Franchise Agreement - TGI Friday's Inc.
T.G.I. FRIDAY'S-Registered Trademark- RESTAURANT
FRANCHISE AGREEMENT
DATED: ___________________, _______
<PAGE>
T.G.I. FRIDAY'S-Registered Trademark- RESTAURANT
FRANCHISE AGREEMENT
TABLE OF CONTENTS
1. DEFINITIONS.............................................................................1
2. EXCLUSIVE RIGHTS; TERM..................................................................7
3. FEES AND PAYMENTS.......................................................................7
4. REPRESENTATIVE; OPERATOR; RESTAURANT MANAGERS; TRAINING.................................8
5. RESTAURANT LOCATION; OCCUPANCY CONTRACT.................................................9
6. RESTAURANT CONSTRUCTION................................................................10
7. RESTAURANT OPERATIONS; MANUALS.........................................................11
8. CONFIDENTIAL INFORMATION...............................................................14
9. PROPRIETARY MARKS......................................................................15
10. ADVERTISING............................................................................17
11. INSURANCE..............................................................................18
12. ACCOUNTING AND RECORDS.................................................................19
13. FRANCHISEE'S REPRESENTATIONS AND WARRANTIES; AFFIRMATIVE AND NEGATIVE COVENANTS........20
14. TRANSFER...............................................................................22
15. CONSENT AND WAIVER.....................................................................24
16. DEFAULT AND REMEDIES...................................................................25
17. OBLIGATIONS UPON TERMINATION OR EXPIRATION; RENEWAL OPTION.............................27
18. INDEMNIFICATION........................................................................31
19. NOTICES................................................................................33
20. FORCE MAJEURE..........................................................................33
21. SEVERABILITY...........................................................................34
<PAGE>
22. INDEPENDENT CONTRACTOR.................................................................34
23. DUE DILIGENCE AND ASSUMPTION OF RISK...................................................34
24. MISCELLANEOUS..........................................................................35
25. CHOICE OF LAW; JURISDICTION; VENUE.....................................................35
26. ENTIRE AGREEMENT.......................................................................36
ADDENDUM A COVENANT AND AGREEMENT FOR CONFIDENTIALITY (PRINCIPALS)
ADDENDUM B COVENANT AND AGREEMENT FOR CONFIDENTIALITY (OTHERS)
EXHIBIT A COMMENCEMENT DATE AGREEMENT
EXHIBIT B GUARANTY AGREEMENT
EXHIBIT C DESCRIPTION OF THE RESTRICTED AREA
<PAGE>
FRANCHISE AGREEMENT
This Franchise Agreement is entered into as of the ____ day of
______________, _______, by and between TGI Friday's Inc., a New York
corporation, with its principal place of business located at 7540 LBJ
Freeway, Suite 100, Dallas, Texas 75251, and ___________________________, a
________ corporation, with its principal place of business located at
_________________________, and its Principals (as defined herein below).
RECITALS
WHEREAS, Friday's has developed and owns the System;
WHEREAS, Friday's intends to identify the System with the
Proprietary Marks;
WHEREAS, Friday's continues to develop, use and control the use of
the Proprietary Marks to identify the source of services and products
marketed under the System and to represent the System's high standards;
WHEREAS, Friday's and Franchisee (or Developer, as defined therein)
have entered into the Development Agreement; and
WHEREAS, Franchisee wishes to obtain certain rights to use the
System in connection with the operation of the Restaurant and to receive
training and other assistance provided by Friday's in connection therewith as
described herein.
NOW, THEREFORE, the parties, in consideration of the undertakings
and commitments set forth herein, agree as follows:
1. DEFINITIONS
As used in this Agreement the following words and phrases shall have
the meanings attributed to them in this Section:
ACTION - any cause of action, suit, proceeding, claim, demand, investigation
or inquiry (whether a formal proceeding or otherwise) asserted or instituted
by a third party with respect to which the indemnity described in Section 18
applies.
AFFILIATE - Carlson Restaurants Worldwide Inc., or any subsidiary thereof or
any subsidiary of TGI Friday's Inc.
AGREEMENT - this Franchise Agreement.
BUSINESS DAYS - each calendar day except Saturday, Sunday and national legal
holidays.
COMMENCEMENT DATE - the first to occur of the date the Restaurant opens for
business to the public or the date Franchisee is required to open the
Restaurant for business pursuant to the terms hereof.
COMMENCEMENT DATE AGREEMENT - an agreement memorializing the Commencement
Date in the form of
<PAGE>
EXHIBIT A hereto.
COMPETING BUSINESS - a restaurant business offering the same or similar
products and services as offered by restaurants in the System or restaurants
in any other concept or system owned, operated, managed or franchised by
Friday's or any Affiliate, including, without limitation, waiter/waitress
service, sit-down dining and bar services.
CONFIDENTIAL INFORMATION - the System, the Development Manual, the Manuals,
other manuals, the Standards, written directives and all drawings, equipment,
recipes, computer and point of sale programs (and output from such programs),
and any other information, know-how, techniques, material and data imparted or
made available by Friday's which is (i) designated as confidential; (ii) known
by Franchisee to be considered confidential by Friday's; or (iii) by its nature
inherently or reasonably considered confidential.
CONTROL OF THE REAL ESTATE - a fully executed deed, lease, sublease or other
occupancy agreement, in form and substance satisfactory to Friday's, evidencing
the control by Franchisee of the property upon which the Restaurant is situated.
DESIGN CONCEPT DRAWINGS - Franchisee's site plans showing parking layout,
landscaping and Site signage, floor plan with seating layout and food service
layout with legend, exterior elevations with signage, transverse and
longitudinal building cross sections, typical wall sections, interior
elevations of all walls in the front of the Restaurant, and a reflected
ceiling plan showing the location of all front-of-the-Restaurant lighting,
ceiling stained glass and ceiling fans.
DEVELOPER - as defined in the Development Agreement.
DEVELOPMENT AGREEMENT - that certain agreement dated ____________________,
_____, between Friday's and Franchisee (or Developer, as therein defined)
relating to the development of T.G.I. Friday's-Registered Trademark-
Restaurants.
DEVELOPMENT MANUAL - Friday's manual, as amended from time to time in Friday's
sole discretion, describing (generally) the procedures and parameters for the
development of T.G.I. Friday's-Registered Trademark- Restaurants.
ENTERTAINMENT PARK - includes, but is not limited to any amusement park,
theme park, or any other entertainment venue which has a national presence of
at least two (2) or more such parks in existence, and which has averaged at
least 1.5 million persons in annual attendance for the preceding three (3)
calendar years at any one (1) park location.
EVENT OF DEFAULT - as defined in Sections 16.01 and 16.02.
FRANCHISE FEE - a non-refundable initial franchise fee of _____________ Dollars
($___________) paid by Franchisee to Friday's upon the execution of this
Agreement, which amount shall be deemed fully earned by Friday's upon payment.
FRANCHISEE - ____________________________, a ___________ corporation.
FRANCHISEE INDEMNITEES - Franchisee, the Principals, and their respective
directors, officers, employees, agents, shareholders, affiliates, successors
and assigns and the respective directors, officers, employees,
<PAGE>
agents, shareholders, affiliates, successors and assigns of each.
FRIDAY'S - TGI Friday's Inc., a New York corporation.
FRIDAY'S INDEMNITEES - Friday's, its directors, officers, employees, agents,
shareholders, affiliates, successors and assigns and the respective directors,
officers, employees, agents, shareholders and affiliates of each.
FURNISHINGS - all of the decorative memorabilia, furnishings, signs, equipment,
advertising materials, inventory, trade dress, menus, items bearing any of the
Proprietary Marks and other tangible assets used in connection with Restaurant
operation.
GROSS SALES - A. For the purposes of this Agreement, "Gross Sales"
shall mean:
(1) the entire amount of the actual sales
price, whether for cash or other consideration, of all sales of food,
beverages, merchandise and services in, on, or from the Restaurant, including
receipts from mail, facsimile or telephone orders received or filled from the
Restaurant and telephone and vending machine receipts;
(2) all deposits not refunded to purchasers;
(3) orders taken, although such orders may be
filled elsewhere;
(4) payments to Franchisee by any
concessionaire, franchisee or person otherwise in the Restaurant with
Friday's consent; and
(5) promotional allowances to customers
whether negative or positive in an amount equal to Franchisee's retail price
for food and/or beverages prepared and served by Franchisee to the extent of
the discount (in whole or in part) provided to the customers, but only to the
extent that said amount for promotional allowances exceeds two and one-half
percent (2 1/2%) of Gross Sales as calculated without inclusion of said
amount. Such promotional allowances shall include the retail price of food
and beverages covered by appetizer and dinner cards and the customer comp
cards to which Friday's gives consent. Promotional allowances provided in
exchange for goods or services shall be includable in Gross Sales without
benefit of the two and one-half percent (2 1/2%) discount (funds expended by
Franchisee to comply with its local advertising requirement pursuant to
Section 10.01.A shall not be included as promotional allowances under this
section).
