivered to Franchisor upon such transfer and
assignment and, thereafter, upon request by Franchisor, from time to time:
1. Franchisee or, if Franchisee is a corporation, the shareholders
of Franchisee shall be and at all times shall remain the owner of
a majority of the stock and a majority of the voting control of
such corporation (or, if a partnership, the sole general partner
and the owner of a majority of the partnership interests of said
partnership);
2. The transferee corporation or partnership shall comply, except as
otherwise approved in writing by Franchisor, with the
requirements set forth in Section V.B. throughout the term of
this Agreement.
3. Franchisee agrees to remain responsible and liable for the
performance by Franchisee and such transferee corporation or
partnership of all of the terms and provisions of this Franchise
Agreement.
D. Right of First Refusal:
1. The Franchisee and any party holding any interest in the
Franchisee who desires to accept any bona fide offer from a third
party to purchase such interest shall notify Hooters of America
in writing of each such offer, and shall provide such information
and documentation relating to the offer as Hooters of America may
require, including a true copy of any such offer. Hooters of
America shall have the right and option, exercisable within
twenty (20) business days after receipt of such written
notification, to send written notice to the seller that Hooters
of America intends to purchase the seller's interest on the same
terms and conditions offered by the third party. To enable
Hooters of America to determine whether it will exercise its
option, Franchisee and the seller shall provide such information
and documentation, including financial statements, as Hooters of
America may require. In the event that Hooters of America elects
to purchase the seller's interest, closing on such purchase must
occur within ninety -(90)---days-,from the-date-of-notice-to-the
seller of the election to purchase by Hooters of America. Failure
of Hooters of America to exercise the option afforded by this
Section XII-D. shall not constitute a waiver of any other
provision of this Agreement, including all of the requirements of
this Section XII., with respect to a proposed transfer. Any
change in the terms of any offer prior to closing shall
constitute a new offer subject to the same rights of first
refusal by Hooters of America as in the case of an initial offer.
2. In the event the consideration, terms, and/or conditions offered
by a third party are such that Hooters of America nay not
reasonably be required to furnish the same consideration, terms,
and/or conditions, then Hooters of America may purchase the
interest in the Franchised Business proposed to be sold for the
reasonable equivalent in cash. If the parties cannot agree within
a reasonable time on the cash consideration, an independent
appraiser experienced in appraising business similar to the
Restaurant shall be designated by Hooters of America, and
determination by such appraiser shall be conclusive and binding
on all parties.
E. Transfer Upon Death or Mental Incompetency:
Upon the death or mental incompetency of the Franchisee or any person with an
interest or beneficial interest in the Franchise, the executor, administrator,
or personal representative of such person shall transfer within one (1) year
after such death or mental incompetency such interest to an existing approved
shareholder of Franchisee, or to a third party approved by Hooters of America,
which approval shall not be unreasonably withheld. Mental incompetency, for
purposes of this Franchise Agreement, shall mean the appointment of a guardian
for the subject party by a court of competent jurisdiction. Such transfers,
including, without limitation, transfers by devise or inheritance, shall be
subject to the same conditions as any inter vivos transfer. However, in the case
of transfer by devise or inheritance, if the heirs or beneficiaries of any such
person are unable to satisfy the conditions in this Section XII. within said one
(1) year period, Hooters of America may terminate this Agreement or may exercise
its option to purchase the Hooters Restaurant at fair market value, as
determined by an independent appraiser designated by Hooters of America which
determination by such appraiser shall be conclusive and binding on all parties.
F. "Interim--operation--of-the-Restaurant:
Pending assignment, upon the death of Franchisee or its operating principal, or
in the event of any temporary or permanent mental or physical disability of
Franchisee or its operating principal, a manager shall be employed for the
operation of the Restaurant who has successfully completed Franchisor's training
courses to operate the Restaurant for the account of Franchisee. If after the
death or disability of Franchisee or the operating principal of Franchisee the
Restaurant is not being managed by such trained manager, Hooters of America is
authorized to appoint a manager to maintain the operation of the Restaurant
until an approved assignee will be able to assume the management and operation
of the Restaurant, but ih no event f or a period exceeding one (1) year without
the approval of Franchisee, the personal representative of Franchisee, or
Franchisee's successor in interest; such manager shall be deemed an employee of
the Franchisee. All funds from the operation of the Restaurant during the period
of management by such appointed or approved manager shall be kept in a separate
fund and all expenses of the Restaurant, including compensation of such manager,
other costs and travel and living expenses of such appointed or approved manager
(the "Management Expenses") , shall be charged to such fund. As compensation for
the management services provided, in addition to the Fees due hereunder, Hooters
of America shall charge such fund the full amount of the direct expenses
incurred by Hooters of America during such period of management for and on
behalf of Franchisee ' provided that Hooters of America shall only have a duty
to utilize reasonable efforts and shall not be liable to Franchisee or its
owners for any debts, losses or obligations incurred by the Restaurant, or to
any creditor of Franchisee for any merchandise, materials, supplies or services
purchased by the Restaurant during any period in which it is managed by a
Hooters of America-appointed or approved manager.
G. Non-Waiver of Claims:
Neither Hooters of America's consent to any proposed transfer of any interest in
the franchise granted herein, nor Hooters of America's failure to exercise its
option to purchase any interest of a seller, shall be deemed to constitute a
waiver of any claims it may have-against the transferring party or entity, nor
shall it be deemed a waiver of Hooters of America's right to demand exact
compliance with any of the terms of this Agreement by any transferor or
transferee, any future rights or options of Hooters of America, or any provision
of this Agreement.
XIII. DEFAULT AND TERMINATION
A. Franchisee shall be deemed to be in default under this Agreement, and
all rights granted herein shall automatically terminate without notice
to Franchisee, upon the occurrence of any of the following events:
1. If Franchisee shall become insolvent or makes a general
assignment for the benefit of creditors;
2. If a petition in bankruptcy is filed or a case in bankruptcy is
commenced by Franchisee, or against Franchisee and is not opposed
by Franchisee;
3. If Franchisee is adjudicated as bankrupt or becomes insolvent, in
Franchisor's reasonable determination, which shall mean any one
or more of the following conditions that appertain - to
Franchisee: (i) The fair value of its property is less than the
amount required to pay all of its indebtedness, including
contingent debts; (ii) The present fair saleable value of its
owned property is less than the amount that will be required to
pay all of its existing indebtedness as such becomes absolute and
matured; (iii) Franchisee is unable to pay all of its
indebtedness as such indebtedness matures, or (iv) Franchisee's
capital is insufficient to carry on its business transactions and
all business transactions in which it is about to engage.
4. If a bill in equity or other proceeding for the appointment of a
receiver of Franchisee or other custodian for Franchisee's
business or assets is filed and consented to by Franchisee,
5. If a receiver or other custodian (permanent or temporary) of the
Restaurant, Franchisee, or Franchisee's assets or property, or
any part thereof, is appointed by any court of competent
jurisdiction;
6. If proceedings for a composition with creditors under any state
or federal law should be instituted by or against Franchisee;
7. If a final judgment remains unsatisfied or of record for thirty
(30) days or longer (unless supersedes bond is filed) ; or if
Franchisee is dissolved;
8. If execution is levied against Franchisee's business or property;
9. If any real or personal property of Franchisee's Restaurant shall
be sold after levy thereupon by any sheriff., marshal, or
constable;
10. If Franchisee (or, if Franchisee is a corporation or partnership,
any principal of Franchisee) is convicted of or pleads nolo
contenders to a felony, fraud, sale of illegal drugs, a crime
involving moral turpitude or any other crime that is directly
related to Franchisee's conduct of the Franchised Business, or
any other crime that Hooters of America determines to have an
adverse effect on the Restaurant, the Hooters System, the
Proprietary Marks, the goodwill associated therewith, or Hooters
of America's interest therein;
11. If, in violation of the terms of Sections VII. or VIII. hereof,
or the Confidentiality Agreement, Franchisee, its principals,
representatives, agents or employees disclose or divulge the
contents of the Manuals or other confidential information
provided to Franchisee by Hooters of America, or if Franchisee
maintains false books or records, or submits any false reports to
Hooters of America;
12. If any inspection of Franchisee's records discloses an
understatement of payments due Hooters of America of four percent
(4%) or more;
13. If Franchisee or any principal of Franchisee is convicted in a
court of competent jurisdiction of an indictable offense
punishable by a term of imprisonment in excess of one (1) year
that is directly related to the business conducted pursuant to
this Agreement;
14. If Franchisee's alternate candidate for management training shall
not adequately complete such management training program, after
either Franchisee or Franchisees designated individual previously
failed to complete adequately the management training;
15. If an approved transfer is not effected within the time set forth
in Section XII.E. hereof, following Franchisee's or the principal
of Franchisee's death or mental incompetency;
16. Except as otherwise provided in this Franchise Agreement, if
Franchisee at any time ceases to operate or otherwise abandons
the Franchised Business, or otherwise forfeits the right to do or
transact business in the jurisdiction where the Restaurant is
located; or
17. In the event of the gross negligence or willful breach of this
Franchise Agreement by the Franchisee, or any of the principals
of the Franchisee, in the breach of any of the covenants of the
Franchisee contained in this Agreement.
B. Except as provided in Sections XIII.A., XIII.C. and XIII.D. of this
Agreement, Franchisee shall have five (5) days after its receipt from
Hooters of America of a written notice of termination within which to
remedy any default hereunder (or, if the default cannot reasonably be
cured within such five (5) days, to initiate within that time
substantial and continuing action to cure the default), and to provide
evidence thereof to Hooters of America. If any such default is not
cured within that time (or, if appropriate, substantial and continuing
action, in continuity, to cure the default is not initiated within
that time), or such longer period as provided herein or as applicable
law may require, this Agreement shall terminate with reference to such
Approved Location(s) wherein said default shall occur without further
notice to Franchisee effective immediately upon expiration of the five
(5) day period or such longer period as applicable law may require.