B. Gross Sales shall not include:
(1) the amount of returns to shippers or
manufacturers;
(2) the amount of any cash or credit refunds
made upon any sale where the food, beverages, merchandise or service
sold or some part thereof is thereafter returned by the customer and accepted
by Franchisee;
(3) receipts from sales of furniture, trade
fixtures or other extraordinary sales (unless bearing any Proprietary
Mark) not made in the ordinary course of business;
(4) any sales or value added tax required by
any duly constituted taxing
<PAGE>
authority to be separately accounted for and collected on its behalf by
Franchisee directly from Franchisee's customers and paid by Franchisee to the
taxing authority; and
(5) meals served to an employee at no cost
while the employee is on duty, or the discounted portion of meals served
to an employee.
C. Each charge or sale upon installment or credit shall be
treated as a sale for the full price in the month during which such charge or
sale shall be made, irrespective of whether, or of the time when, Franchisee
shall receive payment (whether full or partial) thereof.
HEADQUARTERS - the location(s) designated from time to time by Friday's as
its principal place of business.
INDEMNITEES - Friday's Indemnitees and/or Franchisee Indemnitees.
LOSSES AND EXPENSES - compensatory, exemplary or punitive damages, fines,
charges, costs, expenses, lost profits, reasonable fees of attorneys and
other engaged professionals, court costs, settlement amounts, judgments,
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 in Section 18.
MANUALS - Friday's confidential operating manuals, as amended from time to
time in Friday's sole discretion, which contain the instructions,
requirements, Standards, specifications, methods and procedures for the
operation of the Restaurant including (i) those relating to the selection,
purchase, service and sale of all products being sold at the Restaurant; (ii)
those relating to the maintenance and repair of the Restaurant, buildings,
grounds, equipment, signs, interior and exterior decor items, fixtures and
furnishings; and (iii) those relating to employee apparel and dress,
accounting, bookkeeping, record retention and other business systems,
procedures and operations.
MATERIAL EVENT OF DEFAULT - an Event of Default which constitutes a
substantial deviation from the performance required.
MULTI-UNIT MANAGER(S) - the individual(s) designated as described in Section
4.05 who shall be solely dedicated to the management and supervision of the
Restaurant and certain other restaurants developed pursuant to the
Development Agreement.
NSO TEAM - a "new store opening team" consisting of Friday's employees and
certain of Franchisee's employees to whom Friday's has consented which shall
perform the functions described in Section 4.09.
OCCUPANCY CONTRACT - the agreement (including, without limitation, any lease,
deed, contract for sale, contract for deed, land contract, management
contract, license or other agreement purporting to grant any right, title or
interest in or to the Site) pursuant to which Franchisee shall occupy or
acquire rights in the Site.
OPERATOR - an individual designated as described in Section 4.02 who shall
devote his full time and best efforts to the management and supervision of
(i) Franchisee's duties and obligations hereunder and (ii) the operation of
(a) the Restaurant and (b) all T.G.I. Friday's-Registered Trademark-
Restaurants developed pursuant to rights granted by Friday's.
<PAGE>
OTHER CONCEPTS - Retail, wholesale, restaurant, bar, tavern, take-out or any
other type of business involving the production, distribution or sale of food
products, beverages, services, merchandise or other items in connection with
the use of one, some or all of the Proprietary Marks or other names or marks,
but utilizing a system other than the System pursuant to which a T.G.I.
Friday's-Registered Trademark- Restaurant is operated.
OWNER - the party (if other than the Franchisee) owning or controlling the
Site and being a party (with Franchisee) to the Occupancy Contract.
PAYMENTS - all transfers of funds from Franchisee to Friday's including,
without limitation, the Franchise Fee, the Royalty Fee and reimbursement of
expenses.
PERMANENT DISABILITY - any physical, emotional or mental injury, illness or
incapacity which would prevent the afflicted person from performing his
obligations hereunder for more than ninety (90) consecutive days as
determined by a licensed physician selected by Friday's.
PRELIMINARY SITE CONSENT - written communication from Friday's to Developer
notifying Developer that a proposed site has received the consent of the
Friday's Site Review Committee.
PRINCIPAL(S) - ______________________, _____________________,
_____________________ and __________________________, (if any) who are (and
such other persons or entities to which Friday's gives consent and which are
from time to time) the record and beneficial owner of, and has the right to
vote its respective interest (collectively 100%) in the Securities of
Franchisee or the securities or partnership interest of any person or entity
designated by Friday's which owns or controls a direct or indirect interest
in the Securities of the Franchisee.
PROJECT MANAGER - an individual designated as described in Section 4.04 who
shall devote his full-time and best efforts to the coordination and
completion of Restaurant construction.
PROPRIETARY MARKS - certain trademarks, trade names, service marks, trade
dress, emblems and indicia of origin designated by Friday's from time to time
for use in connection with the operation of T.G.I. Friday's-Registered
Trademark- Restaurants pursuant to the System, including, without limitation,
"T.G.I. FRIDAY's-Registered Trademark-", "FRIDAY's-Registered Trademark-" and
"THE AMERICAN BISTRO-Registered Trademark-".
PUBLICLY-HELD ENTITY - a corporation or other entity whose equity securities
are (i) registered pursuant to applicable law; (ii) widely held by the
public; and (iii) traded on a public securities exchange or over the counter
pursuant to applicable law.
RENEWAL ELECTION DATE - the date on which Franchisee notifies Friday's in
writing of its election to renew this Agreement.
RENEWAL FRANCHISE AGREEMENT - the franchise agreement as defined in Section
17.09.
RENEWAL TERM - twenty years from the expiration of the Term of this Agreement.
REPRESENTATIVE - an individual, designated as described in Section 4.01
who (i) owns an equity interest in the Franchisee and (ii) is authorized to
act on behalf of, and bind, Franchisee with respect to this Agreement.
<PAGE>
RESTAURANT - the T.G.I. Friday's-Registered Trademark- Restaurant to be
developed and operated pursuant to this Agreement.
RESTAURANT MANAGER(S) - general manager, assistant general manager, kitchen
manager and other managers required for the management, operation,
supervision and promotion of the Restaurant pursuant to the terms hereof.
RESTRICTED AREA - the geographical area described in EXHIBIT C; provided,
however, the Restricted Area (a) shall in no event exceed a three (3) mile
radius surrounding the Site, (b) not include any airport properties,
professional sports stadiums, military bases, Entertainment Parks or casinos
located within the geographical area described in EXHIBIT C, and (c) not
include the area contained within a _______ (__) mile radius of any other
T.G.I. Friday's-Registered Trademark- Restaurant located within such
Restricted Area as of the date of this Agreement.
ROYALTY FEE - a continuing monthly fee in the amount of four percent (4%) of
Gross Sales at the Restaurant in each accounting month payable by
Franchisee to Friday's.
SECURITY - the capital stock of, partner's interest in, or other equity or
voting interest in Franchisee, including such interests issued or created
subsequent to the date hereof.
SITE - the location of the Restaurant, being
__________________________________.
STANDARDS - Friday's standards and specifications, as amended from time to
time by Friday's, in its sole discretion, contained in, and being a part of,
the Confidential Information pursuant to which Franchisee shall develop and
operate the Restaurant at the Site.
SYSTEM - a unique, proprietary system developed and owned by Friday's (which
may be modified or further developed from time to time, in Friday's sole
discretion) for the establishment and operation of full-service restaurants
and bars/restaurants under the Proprietary Marks, which includes, without
limitation, a distinctive image consisting of exterior and interior design,
decor, color scheme and furnishings; special recipes, menu items and full
service bar; uniform standards, products, services and specifications;
procedures with respect to operations, inventory and management control
(including accounting procedures and policies); training and assistance; and
advertising and promotional programs.
TERM - a period commencing as of the date hereof and continuing until the
twentieth (20th) anniversary of the Commencement Date.
TERRITORIAL EXPENSES - such costs and expenses incurred by or assessed with
respect to Friday's (or other described party's) employees, agents and/or
representatives in connection with activities in the Territory which
Franchisee is obligated to pay pursuant to this Agreement, including, without
limitation, hotel/lodging, transportation and meals, and other related or
incidental expenses.
TGIFM - TGI Friday's of Minnesota, Inc., a Minnesota corporation and a
subsidiary of Friday's.
T.G.I. FRIDAY'S-Registered Trademark- RESTAURANTS - restaurants operated in
accordance with the System under the registered service marks
"FRIDAY'S-Registered Trademark-" OR "T.G.I. FRIDAY'S-Registered Trademark-".
TRAINING CENTER - the location(s) specified from time to time by Friday's as
the training center.
TRANSFER - the sale, assignment, conveyance, license, devise, bequest,
pledge, mortgage or other
<PAGE>
encumbrance, whether direct or indirect, of (i) this Agreement or the
Development Agreement; (ii) any or all rights or obligations of Franchisee
herein; or (iii) any interest in any Security, including the issuance of any
new Securities.
TRANSFEREE OWNER(S) - the owner of any and all record or beneficial interest
in the capital stock of, partner's interest in, or other equity or voting
interest in any transferee of a Transfer occurring pursuant to the terms of
Section 14.
WAGE EXPENSES - such wages and/or salaries (including a reasonable allocation
of the cost of benefits) of, or with respect to, Friday's (or other described
party's) employees, agents and or representatives to be reimbursed to
Friday's or such party as described herein.
2. EXCLUSIVE RIGHTS; TERM
2.01 Friday's grants to Franchisee the right, and Franchisee accepts
the obligation, subject to the terms and conditions herein, to develop and
operate the Restaurant pursuant to the System at the Site and to use solely
in connection therewith the Proprietary Marks. During the Term and for so
long as no Event of Default has occurred and is continuing and no event has
occurred which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default, Friday's will not establish, nor authorize
any other person to establish, a T.G.I. Friday's-Registered Trademark-
Restaurant within the Restricted Area.
2.02 Friday's expressly reserves the right, and Franchisee
acknowledges that Friday's has the exclusive unrestricted right, to engage,
directly and indirectly, through its employees, developers, franchisees,
licensees, agents and others within the Restricted Area, in Other Concepts,
including a Front Row-Registered Trademark- Sports Grill. Such Other Concepts
may compete with Franchisee directly or indirectly. Friday's reserves the
right to use the Proprietary Marks in connection with Other Concepts.
2.03 Unless sooner terminated as provided herein, this Agreement
shall be effective on the date hereof, and continue until the expiration of
the Term. Within thirty (30) days after the Commencement Date, the parties
shall execute the Commencement Date Agreement.
3. FEES AND PAYMENTS
3.01 A. Upon execution of this Agreement, Franchisee shall
pay to Friday's the Franchise Fee. A credit shall be applied to the Franchise
Fee in an amount equal to the portion of the Development Fee (as defined in
the Development Agreement) applicable to the Restaurant which was paid by the
Developer pursuant to the Development Agreement.
B. Franchisee shall pay the Royalty Fee on or
before the fifteenth (15th) day of each month with respect to Gross
Sales at the Restaurant in the preceding accounting month.
3.02 A. All Payments shall be submitted to Friday's at
the address provided in Section 19 hereof, in care of the "Treasurer", or
such other address as Friday's shall designate in writing.
B. Payments shall be received by Friday's (i) upon
execution hereof in the case of the Franchise Fee; (ii) as described in
Section 3.01.B in the case of the Royalty Fee; and (iii) not more than thirty
(30) days after date of invoice for all other Payments. Delinquent Payments
shall bear interest from the due date until received by Friday's at eighteen
percent (18%) per annum or the maximum rate permitted by law, whichever is
less.
<PAGE>
3.03 Any taxes or duties imposed upon or with respect to this
Agreement or any materials, supplies or specifications acquired by or
provided to Franchisee pursuant to or in connection with this Agreement shall
be paid by Franchisee. Franchisee shall pay to Friday's an amount equal to
any sales tax, gross receipts tax, excise tax or any license or tax similar
thereto which is imposed, directly or indirectly, on Friday's with respect to
any Payments to Friday's required under this Agreement. The preceding
sentence shall not apply to any franchise tax or income, war profits or
excess profits tax (or any tax in lieu thereof) imposed on Friday's with
respect to the aforesaid payments.
3.04 Franchisee shall not withhold or off-set any portion of any
Payment due to Friday's alleged non-performance under this Agreement or any
other agreement by and between Friday's and Franchisee or their respective
parent corporations, subsidiaries or affiliates.
4. REPRESENTATIVE; OPERATOR; RESTAURANT MANAGERS; TRAINING
4.01 Franchisee hereby designates __________________ as the
Representative. Any replacement Representative shall be designated within ten
(10) days of the prior Representative's resignation or termination. Each
Representative shall attend and successfully complete at the Training Center,
Friday's "Owner's Orientation Program" (currently, approximately four (4)
weeks). The Representative hereunder and under the Development Agreement
shall be the same individual.
4.02 Franchisee hereby designates ______________________ as the
Operator. Any replacement Operator shall be designated within ten (10) days
of the prior Operator's resignation or termination. Each Operator shall
attend and successfully complete at the Training Center, within six (6)
months of appointment, Friday's training program required for Restaurant
Managers (SEE Section 4.03). The Operator hereunder and under the Development
Agreement shall be the same individual.
4.03 The requisite number of Restaurant Managers, as determined by
Friday's, shall be employed by Franchisee for the Restaurant. All Restaurant
Managers shall attend and successfully complete at the Training Center,
Friday's training program for Restaurant Managers of T.G.I.
Friday's-Registered Trademark- Restaurants (currently, one (1) week).
Additionally, the Restaurant Managers shall attend and successfully complete
additional training (currently, approximately twenty (20) weeks) at such then
existing T.G.I. Friday's-Registered Trademark- Restaurants as shall be
designated by Friday's. Any previously trained Restaurant Manager who is not
a general manager, but has been selected to become a general manager, shall
attend and successfully complete such additional training as Friday's may
require. Friday's may require general and kitchen managers, at Franchisee's
expense, to attend and successfully complete additional training at the
Training Center.
4.04 Not less than sixty (60) days prior to the commencement of
Restaurant construction, Franchisee shall designate the Project Manager. Any
replacement Project Manager shall be designated within ten (10) days of the
prior Project Manager's resignation or termination.
4.05 In the event this Agreement is for the third T.G.I.
Friday's-Registered Trademark- Restaurant to be developed under the
Development Agreement, Franchisee shall designate a Multi-Unit Manager.
Additional Multi-Unit Managers shall be designated from time to time as
reasonably required by Friday's. Prior to assuming his duties, each
Multi-Unit Manager shall have successfully completed training as a Restaurant
Manager and shall attend at the Training Center, and successfully complete,
Friday's training program for Multi-Unit Managers (currently, two (2) days at
the Training Center and approximately four (4) weeks at such then existing
T.G.I. Friday's-Registered Trademark- Restaurants as shall be designated by
Friday's).
<PAGE>
4.06 Friday's shall have the right to interview and consent to each
Operator, each Multi-Unit Manager, each Project Manager and all Restaurant
Managers. Friday's shall endeavor to conduct such interviews at the Restaurant,
but may require that such interviews occur at Headquarters. Franchisee shall
bear all costs and expenses related to making the Restaurant Managers available
for such interviews.
4.07 Friday's shall provide instructors, facilities and materials
for training at the Training Center, and shall provide, at its option, other
training programs (at non-Training Center locations) as may be designated by
Friday's from time to time in the Manuals or otherwise in writing. Franchisee
shall reimburse Friday's for any Territorial Expenses or other direct
expenses incurred by Friday's for such other training programs.
4.08 Except as provided herein, Franchisee shall bear all costs and
expenses relating to any Representative, Operator, Multi-Unit Manager,
Project Manager and Restaurant Manager training.
4.09 The NSO Team shall assist in (i) training Franchisee's
employees at the Site and (ii) the opening of the Restaurant. The NSO Team
typically consists of a combined total of approximately twelve (12) employees
of Friday's and Franchisee (the actual number of members shall be determined
by Friday's in its sole discretion, depending upon the number of T.G.I.
Friday's-Registered Trademark- Restaurants already being operated by
Franchisee and such other criteria as Friday's deems reasonable). The members
of the NSO Team shall be subject to Friday's consent. The number of Friday's
employees selected to serve on the NSO Team for the Restaurant is determined
according to the following schedule, provided however, Friday's may elect to
modify this schedule in the event the total number of people on the NSO Team
is greater or less than twelve (12):
<CAPTION>
-------------------------- -------------------------------- ----------------------- ------------------------
RESTAURANT NO. OPERATED NO. OF FRIDAY'S EMPLOYEES NO. OF TEAM MEMBERS TEAM MEMBERS PAID FOR
BY DEVELOPER ON THE NSO TEAM PAID FOR BY FRIDAY'S BY DEVELOPER
-------------------------- -------------------------------- ----------------------- ------------------------
-------------------------- -------------------------------- ----------------------- ------------------------
1 & 2 12 12 0
-------------------------- -------------------------------- ----------------------- ------------------------
-------------------------- -------------------------------- ----------------------- ------------------------
3 & 4 9 9 3
-------------------------- -------------------------------- ----------------------- ------------------------
-------------------------- -------------------------------- ----------------------- ------------------------
5 & 6 6 6 6
-------------------------- -------------------------------- ----------------------- ------------------------
-------------------------- -------------------------------- ----------------------- ------------------------
7 or more 2 2 10
-------------------------- -------------------------------- ----------------------- ------------------------
In the event Friday's determines that more than 12 NSO team members are
necessary for an opening, Developers with five or more restaurants open
(inclusive of the new restaurant) shall be responsible for the costs
associated with the team members in excess of 12. For Developers with less
than five restaurants open, Friday's will bear the costs of the additional
team members.
If Franchisee fails or is unable to timely provide such employees,
Friday's may, but shall not be obligated to, staff the NSO Team with Friday's
employees. Friday's and Franchisee shall each be responsible for (a) making
all travel, food and lodging arrangements and (b) the wages and other
expenses of the NSO Team members provided by each; provided, however, that
Franchisee shall reimburse Friday's for the Territorial Expenses and the Wage
Expenses of Friday's employees who are provided as a result of Franchisee's
failure or inability to provide Franchisee's employees for participation on
the NSO Team.