Franchisee shall be in default hereunder for any failure to comply
with any of the requirements imposed by this Agreement or the Manuals,
as it may from time to time reasonably be supplemented, or to carry
out the terms of this Agreement. Such defaults shall include, without
limitation, the occurrence of any of the following events:
1. If Franchisee fails, refuses, or neglects promptly to pay when
due any monies owing to Hooters of America or its subsidiaries or
affiliates, the National Advertising Fee or to submit the
financial or other information required by Hooters of America
under this Agreement, or makes any false statements in connection
therewith;
2. If Franchisee sells unauthorized products or products not meeting
Franchisor's specifications;
3. If Franchisee fails to maintain any of the standards or
procedures prescribed by Hooters of -America in this - Agreement,
the Manuals, or otherwise in writing; or
4. If Franchisee fails to maintain the character and nature of the
Restaurant through alteration of the product selection, product
restrictions, image, design or inventory.
C. Except as provided in Sections XIII.A., XIII.B. and XIII.D. of this
Agreement, Franchisee shall have ten (10) days after its receipt from
Hooters of America of a written notice of termination within which to
remedy any default hereunder (or, if the default cannot reasonably be
cured within such ten (10) days, to initiate within that time
substantial and continuing action to cure the default), and to provide
evidence thereof to Hooters of America. If any such default is not
cured within that time (or, if appropriate, substantial and continuing
action in continuity to cure the default is not initiated within that
time) , or such longer period as applicable law may require, this
Agreement shall terminate with reference to such Approved Location(s)
wherein said default shall occur without further notice to Franchisee
effective immediately upon expiration of the ten (10) day period or
such longer period as applicable law may require. Franchisee shall be
in default hereunder for any failure to comply with any of the
requirements imposed by this Agreement or the Manuals, as it may from
time to time reasonably be supplemented, or to carry out the terms of
this Agreement in good faith. Such defaults shall include, without
limitation, the occurrence of any of the following events:
1. If a threat or danger to public health or safety results from the
maintenance or operation of the Restaurant which is not
immediately corrected by Franchisee;
2. If Franchisee or any partner of or shareholder in Franchisee
purports to transfer any rights or obligations under this
Agreement or any interest in Franchisee to any third party
without Hooters of America's prior written consent, contrary to
the terms of Section XII. of this Agreement;
3. If Franchisee fails to comply with the in-term covenants in
Section XV.B. hereof or fails to obtain execution of the
covenants required under Section VIII.B. or Section XV.I. hereof;
or
4. If Franchisee, after curing a default pursuant to 'Section -
XIII. C. hereof , commits the " same - act - of default two
additional times within one (1) year of the initial act of
default.
D. Except as provided in Sections XIII.A., XIII.B. and XIII.C. of this
Agreement, Franchisee shall have thirty (30) days after its receipt
from Hooters of America of a written notice of termination within
which to remedy any default hereunder (or, if the default cannot
reasonably be cured within such thirty (30) days, to initiate within
that time substantial and continuing action to cure the default), and
to provide evidence thereof to Hooters of America. If any such default
is not cured within that time (or, if appropriate, substantial and
continuing action to cure the default is not initiated within that
time) ' or such longer period as applicable law -may require, this
Agreement shall terminate with reference to such Approved Location(s)
wherein said default shall occur without further not-ice to Franchisee
effective immediately upon expiration of the thirty (30) day period or
such longer period as applicable law may require. Franchisee shall be
in default hereunder for any failure to comply with any of the
requirements imposed by this Agreement or the Manuals, as it may from
time to time reasonably be supplemented, or to carry out the terms of
this Agreement in good faith. Such defaults shall include, without
limitation, the occurrence of any of the following events:
1. If Franchisee's alcoholic beverage license is revoked or
suspended for any reason;
2. If Franchisee misuses or makes any unauthorized use of the
Proprietary Marks or otherwise materially impairs the goodwill
associated therewith or Hooters of America's rights therein;
3. If Franchisee engages in any business or markets any service or
product under a name or mark which, in Hooters of America's
opinion, is confusingly similar to the Proprietary Marks or the
Hooters System;
4. If Franchisee, by act or omission, commits or permits a violation
of any terms and provisions of this Franchise Agreement not
specifically addressed in this Section, or of any law, ordinance,
rule or regulation of a governmental agency, in the absence of a
good faith dispute over its application or legality and without
promptly resorting to an appropriate administrative or judicial
forum for relief therefrom;
5. If Franchisee fails to a maintain a responsible credit rating by
failing to make prompt payment of undisputed bills, invoices and
statements from suppliers of goods and services to the Hooters
Restaurant;
6. If Franchisee, without the prior written consent of Hooters of
America, enters into a management agreement or consulting
arrangement relating to the Hooters Restaurant with any person or
with an entity not wholly owned by Franchisee;
7. If Franchisee defaults under a lease for or relating to the
Restaurant, or under any mortgage, chattel mortgage, conditional
bills of sale, title retention contracts or security agreements
of every kind or character, and does not cure such default within
any grace period provided by the lease or security instrument; or
8. If Franchisee fails to pay on a timely basis its taxes or other
governmental charges, rent., lease payments, or payments to
suppliers, contractors, or trade creditors.
9. If the current liabilities of Franchisee exceed the current
assets of Franchisee, as shown on any balance sheet of Franchisee
furnished to the Franchisor; provided that a default of this
nature must be cured within the original thirty (30) day cure
period, and its cure may be effected solely by delivery of (i) an
audited or unaudited balance sheet of Franchisee, dated as of the
end of the month preceding the last day of the cure period,
demonstrating that the current assets of Franchisee exceed the
current liabilities of Franchisee, and (ii) a written
certification, executed by the chief executive officer and the
chief accounting officer of Franchisee, that the balance sheet is
accurate and that as of the date of the certification,
Franchisee's current assets exceed its current liabilities.
E. Any and all claims (except for monies due Franchisor) arising out of
or related to the offer, sale, negotiation, administration and
termination of this Agreement, or the relationship between or among
the parties hereto, shall be barred unless an action at law or in
equity is properly filed in a court of competent jurisdiction within
one (1) year from the date Franchisee or Franchisor knows or should
have known of the fact giving- -rise -to -such- -claim except -to -the
- extent any applicable 'law or statute provides for a shorter period
of time to bring a claim.
XIV. OBLIGATIONS UPON TERMINATION OR EXPIRATION Upon termination or expiration
of this Agreement, all rights granted hereunder to Franchisee shall forthwith
terminate, and:
A. Franchisee shall immediately cease to operate the business franchised
under this Agreement ' and shall not thereafter, directly or
indirectly, represent to the public or hold itself out as a present or
former franchisee of Hooters of America.
B. Franchisee shall immediately and permanently cease to use, in any
manner whatsoever, any confidential methods, procedures and techniques
associated with the Hooters System; the Proprietary Mark "Hooters"; or
all other Proprietary Marks and distinctive forms, slogans, signs,
symbols, and devices associated with the Hooters System. In
particular, Franchisee shall cease to use, without limitation, all
signs, advertising materials, displays, stationery, forms, and any
other articles which display the Proprietary Marks; provided, however,
that this Section XIV.B. shall not apply to the operation by
Franchisee of any other franchise under the Hooters System which may
be separately and independently granted by Hooters of America to
Franchisee.
C. Franchisee shall take such action as may be necessary to cancel any
assumed name or equivalent registration which contains the mark
"Hooters" or any other service mark or trademark of Hooters of
America, and Franchisee shall furnish Hooters of America with
confirmation that this obligation has been fulfilled within thirty
(30) days after termination or expiration of this Agreement.
D. Franchisee agrees, in the event it continues to operate or
subsequently begins to operate any other business, not to use any
reproduction, counterfeit, copy, or colorable imitation of the
Proprietary Marks, either in connection with such other business or
the promotion thereof, which is likely to cause confusion, mistake, or
deception, or which is likely to dilute Hooters of America's rights in
and to the Proprietary Marks, and further agrees not to utilize any
designation of origin or description or representation which falsely
suggests or represents an association or connection with Hooters of
America or the Hooters, System.
E. Franchisee shall promptly pay to Franchisor (a) all sums owing to
Hooters of America and its subsidiaries and affiliates accrued through
the effective date of termination following performance by the
Franchisee of the provisions of Section XIV, and (b) an amount equal
to the Fee payable by Franchisee for the thirteen (13) four (4)-week
periods prior to the date of notice by Franchisor to Franchisee of
termination of this Agreement (or if this Agreement is terminated
prior to the expiration of thirteen (13) four (4)-week periods, then
the amount of such Fees payable by Franchisee projected to said
thirteen (13) four (4)-week periods], and (c) all costs and expenses,
including reasonable attorney's fees, incurred by Hooters of America
as a result of the default, which obligation, until paid in full '
shall be and constitute a lien in favor of Hooters of America against
any and all cf the personal property, furnishings, equipment, signs,
fixtures inventory and assets owned by Franchisee and on the premises
operated hereunder at the time of default. The Franchisor and the
Franchisee specifically acknowledge and agree that the damage to
Franchisor from Franchisee's default hereunder would be difficult or
impossible to accurately determine, and that the sums payable by
Franchisee to Franchisor, as herein provided, are a reasonable
estimate of Franchisor's damages and does not constitute a penalty.
F. Franchisee shall pay to Hooters of America all damages, costs, and
expenses, including reasonable attorney's fees, , incurred by Hooters
of America in obtaining injunctive or other relief for the enforcement
of any provisions of Section XIV.
G. Franchisee shall immediately deliver to Hooters of America all
manuals, including the Manuals, records, files, instructions,
correspondence,. all materials related to operating the Franchised
Business, including, without limitation, brochures, agreements,
invoices, and any and all other materials relating to the operation of
the Franchised Business in Franchisee's possession, and all copies
thereof (all of which are acknowledged to be Hooters of America's
property), and shall retain no copy or record of any of the foregoing,
except Franchisee's copy of this Agreement and of any correspondence
between the parties and any other documents which Franchisee
reasonably needs for compliance with any provision of law.
H. Within ten (10) days from the date of termination of this Agreement,
Franchisee and Hooters of America shall arrange f or an, inventory -
to --be - made, -at -- Hooters- of America's cost if required by
Hooters of America, of all of the assets of the Restaurant, including
without limitation resalable merchandise, decor package, signs, and
any items containing the Proprietary Marks related to the operation of
the Restaurant. Hooters of America shall have the option to purchase
from Franchisee any or all such items at fair market value, as
determined by an independent appraiser designated by Hooters of
America, which determination by such appraiser shall be conclusive and
binding on all parties; such option may be exercised by Hooters of
America within thirty (30) days from the date of receipt of such
appraisal, for closing of purchase and sale within thirty (30) days
from the date of exercise of such option.
XV. COVENANTS
A. Franchisee covenants that during the term of this Agreement, except as
otherwise approved in writing by Hooters of America, Franchisee shall
devote his full time, energy, and best efforts to the management and
operation of the Franchised Business hereunder.
B. Franchisee specifically acknowledges that, pursuant to this Agreement,
Franchisee will receive valuable specialized training and confidential
information, including, without limitation, information regarding the
operational, sales, promotional and marketing methods and techniques
of Hooters of America and the Hooters System. Franchisee covenants
that, during the term of this Agreement'. except as otherwise approved
in writing by Hooters of America, Franchisee shall not, either
directly or indirectly, for itself, or through, on behalf of ' or in
conjunction with, any person, persons, or legal entity, employ or seek
to employ any person who is at that tin ' e employed by Hooters of
America or by any other franchisee or affiliate of Hooters of America,
or otherwise directly or indirectly induce such person to leave his or
her employment.
C. Franchisee covenants that, except as otherwise approved in writing by
Hooters of America, Franchisee shall not, during the term of this
Agreement and for a continuous uninterrupted period commencing upon
the expiration or termination of this Agreement, regardless of the
cause for termination, and continuing for two (2) years thereafter,
either directly or indirectly for itself, or through, on behalf of, or
in conjunction with, any person! persons, or legal entity, own,
maintain, operate, engage in, be employed by, or have any interest in
any restaurant business featuring female sex appeal, with similar
decor or similar menu items to Hooters restaurants within a five (5)
mile radius of the restaurant location designated hereunder, or within
a five (5) mile radius of any other Hooters Restaurant in existence or
planned as of the time of termination or expiration of this Agreement,
as identified in the Franchise Offering Circular of Hooters of America
in effect as of the date of expiration or termination of this
Agreement.
D. Section XV.C. shall not apply to ownership by Franchisee of less than
a five percent (5%) beneficial interest in the outstanding equity
securities of any publicly held corporation.
E. The parties agree that each of the foregoing covenants shall be
construed as independent of any other covenant or provision of this
Agreement. If all or any portion of a covenant in this Section XV. is
held unreasonable or unenforceable by a court or agency having valid
jurisdiction in an unappealed final decision in a proceeding to which
Hooters of America is a party, Franchisee expressly agrees to be bound
by any lesser covenant subsumed within the terms of such covenant that
imposes the maximum duty permitted by law, as if the resulting
covenant were separately stated in and made a part of this Section XV.
F. Franchisee understands and acknowledges that Hooters of America shall
have the right, in its sole discretion, to reduce the scope of any
covenant set forth in Sections XV.B. and XV.C. of this Agreement, or
any portion thereof, without Franchisee's consent, effective
immediately upon receipt by Franchisee of written notice thereof; and
Franchisee agrees that it shall comply forthwith with any covenant as
so modified, which shall be fully enforceable notwithstanding the
provisions of Section XX. hereof.
G. Franchisee expressly agrees that the existence of any claims it may
have against Hooters of America, whether or not arising from this
Agreement, shall not constitute a defense to the enforcement by
Hooters of America of the covenants in this Section XV. Franchisee
agrees to pay all damages, costs and expenses (including reasonable
attorney's fees) incurred by Hooters of America in connection with the
enforcement of this Section XV.
H. Franchisee acknowledges that Franchisee's violation of the terms of
this Section XV. would result in irreparable injury to Hooters of
America for which no adequate remedy 'at, law may be available, and
Franchisee accordingly consents to the issuance of an injunction
prohibiting any conduct by Franchisee in violation of the terms of
this Section XV and waives any requirement for the posting of any
bond(s) relating thereto.
I. At Hooters of America's request, Franchisee shall require and obtain
execution of covenants set forth in this Section XV. (including
covenants applicable upon the termination of a person's relationship
with Franchisee) from any or all of the following persons: (1) all
principals of Franchisee (if Franchisee is a corporation or
partnership), all managers of Franchisee, and any other personnel
employed by Franchisee who have received or will receive training in
the Hooters System; (2) all officers, directors, and holders of a
beneficial interest of five percent (5%) or more of the securities or
ownership of Franchisee, and of any corporation directly or indirectly
controlling Franchisee, if Franchisee is a corporation; and (3) the
general partners and any limited partners (including any corporation,
and the officers, directors, and holders of a beneficial interest of
five percent (5%) or more of the securities of any corporation which
controls, directly or indirectly, any general or limited partner), if
Franchisee is a partnership. Every covenant required by this Section
XV.I. shall be in a form and substance satisfactory to Hooters of
America, including, without limitation. specific identification of
Hooters of America as a third party beneficiary of such covenants with
the independent right to enforce such covenants. Failure by Franchisee
to obtain execution of a covenant required by this Section XV.I. shall
constitute a default under Section XIII.B. hereof.
XVI. TAXES, PERMITS, AND INDEBTEDNESS
A. Franchisee shall promptly pay when due all taxes levied or assessed,
including, without limitation, unemployment and sales taxes, and all
accounts and other indebtedness of every kind incurred by Franchisee
in the conduct of the business franchised under this Agreement.
Franchisee shall pay to Hooters of America an amount equal to any
sales tax, gross receipts tax, or similar tax (other than income tax,
or similar tax) imposed on Hooters of America with respect to any
payments to Hooters of America required under this Agreement, unless
the tax is credited against income tax otherwise payable by Hooters of
America.
B. In the event of any bona fide dispute as to Franchisee's liability for
taxes assessed or other indebtedness, Franchisee may contest the
validity or the amount of the tax or-indebtedness-in-accordance-with
procedures-of-the taxing authority or applicable law; however, in no
event shall Franchisee 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 of the Franchised Business, or any
improvements thereon.
C. Franchisee shall comply with all federal, state, and local laws, rules
and regulations, and shall timely obtain any and all permits,
certificates, or licenses necessary for the full and proper conduct of
the business franchised under this Agreement, including, without
limitation, licenses to do business, fictitious name registrations,
sales tax permits, and fire and liability insurance.
D. Franchisee shall notify Hooters of America in writing within five (5)
days of the commencement of any action, suit, or proceeding, and of
the issuance of any order, writ, injunction, award, or decree of any
court, agency, or other governmental instrumentality, which adversely
affects or relates to the operation or financial condition of the
Franchised Business.
XVII. INDEPENDENT CONTRACTOR
A. It is understood and agreed by the parties hereto that this Agreement
does not create a fiduciary relationship between the parties hereto or
any affiliated or related parties or entities; that Franchisee is an
independent contractor; and that nothing in this agreement is intended
to constitute either party as an agent, legal representative,
subsidiary, joint venturer, partner, employee, or servant of the other
for any purpose whatsoever.
B. During the term of this Agreement and any extensions hereof,
Franchisee shall hold itself out to the public as an independent
contractor operating the business pursuant to a franchise from Hooters
of America. Franchisee agrees to take such action as may be necessary
to do so, including, without limitation, exhibiting a notice of that
fact in a conspicuous place in the franchised premises, the content
and form of which Hooters of America reserves the right to specify.
C. It is understood and agreed that nothing in this Agreement authorizes
Franchisee, and Franchisee shall have no authority, to make any
contract, agreement, warranty, or representation on behalf of Hooters
of America, or to incur - any debt or other obligation in Hooters of
America's name; and that Hooters of America -shall -in --no -event
assume -,liability for, or- be deemed liable hereunder or thereunder
as a result of any such action; nor shall Hooters of America be liable
by reason of any act or omission of Franchisee in its conduct of the
Franchised Business or for any claim or judgment arising therefrom
against Franchisee or Hooters of America.
XVIII. INDEMNIFICATION
A. As used in this Section, the phrase "losses and expenses" shall
include without limitation, all losses, compensatory, exemplary or
punitive damages, fines, charges, costs, lost profits, attorneys,
fees, accountants' fees, expert witness fees, expenses, court costs,
settlement amounts" judgments, compensation for damages to Hooters of
America's reputation and goodwill, costs of or resulting from delays,
financing, costs of advertising material and media time/space, and
costs of changing, substituting or replacing the same, and any and all
expenses of recall, refunds', compensation, public notices and other
such amounts incurred in connection with the matters described.