4.10 Franchisee shall comply with such employee training and testing
procedures and requirements reasonably prescribed in the Manuals or otherwise
in writing.
<PAGE>
4.11 Friday's may create an audio and/or video recording of any
training programs at Friday's expense.
5. RESTAURANT LOCATION; OCCUPANCY CONTRACT
5.01 Franchisee shall not relocate the Restaurant from the Site
without Friday's consent.
5.02 Friday's shall have the right to review and consent to the
Occupancy Contract prior to the execution thereof. Franchisee represents that
the Occupancy Contract as consented to by Friday's shall be executed by all
necessary parties within ten (10) days following Friday's consent thereto.
Franchisee shall furnish Friday's a complete copy of the fully executed
Occupancy Contract within ten (10) days after execution. Unless it conveys to
Franchisee fee simple title to the Site, the Occupancy Contract shall include
the following covenants:
A. Owner shall deliver to Friday's, simultaneously with
delivery to Franchisee, any notice alleging Franchisee's default under the
Occupancy Contract which threatens or purports to terminate the Occupancy
Contract or result in a foreclosure thereof;
B. Friday's may enter the Restaurant premises to protect
the Proprietary Marks or the System or to cure any Event of Default or
default under the Occupancy Contract;
C. Franchisee may assign the Occupancy Contract to Friday's
without any fee or modification thereof and Friday's may assign the Occupancy
Contract or license or sublease the Restaurant premises for any part of the
remaining term of the Occupancy Contract, each without Owner's consent; and
D. Owner and Franchisee shall not amend the Occupancy
Contract in any way which is inconsistent with the provisions of Sections
5.02.A through D, inclusive.
5.03 Notwithstanding the terms of Section 5.02, Franchisee shall:
A. deliver to Friday's, immediately after delivery
to or by Franchisee, any notice of default under the Occupancy Contract
which threatens or purports to terminate the Occupancy Contract or result in
a foreclosure thereof;
B. permit Friday's to enter the Restaurant premises to
protect the Proprietary Marks or the System or to cure any Event of Default
or default under the Occupancy Contract, all at Franchisee's expense; and
C. not amend the Occupancy Contract in any way
which is inconsistent with the provisions described in Sections 5.02.A
through D, inclusive.
6. RESTAURANT CONSTRUCTION
6.01 Franchisee shall ensure that (i) materials satisfying the
Standards are utilized in construction and (ii) such materials are purchased
from suppliers as described in Sections 6.06 and 6.07.
6.02 Franchisee shall (a) employ a qualified architect and licensed
general contractor to whom
<PAGE>
Friday's shall have the right to consent, and (b) provide copies to Friday's,
upon request, of architectural or construction contracts applicable to the
Restaurant. Upon request by Franchisee, Friday's will make available to
Franchisee, at Franchisee's expense, (i) architectural consultation and
advice; (ii) preparation of Design Concept Drawings; and (iii) consultation
and advice on the purchase, display and installation of typical decorative
memorabilia.
6.03 Franchisee shall (i) submit Design Concept Drawings,
incorporating proposed adaptations to the local market for Friday's consent;
(ii) modify the Design Concept Drawings as reasonably required by Friday's;
and (iii) submit the modified Design Concept Drawings to Friday's for final
consent. Following Friday's consent to the Design Concept Drawings,
Franchisee shall, pursuant to the Manuals, (a) submit for Friday's review,
construction plans and specifications based upon the standard construction
plans provided to Franchisee, adapted by Franchisee to the Design Concept
Drawings for the Restaurant to which Friday's has consented; (b) modify such
plans and specifications as reasonably required by Friday's; (c) submit such
modified plans and specifications to Friday's for final consent; and (d)
construct the Restaurant pursuant to the plans and specifications to which
Friday's has consented. Design Concept Drawings and construction plans and
specifications to which Friday's has consented shall not be modified without
Friday's consent. Prior to the commencement of construction, Franchisee shall
deliver a construction schedule and thereafter shall deliver monthly
revisions thereof indicating construction progress.
6.04 Franchisee shall obtain all zoning classifications, clearances,
consents, permits and licenses required in connection with the construction
of the Restaurant. Upon request, copies of such permits and licenses shall be
provided to Friday's.
6.05 Franchisee shall commence construction within six (6) months
from the date of Preliminary Site Consent and shall complete construction no
later than eleven (11) months thereafter and sooner if so required by the
opening dates set forth in the Development Agreement. Construction shall be
deemed to have been commenced upon the commencement of site work by heavy
equipment or, in the event the Restaurant is to be located in existing shell
space, commencement of construction-related work at the Site. Franchisee
shall, within ten (10) days after commencement of construction, advise
Friday's of such commencement date. Friday's may inspect construction at the
Site. Franchisee shall make all necessary arrangements to insure Friday's
access to the Site.
6.06 Franchisee shall acquire from Friday's or a supplier satisfying
the requirements of Section 6.07 all (i) fixtures, (ii) furnishings, (iii)
other products and materials required for the development of the Restaurant,
and (iv) millwork for the Restaurant. Franchisee acknowledges that Friday's
may (i) profit from its sale of such items to Franchisee or (ii) receive
consideration from the third party supplier with respect to Franchisee's
purchases of such items.
6.07 Franchisee's suppliers of the items referred to in Section 6.06
shall (i) demonstrate the ability to meet the Standards; (ii) possess quality
controls and capacity to supply Franchisee's needs promptly, reliably and
consistent with the Standards and the System; and (iii) not have been
rejected in writing by Friday's. Franchisee shall provide Friday's with a
current list of suppliers prior to commencement of construction of the
Restaurant (current supplier lists shall thereafter be provided upon
request). Franchisee shall bear or reimburse Friday's direct expenses
incurred in connection with the consent to suppliers. Friday's may provide a
list of suppliers to which Friday's has given consent for such items.
6.08 Friday's reserves the right to consent to, or require, limited
variations from the Standards
<PAGE>
with respect to the development of other T.G.I. Friday's-Registered
Trademark- Restaurants in the System.
7. RESTAURANT OPERATIONS; MANUALS
7.01 The Restaurant shall open for business (i) only with Friday's
consent and (ii) promptly after completion of appropriate training pursuant
to the System (as reasonably determined by Friday's).
7.02 Franchisee acknowledges that (i) every component of the System
is material to (a) Friday's, (b) other franchisees in the System and (c) the
operation of the Restaurant; and (ii) compliance by all System franchisees
with the Standards and the System is (a) fundamental to the value of the
System and to this Agreement and (b) the basis for the broad public
acceptance of the System and the goodwill associated therewith.
7.03 Franchisee shall employ continuously during the Term the
requisite number of Restaurant Managers, as determined by Friday's, each of
whom shall have successfully completed appropriate training as described
herein.
7.04 Except as otherwise provided herein, Franchisee shall:
A. use the Restaurant premises solely for the
operation of the Restaurant pursuant to the terms hereof;
B. keep the Restaurant operating pursuant to the terms
hereof for such minimum hours and days as from time to time prescribed in the
Manuals or otherwise in writing except as restricted by local law;
C. obtain and maintain all permits and licenses
required for Restaurant operation and comply with all applicable laws and
regulations;
D. refrain from using any juke box, video machine
or other coin or token operated machine, or any film or video device to
which Friday's has not given consent;
E. refrain from (i) offering for sale any tickets,
subscriptions or chances; (ii) conducting any pools, raffles or related
activities; (iii) using or allowing any gaming, dancing or live
entertainment; or (iv) using or providing any form of delivery service at,
from or on the Restaurant premises without Friday's consent;
F. permit Friday's to enter upon the Restaurant premises at
any time to inspect the Restaurant and the products and materials used by
Franchisee, cooperate with such inspection and take such steps as may be
necessary to correct any deficiencies discovered during such inspection
(Franchisee acknowledges that Friday's may re-inspect the Restaurant and such
products or materials and revoke its consent to any product or material (or
the supplier thereof) or the condition of the Restaurant should the
Restaurant, products or materials fail to meet the Standards); and
G. permit Friday's to remove from the Restaurant samples of
any inventory items (without payment) in amounts reasonably necessary for
testing to determine if such samples meet the Standards. Friday's may require
Franchisee to bear the cost of such testing if Friday's has not given consent
to the supplier or if the sample fails to conform to Friday's specifications.
<PAGE>
7.05 Franchisee shall forward to Friday's within five (5) days of
Franchisee's receipt thereof copies of all inspection reports, warnings,
certificates and ratings issued by any governmental entity during the Term of
this Agreement in connection with the conduct of the franchised business
which indicate less than full compliance by Franchisee with any applicable
law, rule or regulation.
7.06 Franchisee acknowledges that a material aspect of the System is
the (i) breadth of palate range and (ii) quality of, and Standards relating
to, food and beverage. Therefore, Franchisee shall (a) sell or offer only
such products and services to which Friday's has consented (which products
and services shall be prepared, offered and served or delivered in accordance
with the Standards); (b) sell or offer for sale all products and services
required by Friday's; (c) refrain from any deviation from the Standards
without Friday's consent; and (d) discontinue selling or offering any
products and services to which Friday's may, in its sole discretion, fail to
consent, or revoke its consent, in writing.