B. Franchisee shall, at all times, indemnify and hold harmless to the
fullest extent permitted by law Hooters of America, its corporate
affiliates, successors and assigns and the respective directors,
officers, employees, agents and representatives of each (collectively,
the "Indemnities") from all losses and expenses incurred in connection
with any action, suit, proceeding, claim, demand, investigation or
inquiry (formal or informal) , or any settlement thereof (whether or
not a formal proceeding or action has been instituted) which arises
out of or is based upon Franchisee's acquisition, construction,
renovation, financing, management and operation of the Franchised
Business, including, without limitation, any of the following:
1. Franchisee's violation, breach or asserted violation or breach of
any contract, federal state or local law, regulation, rule,
order, standard, or directive or of any industry standard;
2. Libel, slander or any other form of defamation by Franchisee;
3. Franchisee's violation or breach of any warranty, representation,
agreement or obligation in this Agreement;
A. Acts, errors or omissions of Franchisee or any of its agents,
servants, employees, contractors, partners, affiliates or
representatives.
This indemnification shall include cases alleging the negligence of any
Indemnitee, including, without limitation, negligence in the supervision and
inspection of the Franchised Business, the training of a Restaurant employee,
and the specification of System standards, but excluding any case in which the
Indemnitee is determined by a court of competent jurisdiction to have engaged in
gross negligence or willful misconduct. The indemnification set forth in this
Section shall survive the termination of this Agreement.
C. Franchisee shall promptly notify Hooters of America of any action,
suit, proceeding, claim, demand, inquiry or investigation as described
in Section XVIII.B. If Hooters of America is or may be named as a
party in any such action, Hooters of America may elect (but under no
circumstances will be obligated) to undertake the defense and/or
settlement thereof, at the cost and expense of Franchisee. No such
undertaking by Hooters of America shall, in any manner or form,
diminish Franchisee's obligation to indemnify Hooters of America and
to hold it harmless.
D. With respect to any action, suit, proceeding, claim, demand, inquiry
or investigation, Hooters of America may, at any time and without
notice, in order to protect persons or property or the reputation or
goodwill of Hooters of America or others, order, consent or agree to
any settlement or take any remedial or corrective action as Hooters of
America deems expedient, if, in Hooters of America's sole judgment,
there are reasonable grounds to believe that:
1. any of the acts or circumstances enumerated in Section XVIII.B.
have occurred;.-or
2. any act, error, or omission of Franchisee may result directly in
or indirectly in damage, injury or harm to any person or any
property.
E. All losses and expenses incurred under this Section XVIII. shall be
chargeable to and paid by Franchisee pursuant to its obligations of
indemnity hereunder.
F. Under no circumstances shall the Indemnities be required or obligated
to seek recovery from third parties or otherwise mitigate their losses
in order to maintain a claim against Franchisee. Franchisee agrees
that the failure to pursue such recovery or mitigate loss shall in no
way reduce the amounts recoverable by the Indemnities from Franchisee.
G. The Indemnities assume no liability whatsoever for any acts, errors,
or omissions of any persons with whom Franchisee may contract,
regardless of the purpose. Franchisee shall hold harmless and
indemnify the Indemnities and each of them for all losses and expenses
that may arise out of any acts, errors or omissions of such third
parties with whom Franchisee may contract.
XIX. APPROVALS AND WAIVERS
A. Whenever this Agreement requires the prior approval or consent of
Hooters of America, Franchisee shall make a timely written request to
Hooters of America therefor, and such approval or consent shall be
obtained in writing.
B. Hooters of America makes no warranties or guarantees upon which
Franchisee may rely, and assumes no liability or obligation to
Franchisee, by providing any waiver, approval, consent, or suggestion
to Franchisee or in connection with any consent, or by reason of any
neglect, delay, or denial of any request therefor.
C. No failure of Hooters of America to exercise any power reserved to it
in this Agreement, or to insist upon compliance by Franchisee with any
obligation or condition in this Agreement, and no custom or practice
of the parties at variance with the terms hereof, shall constitute a
waiver of Hooters of America's rights to demand exact compliance with
any of the terms of this Agreement. Waiver by Hooters of America of
any particular default shall not affect or impair Hooters of America's
right with respect to any subsequent default of the same or of a
different nature; nor shall any delay, forbearance, or omission by
Hooters of America to exercise any power or right arising out of any
breach or default by Franchisee of any of the terms, provisions, or
covenants of this Agreement affect or impair Hooters of America's
rights; nor shall such constitute a waiver by Hooters of America of
any rights hereunder or rights to declare any subsequent breach or
default.
XX. NOTICES
Any and all notices required or permitted under this Agreement shall be in
writing and shall be personally -delivered ... or-mailed by certified,
registered or express mail, return receipt requested, or by overnight delivery
service, to the respective parties at the following addresses unless and until
a different address has been designated by written notice to the other party:
Notices to Hooters of America:
Hooters of America, Inc.
4501 Circle 75 Parkway
Suite E-5110
Atlanta, Georgia 30339
Attention: Franchise Department
<PAGE>
With Copy To:
A. J. Block, Jr., Esq.
Fine and Block
2060 Mt. Paran Road, N.W.
Atlanta, Georgia 30327
Notices to Franchisee:
Butterwings of Wisconsin, Inc. c/o Harvey L. Temkin 1st
Wisconsin Plaza 1 South Pinckney Street
Madison, Wisconsin 53701-1497
Any notice by certified, registered or express mail, or
overnight delivery service, shall be deemed to have been given
at the earlier of the date and time of receipt or refusal of
receipt or, if by mail, three (3) business days after being
deposited in the United States mail.
XXI. ENTIRE AGREEMENT
This Agreement, the documents referred to herein, and the attachments hereto, if
any, constitute the entire, full, and complete Agreement between Hooters of
America and Franchisee concerning the subject matter hereof, and supersede all
prior agreements. Except for those acts permitted to be made unilaterally by
Hooters of America hereunder, no amendment, change, or variance from this
Agreement shall be binding on either party unless mutually agreed to by the
parties and executed by their authorized officers or agents in writing.
XXII. SEVERABILITY AND CONSTRUCTION
A. Except as expressly provided to the contrary herein, each -portion,
--section, -part,---term- and/or 'provision of this Agreement shall be
considered severable; and if, for any reason, a portion, section,
part, term, and/or provision herein is determined to be invalid and
contrary to, or in conflict with, any existing or future law or
regulation by a court or agency having valid jurisdiction, such shall
not impair the operation of, or have any other effect upon, such other
portions, sections, parts, terms, and/or provisions of this Agreement
as may remain otherwise valid and enforceable; and the latter shall
continue to be given full force and effect and bind the parties
hereof; and said invalid portions, sections, parts, and/or provisions
shall be deemed not to be a part of this Agreement.
B. Except as expressly provided to the contrary herein, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person
or legal entity other than Franchisee, Hooters of America, Hooters of
America's officers, directors, and employees, and such of Franchisee's
and Hooters of America's respective successors and assigns as may be
contemplated (and, as to Franchisee, permitted) by Section XII.
hereof, any rights or remedies under or by reason of this Agreement.
C. Franchisee expressly agrees to be bound by any promise or covenant
imposing the maximum duty permitted by law which is subsumed within
the terms of any provision hereof, as though it were separately
articulated in and made a part of this Agreement, that may result from
striking from any of the provisions hereof any portion or portions
which a court may hold to be unreasonable and unenforceable in a
final, decision in a proceeding to which Hooters of America is a
party, or from reducing the scope of any promise or covenant to the
extent required to comply with such a court order.
D. All captions in this Agreement are intended solely for the convenience
of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof.
E. All references herein to the masculine, neuter, or singular shall be
construed to include the -masculine, feminine, neuter, or plural,
where applicable; and all acknowledgments, promises, covenants,
agreements, and obligations herein made or undertaken by Franchisee
shall be deemed jointly and severally undertaken by all those
executing this Agreement on behalf of Franchisee.
F. This Agreement may be executed in several counterparts, and each copy
so executed shall be deemed an original.
XXIII. FORCE MAJEURE
Except for monetary obligations hereunder, or as otherwise specifically provided
in this Franchise Agreement, if either party to this Agreement shall be delayed
or hindered in or prevented from the performance of any act required under this
Agreement by reason of strikes, lock-outs, labor troubles, inability to procure
materials., failure of power, restrictive governmental laws or regulations,
riots, insurrection, war, or other causes beyond the reasonable control of the
party required to perform such work or act under the terms of this Agreement not
the fault of such party, then performance of such act shall be excused for the
period of the delay, but in no event to exceed ninety (90) days from the stated
time periods as set forth in Article I of this Franchise Agreement.
XXIV. APPLICABLE LAW
A. This Agreement takes effect upon its acceptance and execution by
Hooters of America as its principal office in the State of Georgia,
and shall be interpreted and construed under the laws of the State of
Georgia which laws shall prevail in the event of any conflict of law.
B. The parties agree that any action brought by either party against the
other in any court, whether federal or state, may, at the option of
Hooters of America., be brought within the State of Georgia in the
judicial circuit or district in which Hooters of America has its
principal place of business and Franchisee does hereby agree to and
submit to such jurisdiction and does hereby waive all questions of
personal Jurisdiction or venue for the purpose of carrying out this
provision.
C. No right or remedy conferred upon or reserved to Hooters of America or
Franchisee by this Agreement is intended to be, nor shall be deemed,
exclusive of any other right or remedy herein or by law or equity
provided or permitted, but each shall be cumulative of every other
right or remedy.
D. Nothing herein contained shall bar Hooters of America's right to
obtain injunctive relief against threatened conduct that shall cause
it loss or damages, under the usual equity rules, including the
applicable rules for obtaining restraining orders and preliminary
injunctions.
XXV. ACKNOWLEDGMENTS
A. Franchisee acknowledges that it has conducted an independent
investigation of the Franchised Business, and recognizes that the
business venture contemplated by this Agreement involves business
risks and that its success will be largely dependent upon the ability
of Franchisee as an independent businessperson. Hooters of America
expressly disclaims the making of, and Franchisee acknowledges that it
has not received, any warranty or guarantee, express or implied, as to
the potential volume, profits, or success of the business venture
contemplated by this Agreement.