7.07 Franchisee shall purchase Friday's proprietary spice packs from
Friday's or its designated supplier at a reasonable price established by
Friday's or such supplier. Franchisee acknowledges that Friday's may (i)
profit from its sale of spice packs to Franchisee or (ii) receive
consideration from such supplier with respect to Franchisee's purchases of
spice packs.
7.08 Franchisee shall (i) repair, maintain and keep the Restaurant
(and all fixtures, Furnishings, signs and equipment) in good order and
condition and in compliance with the System and the Standards and (ii) as
reasonably required by Friday's, upgrade the Restaurant to the then current
System and Standards. Such upgrade shall not be required more than once every
three (3) years and the cost thereof shall not exceed Fifty Thousand dollars
($50,000.00) per upgrade unless at least twenty-five percent (25%) of the
restaurants operated by Friday's under the Proprietary Marks in the United
States have been so upgraded in which event such cost shall not be limited.
Franchisee shall undertake and complete such upgrading within a reasonable
time specified by Friday's.
7.09 Franchisee shall (i) acquire all inventory, supplies and other
products and materials required for the operation and maintenance of the
Restaurant solely from suppliers who (a) demonstrate the ability to meet the
Standards; (b) possess quality controls and capacity to supply Franchisee's
needs promptly, reliably and consistent with the Standards and the System;
and (c) Friday's has given consent to, which consent has not been withdrawn
and (ii) provide Friday's with a current list of suppliers at least ten (10)
business days prior to the Commencement Date (current supplier lists shall
thereafter be provided upon request). Friday's may provide a list of
suppliers to whom Friday's consents. Franchisee may submit to Friday's a
written request for consent to use other suppliers, or shall request the
supplier itself to do so. As a condition of its consent, Friday's shall be
permitted to inspect the supplier's facilities and take samples of the items
proposed to be acquired, which shall be delivered, at Friday's option, to
Friday's or to an independent laboratory designated by Friday's for testing.
Consent to a Supplier shall be within the sole discretion of Friday's.
Franchisee shall bear or reimburse the Territorial Expenses incurred in
connection with such inspection and the expense of any laboratory testing. In
addition, a charge not to exceed the actual cost of the test shall be paid by
Franchisee. Friday's reserves the right, at its option, to re-inspect the
facilities and products of any such supplier and to revoke its consent upon
such supplier's failure to continue to meet any of the foregoing criteria.
Franchisee shall bear or reimburse the Territorial Expenses and the cost of
any tests incurred in connection with such re-inspection. Franchisee shall
maintain sufficient amounts of, and shall utilize at all times, such
inventory, supplies and other products or materials.
7.10 Friday's shall provide Franchisee with one (1) set of the
Manuals "on loan". Franchisee acknowledges Friday's ownership of the Manuals
and any copyright rights in or to the Manuals.
<PAGE>
Franchisee shall observe such reasonable requirements concerning copyright
notices as Friday's requests. Replacement Manuals will be made available to
Franchisee at an additional cost.
7.11 Franchisee shall operate the Restaurant in accordance with the
System, the Manuals, the Standards, this Agreement, written directives
(whether or not such directives are made part of the Manuals or the
Standards) and other manuals prepared for use in Restaurant operations. The
Manuals, the Standards, other manuals and such written directives may be
revised from time to time by Friday's in its sole discretion.
7.12 The Manuals, other manuals, such written directives and any
other Confidential Information shall be kept in a secure location in the
Restaurant and returned to Friday's immediately upon request or upon
termination or expiration of this Agreement.
7.13 Franchisee shall keep the Manuals, the Standards, other manuals
and such written directives up to date. In the event of any dispute as to the
contents of the Manuals, the Standards, other manuals or written directives,
the copy thereof maintained by Friday's shall control.
7.14 Franchisee shall establish prices charged for products or
services sold in the Restaurant.
7.15 Franchisee shall obtain such copyright licenses as may be
necessary to authorize the playing of recorded music in the Restaurant.
Franchisee shall change such recorded music as required from time to time in
the Manuals or otherwise in writing.
7.16 Friday's shall provide to Franchisee:
A. access, together with other System franchisees,
to new System developments. Franchisee may be required to attend meetings
at its expense to discuss such developments;
B. access to and written materials concerning improvements
to the System which may include, without limitation, new products, recipes,
equipment, specifications and menu formats. At Franchisee's request, Friday's
shall provide training or demonstrations at the Restaurant of new products or
other changes to the System. Franchisee shall bear or reimburse the
Territorial Expenses and Wage Expenses in connection with such
demonstrations; and
C. periodic inspection and evaluation of the
Restaurant as reasonably required by Friday's.
7.17 Friday's reserves the right to consent to, or require, limited
variation from the Standards with respect to the operation of the Restaurant
and other T.G.I. Friday's-Registered Trademark- Restaurants in the System.
8. CONFIDENTIAL INFORMATION
8.01 Neither Franchisee nor any Principal shall communicate,
disclose or use any Confidential Information except as (i) permitted herein
or (ii) required by law, and shall use all reasonable efforts to maintain
such information as secret and confidential. Neither Franchisee nor any
Principal shall, without Friday's prior consent, copy, duplicate, record or
otherwise reproduce any Confidential Information. Confidential Information
may be provided to employees, agents, consultants and contractors only to the
extent necessary for such parties to provide services to Franchisee. Prior to
such disclosure of any Confidential Information each of such employees,
agents, consultants and contractors shall (a) be advised
<PAGE>
by Franchisee of the confidential and proprietary nature of the Confidential
Information and (b) agree to be bound by the terms and conditions of Section
8 of this Agreement. Notwithstanding such agreement, Franchisee shall
indemnify the Friday's Indemnitees from any damages, costs or expenses
resulting from or related to any disclosure or use of Confidential
Information by its agents, employees, consultants and contractors.
8.02 In the event Franchisee or Franchisee's employees, agents,
consultants, or contractors receive notice of any request, demand, or order
to transfer or disclose all or any portion of the Confidential Information,
Franchisee shall immediately notify Friday's thereof, and shall fully
cooperate with and assist Friday's in prohibiting or denying any such
transfer or disclosure. Should such transfer or disclosure be required by a
valid, final, non-appealable court order, Franchisee shall fully cooperate
with and assist Friday's in protecting the confidentiality of the
Confidential Information to the maximum extent permitted by law.
8.03 Franchisee and each Principal acknowledge Friday's exclusive
ownership of the Confidential Information and the System, and TGIFM's
exclusive ownership of, and Friday's license with respect to, the Proprietary
Marks. Neither Franchisee nor any Principal shall, directly or indirectly,
contest or impair Friday's or TGIFM's exclusive ownership of, and/or license
with respect to, the Confidential Information, the System or the Proprietary
Marks.
8.04 If Franchisee develops improvements (as determined by Friday's)
to the Confidential Information, Franchisee and the Principals shall each,
without additional consideration, execute such agreements and other
documentation as shall be deemed necessary by Friday's, granting exclusive
ownership thereof to Friday's. All such improvements shall be Confidential
Information.
8.05 Each Principal shall execute and deliver to Friday's a covenant
in the form attached as ADDENDUM A. Franchisee shall cause each Operator,
Representative, Multi-Unit Manager, Project Manager, and Restaurant Manager
and such other employees of Franchisee whom Friday's shall designate to
execute and (if requested) deliver to Friday's a covenant in the form
attached as ADDENDUM B. Notwithstanding the execution of such covenants,
Franchisee shall indemnify the Friday's Indemnitees from any damages, costs
or expenses resulting from or related to any disclosure or use of
Confidential Information by any Principal, Operator, Representative,
Multi-Unit Manager, Project Manager or Restaurant Manager.
8.06 Immediately upon any termination or expiration hereof,
Franchisee and each Principal shall return the Confidential Information
including, without limitation, that portion of the Confidential Information
which consists of analyses, compilations, studies or other documents
containing or referring to any part of the Confidential Information, prepared
by Franchisee or such Principal, their agents, representatives or employees,
and all copies thereof.
9. PROPRIETARY MARKS
9.01 Friday's grants to Franchisee the non-exclusive right and
license to use the Proprietary Marks (subject to the terms hereof) during the
Term in accordance with the System, the Standards and as prescribed by
Friday's from time to time. In connection therewith, Franchisee agrees that:
A. Franchisee shall use (i) only such of the Proprietary
Marks designated by Friday's and (ii) such marks only in the manner specified
by Friday's in writing. Any other use of any Proprietary Mark shall
constitute an infringement of Friday's and TGIFM's rights therein.
<PAGE>
B. Franchisee shall use the Proprietary Marks only (i) for
the operation of the Restaurant; (ii) at the Site or in advertising related
to the Restaurant; and (iii) during the Term. Franchisee shall cease (a) any
unauthorized use of any Proprietary Mark upon demand and (b) all use upon the
termination or expiration hereof.
C. Friday's reserves the right to substitute different
trade names, service marks, trademarks, logos, trade dress, emblems, symbols
and indicia of origin for the Proprietary Marks for use in identifying the
System and the business operated thereunder, as deemed reasonable and
necessary in Friday's sole discretion.