B. Franchisee acknowledges that it received a copy of the complete
Hooters of America, Inc. Franchise Agreement, the Attachments thereto,
and agreements relating thereto, if any, at least five (5) business
days prior to the date on which this Agreement was executed.
Franchisee further acknowledges that it received the disclosure
document required by the Trade Regulation Rule of the Federal Trade
Commission entitled "Disclosure Requirements and Prohibitions
concerning Franchising and Business Opportunity Ventures" at least ten
(10) business days prior to the date on which this Agreement was
executed.
C. Franchisee acknowledges that it has read and understood this
Agreement, the Attachments hereto, and any agreements relating
thereto, and that Franchisee has been advised by a representative of
Hooters of America to consult with an attorney or advisor of
Franchisee's own choosing about the potential benefits and risks of
entering into this Agreement prior to its execution.
D. Franchisee acknowledges that any statements, oral or written, by
Hooters of America or its agents preceding the execution of this
Agreement were for informational purposes only and do not constitute
any representation or warranty by Hooters of America. The only
representations, warranties and obligations of Hooters of America are
those specifically set forth in this Agreement. Franchisee must not
rely on, and the parties do not intend to be bound by, any statement
or representation not contained herein.
E. Franchisee acknowledges that Hooters of America will not provide or
designate locations for Franchisee, will not provide financial
assistance to Franchisee, and has made no representation that it will
buy back from Franchisee any products, supplies or equipment purchased
by Franchisee in connection with the Franchised Business. F.
Franch'isee, and each party executing Exhibit "All hereto,
acknowledges that Hooters of America, itself or through any officer,
director, employee or agent, has not made, and Franchisee has not
received or relied upon, any oral or written, visual, express or
implied information, representations, assurances, warranties,
guarantees, inducements, promises or agreements concerning the actual,
average, projected or forecasted franchise sales, revenues, profits,
earnings or likelihood of success that Franchisee might expect to
achieve from operating the Franchised Business, except as set forth in
the Franchise Offering Circular reviewed by Franchisee or its
representatives and except as follows, (if no exceptions, please
initial:
Initials:/WJ
IN WITNESS WHEREOF, the parties hereto have duly executed, and delivered this
Agreement on the day and year first above written.
FRANCHISEE:
BUTTERWINGS OF WISCONSIN
By: )
Attest Kenneth B. Drost
T i t 1 e
FRANCHISOR:
HOOTERS OF AMERICA, INC.
Attest
By: Robert H. Brooks
Title: President
EXHIBIT "A"
WHEREAS, the undersigned are the majority shareholders of the
Franchisee (hereinafter jointly and severally, referred to collectively as the
"Undersigned"), as designated in the foregoing Franchise Agreement; and
WHEREAS, as a condition to and in consideration of Franchisor
entering into said Franchise Agreement with Franchisee ' Franchisor has
required that the Undersigned guarantee the performance by the Franchisee of
all of the non-monetary covenants and agreements of the Franchisee contained
in the Franchise Agreement (the "NonMonetark Covenants") , together with the
monetary covenants and agreements of the Franchisee ("Monetary Covenants")
contained in the Franchise Agreement (hereinafter collectively referred to as
the "Covenants"),
NOW, THEREFORE, in consideration of $10.00, the entering into of the
Franchise Agreement by the Franchisor, and other good and valuable
considerations paid or delivered to the Undersigned, the receipt and
sufficiency of which are herewith acknowledged by the Undersigned hereby
agrees as follows:
I. The Undersigned guarantees the due and punctual payment when due
of Monetary Covenants and the due and punctual performance of the Non-Monetary
Covenants. The Undersigned agrees that, with reference to the Monetary
Covenants, this guarantee is a guarantee of payment and not of collection, and
that the obligations of the Undersigned are primary, absolute, and
unconditional and, without impairing or releasing or affecting the obligations
of the Undersigned hereunder, and without notice to or consent of the
Undersigned, the Franchisor may: (a) amend or modify in any respect the
Franchise Agreement, and (b) extend or waive any time for Franchisee's or any
other person's or entity's performance of or compliance with any term,
'covenant or -agreement to be performed or observed under the Franchise
Agreement, or waive such performance or compliance or consent to a failure of
or departure from such performance or compliance, and (c) take any action
under or with respect to the Franchise Agreement in the exercise of any
remedy, power or privilege contained therein or available to the franchiser at
law, in equity, or otherwise, or waive or refrain from exercising any such
remedies! powers or privileges. The Undersigned hereby waives all rights it
may have now or in the future under any statute, or at common law, or at law
or in equity, or otherwise, to compel Franchisor to proceed with respect to
the Covenants or any other' party before proceeding against, or as a condition
to proceeding against the Undersigned hereunder.
<PAGE>
2. The Undersigned hereby subordinates all obligations of Franchisee to
the Undersigned under any note, agreement, contract, guaranty or accommodation
claim or right of action, and any other obligations of Franchisee to the
Undersigned, however and whenever created, arising or evidenced, whether direct
or indirect, absolute, contingent, or otherwise, now or hereafter arising, or
due or to become due, to the Covenants.
3. This agreement shall be construed and enforced in accordance with
the laws of the State of Georgia, and shall be binding upon and shall inure to
the benefit of the legal representatives, successors, and permitted transfers
and assigns of the parties hereto.
IN WITNESS WHEREOF, the undersigned party or pasties has (or have)
hereunto set his/their hand(s) and seal(s) this_____day of October, 1993.
<PAGE>
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT is made and entered into as of_____ 1993 by and between
HOOTERS OF AMERICA, INC. ("Franchisor") , a Georgia corporation, and Butterwings
of Wisconsin, Inc. a Wisconsin corporation ("Franchisee"). Franchisor and
Franchisee are concurrently entering into a Franchise Agreement dated of even
date herewith (or have heretofore entered into such Franchise Agreement) (the
"Franchise Agreement"), the terms (including definitions) of which are hereby
incorporated by reference. In case of any inconsistency between any term of the
Franchise Agreement and this Agreement, this Agreement shall control. In
consideration of the mutual promises of the parties set forth in the Franchise
Agreement, and of Franchisor's disclosures to Franchisee of certain
confidential, proprietary documents and information in reliance upon this
Agreement, it is agreed as follows:
1. Franchisor owns the Hooters System, and has the right to franchise
it, including the reproduction and distribution of confidential information
relating thereto. All tangible things which Franchisor has marked "Confidential"
(or with words to similar effect) prior to their loan to Franchisee,
collectively with their content, "Confidential Materials" are covered by this
Agreement. All such Confidential Materials shall remain the property of
Franchisor, and are (unless they bear copyright notices) unpublished works
nonetheless protected under the U. S. Copyright Act. Confidential Materials
include, but are not limited to the following particularly sensitive documents
and things (as they may be revised or supplemented by Franchisor from time to
time hereafter) : (a) the Marketing Manual; (b) the Promotions Management
Manual; (c) the Concept Overview Manual; and (d) all other Hooters System
Manuals, including those on the subjects of Franchise Operations, Employee
Relations, Finance and Administration, Field Operations, Purchasing and
Marketing and other documentation.
2. Franchisee shall hold and cause Confidential Materials to be held
-in -the -strictest --confidence, following instructions published from time to
time in the System Manuals for preserving their confidentiality, and maintaining
at least the same level of security for them as it maintains for its own most
confidential business information. Franchisee shall take appropriate precautions
to insure that access to Confidential Materials is limited to authorized
Franchisee personnel (and with Franchisor's prior written consent, contractors)
who have first signed a confidentiality agreement in the form attached as
Exhibit A, and shall then permit access only on a need-to-know basis. Franchisee
shall maintain a separate file for such confidentiality agreements, and shall
make such file available for inspection and copying by Franchisor, upon written
or oral request.
<PAGE>
Confidentiality Agreement
Page -2-
3. Neither the Franchisee nor any of its officers, directors, partners!
employees, agents, independent contractors or affiliates, or any other persons
or organizations over which Franchisee has control (collectively, the
"Obligors") , shall directly or indirectly use, disclose, copy, reproduce or
duplicate all or any part of the Confidential Materials for any purpose not
associated with complying with the Franchisee's duties under the Franchise
Agreement, or disseminate, loan, assign, reveal or disclose all - or any part of
the Confidential Materials to any person or organization not licensed or
affiliated with Franchisor unless with the express prior written consent of
Franchisor. Additional copies or reprints of Confidential Materials may be
obtained only from Franchisor, if needed. If Franchisor permits Franchisee to
cause derivative works to be prepared from Confidential Materials (for example,
architectural and construction plans) , such works shall be created as a
work-made-f or hire (if by an independent contractor, under a written agreement
so stipulating) and Franchisee shall at the conclusion of such work assign all
copyrights therein to Franchisor (including, without limitation, f irst
publication rights and the right to make copies) .
4. If Franchisee is licensed to use any proprietary computer programs
of Franchisor, Obligors shall not attempt to translate, decompile, decode,
modify, merge or otherwise alter the object code of such programs.
5. Franchisee shall use its best efforts to collect all copies of
Confidential Materials from each employee and independent contractor permitted
access to them, at or prior to termination of such employment or retention. Upon
termination of the Franchise (or earlier as requested by Franchisor) ,
Franchisee shall return to Franchisor at Franchisee's expense or destroy (as
Franchisor directs) any or all copies of Confidential Materials, and all other
tangible things containing information from or otherwise derived from such
Confidential Materials, then in Franchisee's-actual-or constructive possession.
6. In the event that any obligor shall breach this Agreement, or the
separately signed Confidentiality Agreement in the form of Exhibit A, or in the
event that such breach appears to be imminent', Franchisor shall be entitled to
all legal and equitable remedies afforded by law as a consequence of such breach
or imminent breach, and may, in addition to any and all other forms of relief,
recover from the breaching obligor all reasonable costs and attorney's fees
incurred by Franchisor in seeking any such remedy. Franchisee acknowledges that
Confidential Materials contain Franchisor's commercially valuable trade secrets
and that
<PAGE>
Confidentiality Agreement
Page -3-
unauthorized use or disclosure of all or any part of them would cause great and
irreparable injury, for which there may be no adequate remedy at law.
7. While some of the information contained in the Confidential
Materials may already be known by Franchisee or its personnel or be in the
public domain, Franchisee acknowledges that the compilation of that information
in Confidential Materials has cost Franchisor great effort and expense, and
affords the persons to whom the Confidential Materials are disclosed, including
the Obligors, a competitive advantage over persons who do not know the
information or have the compilation contained in the Confidential Materials.
Franchisee and the Obligors shall be liable for damages sustained by Franchisor
as a result of willful or negligent publication or dissemination of the
Confidential Materials or any information contained therein by Obligors to whom
Franchisee has disclosed Confidential Materials. The burden of proof shall be on
the party opposed to Franchisor in any claim that the Confidential Materials or
any information contained therein in the form presented is not confidential or
secret.
8. This Agreement shall remain in effect from the above date until the Term
expires or otherwise terminates, and thereafter for the lesser of five (5) years
or the longest time permitted by applicable law. Confidential Material
describing a food or beverage recipe, list of ingredients, and preparation and
serving instructions shall remain secret and confidential forever, unless
Franchisor causes the same to be disclosed without a secrecy obligation from the
discloses. It shall be binding upon the parties hereto and upon their respective
executors, administrators, legal representatives, heirs, successors and assigns.
9. This Agreement shall be governed for all purposes by the
laws-of-the-State-of Georgia. If-any provision of this Agreement is declared
void, or otherwise unenforceable, such provision shall be deemed to have been
severed from this Agreement, which shall otherwise remain in full force and
effect.
10. Any Franchisee notice, consent request or the like shall be in writing
and shall be sent via first class United States mail or by any courier service
having receipted delivery, to Franchisor at 4501 Circle 75 Parkway, Suite
E-5110, Atlanta, Georgia 30339, Attention President, or to such other address or
persons as Franchisor shall advise the undersigned in writing from time to time.
Notice to or consent from an officer of Franchisor shall be sufficient.
<PAGE>
Confidentiality Agreement
Page -4
The undersigned acknowledges and agrees that it has read the foregoing,
understands all of its obligations under this Agreement, is duly authorized to
sign this Agreement, is willing to receive and use the Confidential Materials in
full compliance with the terms of this Agreement, and that this Agreement does
not require the signatures of officers of Franchisor.
THE UNDERSIGNED
BUTTERWINGS OF WISCONSIN, INC.
ADDRESS:
c/o Harvey L. Temkin 1st Wisconsin Plaza 1 South Pinckney Street
Madison, Wisconsin 53701-1497
By:
Title:
Date:
<PAGE>
EXHIBIT "A"
CONFIDENTIALITY AGREEMENT
I, an employee/independent contractor of ("Employer"), in order to
induce disclosure to the Employer of certain confidential, proprietary
documents and information ("Confidential Materials") owned or licensed
by Hooters of America, Inc.
--------, represent and warrant to Employer and that:
I understand that written or otherwise recorded Confidential
Materials remain the property of HOA and are (Unless they bear copyright
notices) unpublished works nonetheless protected under the U.S. Copyright Act,
which include valuable HOA trade secrets and confidential information. I further
understand that HOA has made and will continue to make substantial investments
in developing Confidential Materials, which can be recouped only if HOA's
proprietary rights are honored, and that any unauthorized use or disclosure by
me or all or any part of the Confidential Materials would cause HOA great and
irreparable injury.
2. I acknowledge that all tangible things which HOA has marked
"Confidential" (or with words to similar effect) prior to their loan to
Employer, are Confidential Materials covered by this Confidentiality Agreement,
and that the following (as they may be revised or supplemented by HOA from time
to time) are particularly sensitive: (a) the Marketing Manual; (b) the
Promotions Management Manual; (c) the Concept Overview Manual; and (d) all other
HOA System Manuals, including those on the subject of Franchise operations,
Employee Relations Finance and Administration, Field operations, Purchasing and
Marketing and other documentation.
3. I promise that I will use Confidential Materials and information
contained therein only at places designated by Employer, in furtherance of
Employer's business, and pursuant to Employer's direction. I will not (except as
Employer properly directs) copy all or any part of Confidential Materials, or
transfer or loan to any other person any Confidential materials which are
entrusted to me. If Employer directs me to create works derived from
Confidential Materials (for example, architectural and construction plans) ,
such works shall be deemed works-made-f or hire and Employer shall own all
copyrights in such works, subject to its obligations to assign such rights to
HOA.
<PAGE>
4. If my employment by Employer terminates or I am no longer assigned to
work with Confidential Materials, I will promptly surrender to Employer all
copies of Confidential Materials and any notes, memoranda and the like
concerning or derived from them, which are then in my possession or control.
5. I will not disclose all or any part of Confidential Materials or
information contained therein to any person who is not also employed (directly
or as an independent contractor) by Employer, and then only pursuant to
Employers' directions.
6. If I am granted access to any Confidential Materials which are computer
programs, I will not attempt to translate, decompile, decode, modify, merge or
otherwise alter the object code of such programs.
7. My obligation to preserve the confidentiality of Confidential
Materials and information contained therein will continue for the longest term
permitted by applicable law after termination of my employment by Employer, even
if that termination is wrongful, but in no event less than five (5) years.
understand that this is not an employment agreement of any kind. I understand
further that Confidential Material describing a food or beverage recipe, list of
ingredients, and preparation and serving instructions shall remain secret and
confidential forever, unless HOA causes the same to be disclosed without a
secrecy obligation form the discloses.
8. If a dispute arises as to whether particular information in
Confidential Materials ' used or disclosed by me in violation of this Agreement,
is confidential information or a trade secret, I agree that I shall bear the
burden of proving that I knew the information prior to first disclosure to like
of the Confidential Materials containing it, that it or the Confidential
Materials first became publicly known through no wrongful act on my part, or
that I independently developed it without reference to any Confidential
Materials.
9. I shall be liable to HOA for damages caused by my willful or
negligent use or disclosure of Confidential Materials or information contained
therein, in violation of this Agreement.
<PAGE>
10. This Agreement shall be governed for all purposes by the laws of the
State of Georgia, and shall be construed to maximize protection for HOA's rights
in the Confidential Materials. If any provision of this Agreement is declared
void or unenforceable, such provision shall be deemed severed, and the balance
of the Agreement shall remain in full force and effect.
Dated:
Signature
(Typed or Printed Name)
Address:
Signature
(Typed or Printed Name)
Address:
Signature
(Typed or Printed Name)
Address:
<PAGE>
WISCONSIN ADDENDUM
THIS ADDENDUM is made and entered into 19 93, between Hooters Of
America, Inc., a Georgia corporation ('Franchisor") and ' BUTTERWINGS OF
WISCONSIN, Inc. ('Franchisee"). This Addendum relates to that certain Franchise
Agreement, dated of even date herewith, and any Option Addendum, dated of even
date herewith, between the parties.
IN CONSIDERATION of the mutual promises and covenants herein contained,
and to induce Franchisee to enter into the Franchise Agreement with Franchisor,
and to comply with certain statutory and administrative requirements applicable
to franchises sold subject to Wisconsin law, the parties agree as follows:
I . Notwithstanding Section XIII. of the Franchise Agreement, to the
extent any of the provisions regarding notice of termination or change in
dealership are in conflict with Section 135.04 of the Wisconsin Fair Dealership
Law, the Wisconsin law shall be controlling.
2. Notwithstanding Section XXI. of the Franchise Agreement, and Section
15 of the Option Addendum, if any, this Addendum shall not be merged with or
into, or superseded by the Franchise Agreement. In the event of any conflict
between the Franchise Agreement or the Option Addendum and this Addendum, this
Addendum shall be controlling. Except as expressly set forth herein, no other
amendments or modifications of the Franchise Agreement or the Option Addendum
are intended or made by the parties.
IN WITNESS WHEREOF, the parties hereto have duly executed, and delivered
this Addendum on the day and year first above written.
FRANCHISOR:
HOOTERS OF AMERICA, INC.
By:
Attest Robert H. Brooks
Title: President
FRANCHISEE:
WMRWINGS OF WISOCNSIN, INC.
By:
Attest
<PAGE>
OPTION ADDENDUM
THIS ADDENDUM (the "Option") is made and entered into as of the
day of _____, 1993, between HOOTERS OF AMERICA, INC., a Georgia corporation with
its principal office at 4501 Circle 75 Parkway, Suite E-5110, Atlanta, Georgia
30339 (hereinafter referred to as "Franchisor" or "Hooters of America") and
BUTTERWINGS OF WISCONSIN, INC., a corporation incorporated in the State of
Wisconsin (hereinafter referred to as "Franchisee").