D. During the Term, Franchisee shall identify itself as a
"licensed franchisee" of Friday's (i) in conjunction with any use of the
Proprietary Marks including, without limitation, invoices, order forms,
receipts, contracts, stationary and business cards; (ii) in a notice of such
content and form and at conspicuous locations in the Restaurant as Friday's
may designate in writing; and (iii) on any authorized delivery vehicles.
E. Franchisee shall not assign, pledge, mortgage or
otherwise encumber its rights to use any of the Proprietary Marks.
F. Franchisee shall not use any of the Proprietary Marks as
part of its corporate or other name. Franchisee shall comply with Friday's
instructions, and shall execute any documents deemed necessary by Friday's or
its counsel, in filing and maintaining any requisite trade name or fictitious
name registrations in connection with the Proprietary Marks.
G. Franchisee shall immediately notify Friday's of any (i)
infringement of the Proprietary Marks or challenge to the use of any thereof
or (ii) claim by any person of any rights in or to any of the Proprietary
Marks. Franchisee and each Principal shall not communicate with any person
except Friday's and Friday's counsel in connection with any such
infringement, challenge or claim. Friday's, in its sole discretion, may take
such action as it deems appropriate, and shall exclusively control any
litigation or proceeding arising from any infringement, challenge, claim or
otherwise relating to any of the Proprietary Marks. Franchisee shall execute
any and all instruments and documents, render such assistance and do such
acts and things as may, in the opinion of Friday's or its counsel, be
necessary or advisable in any such litigation or proceeding or to otherwise
protect or maintain Friday's or TGIFM's rights and interest in the
Proprietary Marks.
H. Neither Franchisee nor any Principal shall, directly or
indirectly, apply for, register, attempt to obtain or obtain control of the
Proprietary Marks or any marks or other indicia of ownership or origin which
resemble, or are deceptively or confusingly similar to, the Proprietary
Marks, in any country or political sub-division thereof. Neither Franchisee
nor any Principal shall interfere with Friday's or TGIFM's efforts to obtain
registration or ownership of any name, trademark, service mark or other
identifying name anywhere in the world.
I. Franchisee shall cooperate with Friday's to prove the
continuous and effective use of the Proprietary Marks, including, without
limitation, in connection with any registration or any renewal thereof.
9.02 Franchisee and each Principal agree and acknowledge that:
<PAGE>
A. Friday's or TGIFM is the exclusive owner of all
right, title and interest in and to the Proprietary Marks and the
goodwill associated therewith;
B. the Proprietary Marks identify Friday's and TGIFM as
the source of origin of goods and services provided under such marks and the
System;
C. neither Franchisee nor any Principal shall
directly or indirectly contest Friday's or TGIFM's ownership, or the
validity, of the Proprietary Marks;
D. Franchisee does not have, and shall not acquire by use
pursuant to this Agreement, any ownership or other interest in or to the
Proprietary Marks, except the right and license granted herein, subject in
all respects to the terms hereof;
E. any and all goodwill arising from Franchisee's
use of the Proprietary Marks shall inure exclusively to Friday's or TGIFM
without compensation; and
F. Franchisee's right and license to use the Proprietary
Marks is non-exclusive and, subject to Section 2 hereof, Friday's or TGIFM
has and retains all rights relating to the Proprietary Marks and the use
thereof including, without limitation, the right to:
(1) grant other licenses to use the
Proprietary Marks;
(2) develop and establish Other Concepts
using the Proprietary Marks or other names or marks and to grant licenses
thereto without providing any rights therein to Franchisee; and
(3) engage, directly or indirectly, at
wholesale, retail or otherwise, in (i) the production, distribution,
license and/or sale of products and services under the Proprietary Marks or
other names or marks and (ii) the use, in connection with such production,
distribution and sale, of any and all trademarks, trade names, service marks,
logos, insignia, trade dress, slogans, emblems, symbols, designs and other
identifying characteristics as may be developed or used from time to time by
Friday's.
10. ADVERTISING
10.01 Franchisee recognizes (i) the value of advertising and (ii)
that standardized advertising programs enhance the goodwill and public image
of the System.
A. Franchisee shall expend not less than two percent (2%)
of Gross Sales, measured over continuing six (6) month periods, for local
advertising. Franchisee's local advertising may utilize media to which
Friday's has granted consent including:
(1) newspapers, magazines and other
periodicals;
(2) radio/ television;
(3) outdoor advertising (E.G., billboards or
signs);
(4) transit advertising and direct mail; and
(5) such other media to which Friday's consents.
<PAGE>
B. Franchisee, at its expense, shall obtain listings in
bold type in the white pages directory of the local public telephone company
under the names "Friday's-Registered Trademark-" and "T.G.I.
Friday's-Registered Trademark-". Franchisee shall also participate in and pay
its PRO RATA share of the cost of yellow pages advertising placed by Friday's
on behalf of all other local System franchisees and T.G.I.
Friday's-Registered Trademark- Restaurants. If no other T.G.I.
Friday's-Registered Trademark- Restaurants are located within Franchisee's
local area, Franchisee, at its expense, shall obtain display type
advertisements in the yellow pages directory of the local public telephone
company.
C. Franchisee's expenditures made for participation in
(i) advertising and promotional programs described in Section 10.01.B and
10.03; (ii) Friday's national and/or regional advertising funds described in
Section 10.02.A (to the extent in excess of two percent (2%) of monthly Gross
Sales); and (iii) the cost of promotional food and beverages given to
customers (in an amount not to exceed thirty percent (30%) of the retail
price thereof), shall be credited to Franchisee's local advertising
obligations described in Section 10.01.A. Friday's may audit Franchisee's
books and records to confirm local advertising expenditures.
10.02 A. Friday's shall have the right to establish national
and/or regional advertising funds. If established, Franchisee agrees to pay
Friday's on a monthly basis, in addition to any payments required under
Section 10.01.A, a sum to be determined by Friday's, which sum for any
national or regional fund shall not exceed four percent (4%) of monthly Gross
Sales. If both regional and national advertising funds are established,
Franchisee's total contribution shall not exceed four percent (4%) of monthly
Gross Sales. All contributions to national or regional advertising funds in
excess of two percent (2%) of Gross Sales shall be credited to Franchisee's
local advertising obligations described in Section 10.01.A.
B. Friday's or its designee shall (i) administer such
funds and (ii) direct all national and regional advertising programs and
shall have sole discretion to consent to or reject all creative concepts,
materials and media and the placement and allocation thereof. Friday's shall
not be a fiduciary to Franchisee with respect to the management of such
funds. Friday's and its designees undertake no obligation to (a) make
expenditures in the area where the Restaurant is located which are equivalent
or proportionate to Franchisee's contribution or (b) insure that any
particular franchisee benefits directly or PRO RATA from the placement of
such advertising. Such funds may be applied to Friday's costs of maintaining,
administering, directing and preparing national or regional advertising
(including, without limitation, marketing research, public relations
activities, marketing programs and initiatives including but not limited to
guest membership programs, and employing advertising agencies to assist
therein); provided, however, that such funds shall not be used to defray
Friday's general operating expenses (except reasonable administrative costs
and overhead related to the administration or direction of such funds and
programs). Such funds shall be maintained in a separate account and an annual
statement of fund expenditures shall be delivered to Franchisee upon request.
10.03 In addition to the national and regional advertising
described in Section 10.02, Friday's may from time to time develop and
administer advertising, marketing and sales promotion programs in which
Franchisee shall participate upon such terms and conditions as established by
Friday's. Such programs may include, but not be limited to, guest membership
programs. All phases of such advertising and promotion, including, without
limitation, type, quantity, timing, placement, and choice of media, market
areas, promotional programs and advertising agencies, shall be determined by
Friday's.
10.04 All advertising and promotion by Franchisee shall conform to
the Standards. Franchisee
<PAGE>
shall submit all advertising and promotional plans and materials to Friday's
for consent prior to use if such plans and materials were not prepared by
Friday's or previously consented to during the prior twelve (12) months.
Friday's shall consent to or reject such plans and materials within twenty
(20) days of receipt. Franchisee shall not use such plans or materials until
Friday's consent is received. Franchisee shall promptly discontinue any
advertising or promotional plans or materials, whether or not previously
consented to, upon notice from Friday's.