WITNESSETH:
WHEREAS, Franchisee has purchased a Hooters of America, Inc. franchise
contemporaneously herewith for the development and operation of an Approved
Location pursuant to and as identified in the Franchisor's Franchise Agreement
of even date herewith (the "Franchise Agreement"), and
WHEREAS, Franchisee desires to secure an option for the development and
operation of four (4) additional Hooters of America, Inc. franchised locations,
within a specified period of time and geographical area as defined in this
Option (the "Territory") (hereinafter collectively referred to as the
"Locations" and singularly as the "Location") and for a specified additional
franchise fee, which fee shall be Seventy Five Thousand ($75,000) Dollars per
Location, and
WHEREAS, Franchisor desires to grant such an option to Franchisee.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereby agree as follows:
1. Grant of Qption Subject to the terms and conditions set forth
herein, Franchisor grants to Franchisee, and Franchisee accepts, an exclusive
option to develop and operate four (4) additional Location(s) within the
Territory, subject to the terms and conditions of this option and the Franchise
Agreement.
2. Franchise Fees for Optioned Location. The additional franchise fee to be
charged and collected by the Franchisor in connection with each additional
Location approved by the Franchisor pursuant to this Option shall be
Seventy-Five Thousand ($75,000) Dollars.
<PAGE>
3. Option Fee., In consideration for Franchisor's granting the within
option to Franchisee, Franchisee shall pay to Franchisor the sum of Ten Thousand
($1 0,000) Dollars for each Location optioned to Franchisee hereby, or the total
amount of Forty ($40,000), which sum shall be due in full upon the execution of
this Agreement and shall be deemed fully earned when paid in consideration of
the Franchisor's granting the within option(s). This Option Fee is not
refundable in whole or in part, except as otherwise provided in the Franchise
Agreement.
4. Time Periods. The option to develop and open additional LOGation(s) in
the Territory, to the extent granted hereby, may be exercised by Franchisee at
any time for construction and opening within the following time period(s):
Additional Restaurant No.,-- Time Period (In Months) For
Execution of This Agreement
1 Under Construction within 12 months
and open within 15 months
2 Open within 21 months
3 Open within 27 months
4 Open within 33 months
Nothing contained in this paragraph shall grant, create or
extend the rights granted to the Franchisee in Paragraph 1 hereof.
5. Optioned Franchise Territgriaa. The Location(s) optioned hereby shall be
located within that certain geographic area delineated in Exhibit "All to this
Agreement, either by a map or written description.
6. Exercise of Option. Any option granted hereunder shall be exercised in
the following manner:
(a) Prior to the expiration of each of the option time(s)
specified hereunder, Franchisee shall serve upon Franchisor a written notice of
exercise the option(s) granted hereunder, accompanied by payment for such
Locations(s) by certified check or bank draft made payable to the order of the
Franchisor in the amount of Sixty-Five Thousand ($65,000) Dollars for each
Location, and designation of a proposed site for approval by the Franchisor in
accordance with the provisions of this Option.
(b) If Franchisee shall fail to perform any of the acts or
fail to deliver the notice required pursuant to the provisions of sub-section
(a) in a timely fashion, such failure shall be deemed an election by Franchisee
not to exercise its option rights hereunder, and such failure shall cause all of
Franchisee's said option rights as provided in this Option to lapse and expire,
in which event all Option Fees paid to Franchisor hereunder shall be retained by
the Franchisor as consideration for this Option.
(c) Provided that Franchisee shall exercise the Franchisee's
option in the form and manner herein described and upon approval of a
Location(s) by the Franchisor in accordance with the provisions of Paragraph 8
of this Option, the Franchisor shall deliver to Franchisee an addendum to the
Franchise Agreement designating such Location(s) as an Approved Location, as
defined in the Franchise Agreement in the form attached hereto as Exhibit "Bit,
or in the then current form approved by Franchisor (the "Addendum"), which
Addendum shall be executed and delivered by the Franchisee to the Franchisor
within ten (10) business days from receipt of such Addendum from the Franchisor
subject and pursuant to the terms of the Franchise Agreement.
(d) As to each Approved Location and upon execution and
delivery of the Addendum relating to said Approved Location, the Franchisee
shall be bound by all of the terms, conditions, requirements and duties imposed
by the Franchise Agreement, which Franchise Agreement shall govern the parties
and preempt this Agreement with reference to such Approved Location.
7. Conditions Precedent. Franchisee's right to exercise its opt-ion to
develop and operate a Location(s) pursuant to this option is conditioned upon
Franchisee's fulfillment of each and all of the following conditions precedent:
(a) At the time of Franchisee's exercise of said option, Franchisee shall
have fully performed and otherwise be in compliance with all of the Franchisee's
obligations under the Franchise Agreement and under all other agreements which
may then be in effect between Franchisor (and its affiliates and subsidiaries,
if any) and Franchisee.
(b) Franchisee shall not be in default of any provision of the Franchise
Agreement, and the amendments thereto or any replacement thereof, or any other
agreement with Franchisor, its subsidiaries and affiliates (if any) and shall
have complied with all the terms and conditions of such agreements during the
terms thereof.
(c) Franchisee shall have submitted to the Franchisor a proposed site for
such Location(s) and shall have obtained the approval of the Franchisor to such
site, or any alternative site, within sixty (60) days from the date of notice
from the Franchisee, as provided in Paragraph 6(a).
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<PAGE>
(d) Butterwings of California, Inc. shall not be in default of any
provision of the Franchise Agreement between Franchisor and Butterwings of
California, Inc. dated (the "California Franchise Agreement"), or any other
agreement with Franchisor, it subsidiaries and affiliates (if any) and shall
have complied with all of the terms and conditions of such agreements during the
terms thereof, Butterwings of California, Inc. being an affiliated or related
entity of Franchisee and/or the principals of Franchisee.
(e) Butterwings of California, Inc. shall have timely exercised the first
three (3) of its options for additional Locations under the Option Addendum to
the California Franchise Agreement and shall be in compliance with all of the
terms and provisions thereof, including the opening of Restaurants at additional
Locations within the time schedule set forth in said Option Addendum, the
Franchisee acknowledging that the performance by Butterwings of California, Inc.
pursuant to said Option Addendum is a material consideration to the grant of the
within and foregoing Option Addendum.
In the event that the Franchise Agreement is terminated or
expires, then the Options herein granted shall be null and void at the time of
such termination or expiration.
8. Site Selection. (a) Franchisee agrees to submit for evaluation by
the Franchisor site approval request documents for each proposed site for a
Hooters Restaurant. The Franchisor shall review the site approval request
documents and conduct such other investigation of the proposed site as it
determines is necessary to properly evaluate the site, including an evaluation
of the financial terms of the acquisition or rental of the proposed site.
Approval shall be at the sole discretion of the Franchisor. The Franchisor shall
notify Franchisee of the acceptance, acceptance with contingencies or
conditions, or rejection of a site by written notice to Franchisee with fifteen
(15) business days from the date of compliance by Franchisee with the
requirements of Paragraph 6 hereof. Written notice of the acceptance of any site
request by the Franchisor shall be accompanied by an Addendum to the Franchise
Agreement, as provid ed in Paragraph 6. Written notice of the rejection of any
site request by the Franchisor shall set forth the Franchisor's reasons for any
such rejection. The Franchisor shall pay all reasonable travel expenses incurred
by agents and employees of the Franchisor (the "Costs") in connection with the
inspection of the initially proposed site by Franchisee for each option period,
and the Franchisee shall pay all other Costs for inspection of additional or
alternative sites proposed by Franchisee within thirty (30) days of the receipt
of written notice of the actual expenses incurred by said agents and employees.
(b) Franchisee acknowledges that no officer, employee or agent of the
Franchisor has any authority to approve or accept
4
<PAGE>
any proposed site except by written acceptance by an officer of the Franchisor
authorized to approve and accept a site proposal and any other representations,
approvals or acceptances, whether oral or written, shall be of no effect.
FRANCHISEE ACKNOWLEDGES THAT THE FRANCHISORS ACCEPTANCE OF SAID SITE DOES NOT
CONSTITUTE ANY REPRESENTATION, WARRANTY OR GUARANTEE BY THE FRANCHISOR THAT SAID
SITE WILL BE A SUCCESSFUL LOCATION FOR A HOOTER'S RESTAURANT.
(c) The Franchisor reserves the right to revoke any site
acceptance after ninety (90) days from the date thereof if a Hooter's Restaurant
is not under construction, as defined herein, at the site in accordance with a
fully executed Addendum to the Franchise Agreement for said site, as provided in
this Option, or if said Addendum is not executed and delivered to the Franchisor
as herein provided.
9. Construction Plans and Site Acquisition.
(a) Property Acquisition. Upon receipt of the Franchisor's
written acceptance of a proposed site as set forth in Paragraph 6 hereof,
Franchisee shall immediately take the necessary steps to acquire the site by
purchase, lease or sublease, and to otherwise obtain the rights to construct,
maintain and operate a Hooter's Restaurant on the site.
(b) Site Plan Approval. Upon site approval by Franchisor f or
the construction of new improvements, the Franchisor shall provide Franchisee
with a set of plans for a Hooter's Restaurant which has already been
constructed. The Franchisee shall engage a licensed architect or engineer to
conform the plans to local, state and federal codes and requirements, and site
conditions, prior to submission of such plans to the Franchisor. Franchisee
shall submit to the Franchisor a Site Plan for the Franchisor's approval. Such
Site Plan must be reviewed and approved by the Franchisor in writing prior to
commencement of construction. Rejection of any Site Plan shall be at the sole
discretion of the Franchisor, and the Franchisor shall notify Franchisee in
writing of any rejection of the Site Plan, setting forth the Franchisor's
reasons for said rejection. If alterations of any kind are required to be made
to the Site Plan other than alterations necessary to conform the Site Plan to
local, state and federal codes and requirements or to adapt the Site Plan to
site topography or soil conditions, as approved by the Franchisor, or to any of
the Franchisor's construction plans, specifications or layouts, for any reason,
such alterations must be approved by the Franchisor in writing before any work
is begun on the site. All costs for any Site Plan or alteration to the
Franchisor standard construction plans, specifications and layouts shall be paid
by Franchisee, including costs incurred for any reason such as soil tests,
engineering and architectural fees, and fees required to comply with any
applicable law, regulation or ordinance.