11. INSURANCE
11.01 Franchisee shall obtain, at least thirty (30) days prior to
commencement of Restaurant construction and maintain throughout the Term,
such insurance coverage (including, without limitation, broad form
comprehensive general liability coverage, products liability coverage, broad
form contractual liability coverage, liquor liability coverage, auto
liability coverage, business interruption coverage, workers compensation and
employers liability insurance) as may be (i) required by law or (ii) reasonably
designed to protect Franchisee from the risks inherent in Restaurant
construction and operation. Friday's shall have the right to reasonably
consent to the types and amounts of coverage and the issuing companies. Such
insurance shall:
A. name the Friday's Indemnitees as additional insured
parties and provide that coverage applies separately to each insured and
additional insured party against whom a claim is brought as though a separate
policy had been issued to each Friday's Indemnitee;
B. contain no provision which limits or reduces coverage
in the event of a claim by any one (1) or more of the insured or additional
insured parties;
C. provide that policy limits shall not be reduced, coverage
restricted, canceled, allowed to lapse or otherwise altered or such
policy(ies) amended without Friday's consent, but in no event upon less than
thirty (30) days prior written notice to Friday's;
D. be obtained from reputable insurance companies with an
A.M. Best Rating of "A" and an A.M. Best Class Rating of XIV (or comparable
ratings from a reputable insurance rating service, in the event such
A.M. Best ratings are discontinued or materially altered), authorized to do
business in the jurisdiction in which the Restaurant is located; and
E. be in an amount and form satisfactory to Friday's; but in
no event in amounts less than the following:
(1) comprehensive general liability insurance,
including product and liquor liability coverage, with a combination of
primary and excess limits of not less than Ten Million Dollars
($10,000,000.00), bodily injury and property damage combined;
(2) auto liability insurance, including coverage of
owned, non-owned and hired vehicles, with a combination of primary and excess
limits of not less than One Million Dollars ($1,000,000) for bodily injury
for each person, One Million Dollars ($1,000,000) for bodily injury for each
occurrence and Two Hundred Fifty Thousand Dollars ($250,000.00) for each
occurrence of property damage;
(3) employer's liability insurance with a limit of not
less than One Million Dollars ($1,000,000.00); and
<PAGE>
(4) workers compensation insurance in such amount as may
be required by applicable statute or rule.
11.02 Such insurance may provide for reasonable deductible amounts
with Friday's consent.
11.03 A certificate of insurance shall be submitted for Friday's
consent prior to the commencement of construction of the Restaurant, and
additional certificates of insurance shall be submitted to Friday's
thereafter, evidencing uninterrupted coverage. Franchisee shall deliver a
complete copy of such policy(ies) within ten (10) days of request.
11.04 In the event of a claim of any one or more of the Friday's
Indemnitees against Franchisee, Franchisee shall, on request of Friday's,
assign to Friday's any and all rights which Franchisee then has or thereafter
may have with respect to such claim against the insurer(s) providing the
coverages described in this Section.
11.05 Franchisee's obligation to obtain and maintain insurance or
to indemnify any Friday's Indemnitee shall not be limited by reason of any
insurance which may be maintained by any Friday's Indemnitee, nor shall such
insurance relieve Franchisee of any liability under this Agreement.
Franchisee's insurance shall be primary to any policies maintained by any
Friday's Indemnitee.
11.06 If Franchisee fails to obtain or maintain the insurance
required by this Agreement, as such requirements may be revised from time to
time, Friday's may acquire such insurance, and the cost thereof, together
with a reasonable fee for Friday's expenses in so acting and interest at
eighteen percent (18%) per annum from the date acquired, shall be payable by
Franchisee upon notice.
12. ACCOUNTING AND RECORDS
12.01 Franchisee shall prepare in accordance with the System and
generally accepted accounting principles, and preserve for the periods
specified in the Manuals, complete and accurate books, records and accounts
with respect to the Restaurant and all other reports or disclosures required
or permitted herein and in the Manuals including, without limitation, sales
slips, coupons, purchase orders, invoices, payroll records, check stubs, bank
statements, sales tax records and returns, cash receipts and disbursements,
journals and ledgers, in a form and manner prescribed in the Manuals or
otherwise in writing. Franchisee shall adopt such accounting periods as
Friday's shall prescribe.
12.02 Franchisee shall submit to Friday's (i) a monthly accounting
of Gross Sales simultaneously with the Payment of the Royalty Fee therefor
and (ii) an annual accounting of Gross Sales within thirty (30) days after
the end of each accounting year.
12.03 Franchisee shall submit to Friday's such additional reports,
records, data, information, financial statements (including, without
limitation, periodic guest counts, weekly and monthly sales reports and
quarterly and annual statements of profit and loss for the Restaurant and
quarterly and annual financial statements and statements of Franchisee's
Gross Sales, showing itemized deductions and exclusions from Gross Sales for
the Restaurant) as Friday's may reasonably require or as specified from time
to time in the Manuals in a form reasonably required. Friday's may inspect,
copy and audit all of the documents and information specified in
Sections 12.01, 12.02 and 12.03 and the books, records and tax returns of
Franchisee at any time during normal business hours upon five (5) days prior
notice.
<PAGE>
12.04 If any audit discloses an (i) understatement of Gross Sales
for the period subject to audit of one percent (1%) or more or
(ii) underpayment of the Royalty Fee for the period subject to audit of five
percent (5%) or more, Franchisee shall reimburse (in addition to payment of
such Royalty Fee and interest, as provided for in Section 3.02.B) any and all
costs and expenses incurred in connection with such audit including, without
limitation, reasonable attorney's fees, Territorial Expenses and Wage
Expenses.
12.05 The annual accounting of Gross Sales required in
Section 12.02.(ii) and other annual financial statements requested by
Friday's shall be audited and certified no less than every third year by a
reputable, independent, certified public accountant. All financial statements
or reports shall be accompanied by a certificate of Franchisee or
Franchisee's chief financial officer to the effect that such statements or
reports fairly and accurately reflect the matters reported therein and are
complete and correct.
13. FRANCHISEE'S REPRESENTATIONS AND WARRANTIES; AFFIRMATIVE AND NEGATIVE
COVENANTS
13.01 In the event Franchisee is a corporation, limited liability
company or partnership, Franchisee represents and warrants to Friday's as
follows:
A. Franchisee is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization with all
requisite power and authority to own, operate and lease its assets (real or
personal), to carry on its business, and to enter into this Agreement and
perform its obligations hereunder. Franchisee is duly qualified to do
business and is in good standing in each jurisdiction in which its business
or the ownership of its assets requires.
B. The execution, delivery and performance by Franchisee of
this Agreement and all other agreements contemplated herein has been duly
authorized by all requisite action and no further action is necessary to make
this Agreement or such other agreements valid and binding upon it and
enforceable against it in accordance with their respective terms. Neither the
execution, delivery nor performance by Franchisee of this Agreement or any
other agreements contemplated hereby will conflict with, or result in a
breach of any term or provision of Franchisee's articles of incorporation,
by-laws, partnership agreement or other governing documents or under any
mortgage, deed of trust or other contract or agreement to which Franchisee is
a party or by which it or any of its assets are bound, or breach any order,
writ, injunction or decree of any court, administrative agency or
governmental body.
C. Franchisee's articles of incorporation, by-laws,
partnership agreement and other governing documents expressly limit
Franchisee's business activities solely to the development and operation
(pursuant to the Development Agreement and this Agreement or other franchise
agreements with Friday's) of "Restaurants" (as defined in the Development
Agreement).
D. Certified copies of Franchisee's articles of
incorporation, by-laws, partnership agreement, other governing documents and
any amendments thereto, including board of director's or partner's
resolutions authorizing this Agreement, have been delivered to Friday's.
E. A certified current list of all Principals has been
delivered to Friday's.
F. Franchisee's articles of incorporation or other governing
documents, or partnership agreement limit Transfers as described in Sections
14.02 and 14.03.
<PAGE>
G. Each Security shall bear a legend (in a form to which
Friday's has granted consent) indicating that any Transfer is subject to
Sections 14.02 and 14.03.
13.02 Franchisee affirmatively covenants with Friday's as follows:
A. Franchisee shall perform its duties and obligations
hereunder and shall require each Operator, Multi-Unit Manager, Project
Manager and Restaurant Manager to dedicate their respective full time and
best efforts to the development, construction, management, operation,
supervision and promotion of the Restaurant in accordance with the terms and
conditions hereof.
B. Franchisee shall promptly provide Friday's with all
information concerning any new process or improvements in the development,
construction, management, operation, supervision or promotion of the
Restaurant developed by Franchisee or any Principal without compensation.
Franchisee and the Principals shall each execute such agreements and other
documentation as shall be deemed necessary by Friday's, granting Friday's
exclusive ownership thereof.
C. Franchisee shall comply with all requirements of
applicable rules, regulations, statutes, laws, and ordinances.
D. Franchisee shall maintain a current list of all
Principals and deliver a certified copy thereof to Friday's upon (i) any
Transfer or (ii) request.
E. Each Security issued subsequent to the date hereof shall
be in compliance with Section 13.01.G.
13.03 Franchisee acknowledges to and/or negatively covenants with
Friday's as follows:
A. Franchisee shall not amend its articles of incorporation,
by-laws, partnership agreement or other governing documents in a manner which
is inconsistent with Sections 13.01.C, 14.02 and 14.03.
B. Franchisee shall not remove or permit removal from any
Security or its partnership agreement, or issue any Security that does not
have endorsed upon it, the legend described in Section 13.01.G.