5
<PAGE>
(c) Renovation Plan Approval. If Franchisee is renovating an existing
building, all plans and specifications including a site plan must be approved in
writing by the Franchisor for renovation prior to commencement of any such
renovation. Rejection of any plans and specifications shall be at the sole
discretion of the Franchisor, and the Franchisor shall notify Franchisee in
writing of said rejection and shall set forth the reasons for rejection. The
Franchisor shall provide Franchisee with the Franchisor-'s standard floor plan
specifications and examples of same; however, Franchisee at Franchisee's
expense, shall provide final working drawings which must be reviewed and
approved by the Franchisor in writing, prior to commencement of construction.
(d) Notification of Construction Commencement. As soon as Franchisee has
received the Franchisor's written approval of a site plan and construction
plans, acquired the right to use the site, obtained all permits, governmental
approvals, and otherwise obtained all required rights to construct, maintain and
operate the Hooter's Restaurant on the site, Franchisee shall notify the
Franchisor of such facts in writing, postage fully prepaid, delivered by U. S.
Certified Mail or overnight delivery.
10. Conditions of Construction. Prior to the commencement of construction
of any Hooters Restaurant, Franchisee must satisfy the following conditions:
(a) The site must have been accepted by the Franchisor and any
contingencies or conditions to which such acceptance is subject must have been
met, as specified in Paragraph 8 hereof.
(b) Franchisee's site plan must have been approved by the
Franchisor and all proposed construction plans, specifications and layouts must
have been approved by the Franchisor, as specified in Paragraph 9 hereof.
(c) Franchisee has obtained an Addendum to the Franchise
Agreement for the site fully executed by both Franchisee and the Franchisor, as
specified in Paragraph 6.
(d) Franchisee must have obtained the right to use the site,
obtained all necessary permits and governmental approvals, and otherwise
obtained all required rights to construct, maintain and operate the Hooter's
Restaurant as specified in Paragraph 11 herein.
If at any time the Franchisor determines that Franchisee has
begun constructing or renovating a Hooters restaurant without all of these
conditions having been met, the Franchisor shall, in addition to any other
remedies (including termination of the
6
<PAGE>
franchise), have the-right to obtain an injunction against the continued
construction, opening and operation of the Hooters Restaurant from a court of
competent jurisdiction. All legal fees and expenses incurred by the Franchisor
in connection with any such litigation in connection with an action for
injunctive relief as contemplated hereby shall be paid by Franchisee.
11. Commencement of Constructign.
(a) Construction. Upon receipt from the Franchisor of the executed Addendum
for said site., Franchisee shall commence and complete construction of or
renovation to a Hooters Restaurant at the site in accordance with the terms of
the Franchise Agreement.
(b) Deviation from Approved Plan. Franchisee shall not deviate from the
approved site ------------------------------- plan, construction plans or
specifications in any manner in the construction or renovation of the Hooters
Restaurant without the prior written approval of the Franchisor. If, at any
time, the Franchisor determines that Franchisee has not constructed or renovated
the Hooters Restaurant in accordance with the plans and specifications, as
approved by the Franchisor, the Franchisor shall, in addition to any other
remedies, have the right to obtain an injunction from a court of competent
authority against the continued construction, opening and/or operation of the
Hooter's Restaurant. All legal fees incurred by the Franchisor in connection
with any such litigation in connection with an action for injunctive relief as
contemplated hereby shall be paid by Franchisee.
12. No Franchise Convey-p&. The Franchisee shall not be deemed for any purpose
to be a franchisee of the Franchisor with respect to any of the Locations
optioned hereunder except to the extent that the option herein granted shall
have been exercised in the manner provided for herein and a valid addendum to
the Franchise Agreement with respect to the Location(s) optioned has been
executed by the Franchisor and Franchisee.
13. Transfer of Interest. If the Franchise Agreement is validly transferred to a
third party pursuant to Section XII of the Franchise Agreement with the approval
of Hooters of America, Inc., this option shall also be transferred to such
transferee.
14. Waiver and Delay. No waiver or delay in enforcement of any breach of any
term, covenant or condition of this Agreement shall be construed as a waiver of
any preceding or succeeding breach or delay in enforcement, or any other term,
covenants or condition of this Option; and, without limitation upon any of the
foregoing, the acceptance of any payment specified to be paid by Franchisee
hereunder shall not be, nor be construed to be, a waiver of any breach of any
term, covenant or condition of this Option.
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15. Integration of Option. This Option, and all ancillary agreements executed
contemporaneously herewith, constitute the entire agreement between the parties
with reference to the subject matter hereof and supersedes all prior
negotiations, understandings, representations and agreements, if any. Franchisee
acknowledges that Franchisee is entering into this Option as a result of his own
independent investigation of the business and not as a result of any
representations about the Franchisor by its agents, officers or employees that
are contrary to the terms herein set forth.
This Option Addendum may not be amended orally, but may be
amended only by a written instrument signed by the parties hereto. Franchisee
expressly acknowledges that no oral promises or declarations were made to it and
that the obligations of the Franchisor are confined exclusively to the terms
herein. Franchisee understands and assumes the business risks inherent in this
enterprise.
16. Applicable Law
(a) This Option is effective upon its acceptance and execution
by the Franchisor in Georgia, and shall be interpreted and construed under the
laws thereof, which laws shall prevail in the event of any conflict of law;
provided, however, that if any of the provisions of this Option would not be
enforceable under the laws of Georgia, then such provisions shall be interpreted
and construed under the laws of the state in which the premises of the
Franchised Business is located.
(b) The parties agree that any action brought by either party
against the other in any court, whether federal or state, shall be brought
within the State of Georgia in the judicial district in which Hooter's of
America has its principal place-of business and do hereby waive all questions of
personal jurisdiction or venue for the purpose of carrying out this provision.
(c) No right or remedy conferred upon or reserved to the
Franchisor or Franchisee by this option is intended to be, nor shall be deemed,
exclusive of any other right or remedy herein or by law or equity provided or
permitted, but each shall be cumulative of every other right or remedy.
(d) Nothing herein contained shall bar the Franchisor's right
to obtain injunctive relief against threatened conduct that shall cause it loss
or damages, under the usual equity rules, including the applicable rules for
obtaining restraining orders and preliminary injunctions.
17. Notice. Any notice required or permitted to be given hereunder shall be in
writing and shall be served upon the other
<PAGE>
17. Notice- Any notice required or permitted to be given hereunder shall be in
writing and shall be served upon the other party personally, or by certified
mail, return receipt requested, postage prepaid. Any notice to Franchisor shall
be addressed to Franchisor at:
Hooters of America, Inc.
4501 Circle 75 Parkway
Suite E-5110
Atlanta, Georgia 30339
Notices to the Franchisee shall be addressed as
follows:
Butterwings of Wisconsin, Inc. c/o Mr. Harvey L. Temkin Foley & Lardner 1
South Pickney Street
P.O. Box 1497
Madison, Wisconsin 53701-1497
18. Miscellaneous.
Construction and Interpretation:
(a) This Option is to be construed in accordance with the laws of the State
of Georgia.
(b) The titles and subtitles of the various sections and paragraphs of this
Option are inserted for convenience and shall not be deemed to affect the
meaning or construction of any of the terms, provisions, covenants and
conditions of this Option.
(c) The language in all parts of this Option shall in all cases be
construed simply according to its fair and plain meaning and not strictly for or
against Franchisor or Franchisee.
(d) It is agreed that if any provision of this option is capable of two
constructions, one of which would render the provision void and the other of
which would render the provision valid, then the provision shall have the
meaning which renders it valid.
(e) The words "Franchisor" and "Franchisee" herein may be applicable to one
or more parties, the singular shall. include the plural, and the masculine shall
include the feminine and neuter; and if there shall be more than one (1) party
or person referred to as the Franchisee hereunder, then their obligations and
liabilities hereunder shall be joint and several.
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contract, the latter shall prevail, but in such event the provision of this
Option thus affected shall be curtailed and limited only to the extent necessary
to bring it within the requirement of the law. In the event that any part,
section, paragraph, sentence or clauses of this Option shall be held to be
indefinite, invalid or otherwise unenforceable, the entire option shall not fail
on account thereof and the balance of this option shall continue in full force
and effect. If any Court of competent jurisdiction deems any provision hereof
(other than for the payment of money) unreasonable, said Court may declare a
reasonable modification hereof and this Option shall be valid and enforceable
and the parties hereto, agree to be bound by and perform the same as thus
modified.
(g) This Option may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
19. Submission of Option. The submission of this Option does not constitute an
offer and this option shall become effective only upon the execution thereof by
the Franchisor and Franchisee. THIS OPTION SHALL NOT BE BINDING ON THE
FRANCHISOR UNLESS AND UNTIL IT SHALL HAVE BEEN ACCEPTED AND SIGNED, BY AN
AUTHORIZED OFFICER OF THE FRANCHISOR.
IN WITNESS WHEREOF, the parties have duly executed this instrument on the date
first written above.
FRANCHISOR:
HOOTERS OF AMERICA, INC.
By:
Name:
Attest Title:
Dated:
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FRANCHISEE(S):
BUTTERWINGS OF WISCONSIN.
By
Title:
Attest:
Dated:
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Exhibit "A"
Territory
Madison, Wisconsin, and Milwaukee, Wisconsin
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Exhibit "B"
Approved Location
Address:
Date of Approval:
FRANCHISOR: FRANCHISEE:
Hooters of America, Inc. Butterwings of Wisconsin,
Inc.
By: By:
President President
Attest: Attest:
Secretary Secretary
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