C. Franchisee and each Principal shall receive valuable,
unique training, trade secrets and the Confidential Information which are
beyond the present skills, experience and knowledge of Franchisee, any
Principal and Franchisee's employees. Franchisee and each Principal
acknowledge (i) that such training, trade secrets and the Confidential
Information (a) are essential to the development of the Restaurant and
(b) provides a competitive advantage to Franchisee and (ii) access to such
training, trade secrets and the Confidential Information is a primary reason
for their execution of this Agreement. In consideration thereof, Franchisee
and each Principal covenant that, during the Term and for a period of one (1)
year after the expiration or termination hereof, neither Franchisee nor any
Principal shall, directly or indirectly:
(1) employ or seek to employ any person (or induce such
person to leave his or her employment) who is, or has within one (1) year
been, employed (i) by Friday's; (ii) by any developer or franchisee of
Friday's; or (iii) in any other concept or system owned, operated or
franchised
<PAGE>
by an Affiliate, as a director, officer or in any managerial capacity;
(2) own, maintain, operate or have any interest in any
Competing Business;
(3) own, maintain, operate or have any interest in any
Competing Business which business is, or is intended to be, located in the
county in which the Restaurant is located; or
(4) own, maintain, operate or have any interest in any
Competing Business which business is, or is intended to be, located within
a three (3) mile radius of any restaurant which is a part of any concept or
system owned, operated, or franchised by Friday's or any Affiliate.
D. Sections 13.03 C.(2), (3) and (4) shall not apply to an
interest for investment only of five percent (5%) or less of the capital
stock of a Publicly-Held Entity if such owner is not a director, officer or
manager therefor or consultant thereto.
13.04 Each of the foregoing covenants is independent of each other
covenant or agreement contained in this Agreement.
13.05 Friday's may, in its sole discretion, reduce the area,
duration or scope of any covenant contained in Section 13.03.C without
Franchisee's or any Principal's consent, effective upon notice to Franchisee.
Franchisee and each Principal shall comply with any covenant as so modified.
13.06 Franchisee's representations, warranties, covenants and
agreements herein are continuing representations, warranties, covenants and
agreements, each of which shall survive the expiration or termination hereof.
14. TRANSFER
14.01 Friday's may assign this Agreement, or any of its rights or
obligations herein, to any person or entity without Franchisee's or any
Principal's consent; provided, however, that Friday's obligations which are
assigned shall be fully assumed by the party to whom Friday's assigns such
obligations.
14.02 A. Franchisee and each Principal acknowledge that
Franchisee's rights and obligations herein are personal to Franchisee and
that Friday's has entered into this Agreement relying upon the business
skill, experience and aptitude, financial resources and reputation of
Franchisee and each Principal. Therefore, neither Franchisee nor any
Principal, their respective successors or permitted assigns, shall complete,
or allow to be completed, any Transfer without Friday's consent. Any
purported Transfer, by operation of law or otherwise, without Friday's
consent shall be null and void and constitute an Event of Default.
B. Friday's may require satisfaction of any of the following
conditions and such other conditions as Friday's may reasonably require prior
to consenting to any Transfer, each of which Franchisee acknowledges and
agrees is reasonable and necessary:
(1) no Event of Default shall have occurred and be
continuing and no event shall have occurred which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default;
<PAGE>
(2) Franchisee and/or any affected Principal shall
deliver a general release of any and all claims against the Friday's
Indemnitees including, without limitation, claims arising under this
Agreement, in a form acceptable to Friday's;
(3) Franchisee and/or any affected Principal shall
remain liable for the performance of its obligations, covenants and
agreements herein through the date of Transfer and shall execute all
instruments reasonably requested by Friday's to evidence such liability;
(4) the transferee and all Transferee Owners, as
applicable, shall (i) make each of Franchisee's and Principal's
representations and warranties; (ii) assume full, unconditional, joint and
several liability for, and agree to perform from the date of Transfer, each
of Franchisee's and Principal's obligations, covenants and agreements herein;
and (iii) execute all instruments (in a form acceptable to Friday's)
reasonably requested by Friday's to evidence the foregoing;
(5) the transferee and all Transferee Owners shall
satisfy, in Friday's reasonable judgment, Friday's then existing criteria for
T.G.I. Friday's-Registered Trademark- franchisees or principals, as
applicable including, without limitation: (i) education; (ii) business skill,
experience and aptitude; (iii) character and reputation; and (iv) financial
resources;
(6) the transferee and all Transferee Owners shall
execute (without extending the Term) the standard form of franchise
agreement then being offered to new System franchisees or other form of this
Agreement as Friday's requests and such other ancillary agreements as
Friday's may request for the operation of the Restaurant, which shall
supersede this Agreement and its ancillary documents and the terms of which
may differ from the terms hereof including, without limitation, higher
Franchise and Royalty Fees and advertising contributions; provided, however,
that the transferee shall not be required to pay an initial Franchise Fee;
(7) the transferee at its expense shall repair or
replace Restaurant equipment, signs, interior and exterior decor items,
fixtures and furnishings and shall offer such products and services such that
Restaurant appearance and operations reflect the current Standards and image
of the System; and
(8) at the transferee's expense, the transferee's
Representative, any Multi-Unit Manager(s), Operator, Project Manager and
Restaurant Managers shall complete such training as then required (if not
previously trained pursuant to the terms hereof), upon such terms and
conditions as Friday's may reasonably require.
C. In the event Franchisee requests Friday's consent to any
proposed Transfer, there shall be paid to Friday's a non-refundable fee of
Five Thousand Dollars ($5,000.00), or such greater amount as is necessary to
reimburse Friday's for its costs and expenses associated with reviewing the
proposed Transfer including, without limitation, Territorial Expenses, legal
and accounting fees and diversion of employee resources. No such fee shall be
payable with respect to a transaction with Friday's described in Section
14.03.
14.03 Franchisee and each Principal agree that:
A. (i) Friday's shall have and is hereby granted a right of
first refusal with respect to any Transfer; (ii) should Franchisee and/or any
Principal desire to accept a BONA FIDE offer to make a Transfer, such party
shall promptly notify Friday's thereof and shall provide such information and
<PAGE>
documents relating thereto as Friday's may require; (iii) within thirty (30)
days after receipt of such notice, information and documents, Friday's may
notify such party that it intends to exercise its right of first refusal with
regard to such Transfer upon such terms and conditions; provided, however,
that such transaction shall be consummated within a reasonable period of time
after Friday's has given such notice; (iv) any material change in the terms
of any offer or any change in the identity of the proposed transferee shall
constitute a new offer subject to Friday's right of first refusal; and
(v) Friday's failure to exercise such right shall not constitute a waiver of
any other provision of this Agreement, including such right with respect to
future offers; and
B. in the event such offer provides for payment of
consideration other than cash, Friday's may elect to purchase the interest
for the reasonable equivalent in cash. If the parties cannot agree within
thirty (30) days of the receipt of notice of Friday's election to exercise
such right of first refusal on such reasonable equivalent in cash, an
independent appraiser designated by Friday's shall determine such amount, and
his determination shall be final and binding. If Friday's elects to exercise
the right of first refusal described above, the cost of the appraisal, if
any, shall be set off against any payment made by Friday's hereunder.
14.04 In the event Franchisee or any Principal is a natural person,
Franchisee or his administrator, executor, guardian or personal
representative shall promptly notify Friday's of the death or Permanent
Disability of Franchisee or such Principal. Any Transfer upon death or
Permanent Disability shall be subject to the terms and conditions described
in Sections 14.02 and 14.03 and shall be completed prior to a date which is
(i) one (1) year after the date of death or (ii) ninety (90) days after the
date Franchisee or such Principal becomes, or is deemed to be, Permanently
Disabled. Franchisee or any Principal refusing to submit to examination with
respect to Permanent Disability shall be deemed Permanently Disabled.
14.05 Friday's consent to any Transfer shall not constitute a
waiver of (i) any claims it may have against the transferor or (ii) the
transferee's compliance with the terms and conditions hereof.
15. CONSENT AND WAIVER
15.01 When required, Franchisee or any Principal shall make written
request for Friday's consent in advance and such consent shall be obtained in
writing. Neither Friday's nor Franchisee's consent shall be unreasonably
withheld. The foregoing not withstanding, where either party's consent is
expressly reserved to such party's sole discretion, the exercise of such
discretion shall not be subject to contest.
15.02 FRIDAY'S MAKES NO REPRESENTATIONS OR WARRANTIES UPON WHICH
FRANCHISEE OR ANY PRINCIPAL MAY RELY AND ASSUMES NO LIABILITY OR OBLIGATION
TO FRANCHISEE, ANY PRINCIPAL OR ANY THIRD PARTY BY PROVIDING ANY WAIVER,
ADVICE, CONSENT OR SERVICES TO FRANCHISEE OR DUE TO ANY DELAY OR DENIAL
THEREOF.
16. DEFAULT AND REMEDIES
16.01 A. The following shall constitute Events of Default by
Franchisee and the Principals: (i) failure to (a) commence or complete
construction of the Restaurant or (b) open and thereafter continually operate
the Restaurant, as described herein; (ii) the breach or falsity of any
representation or warranty herein; (iii) failure to deliver executed
covenants as required in Section 8.05;
<PAGE>
(iv) failure to comply with or perform its covenants, obligations and
agreements herein; (v) any Transfer that (a) occurs other than as provided in
Section 14 or (b) fails to occur within the time periods described in
Section 14 (notwithstanding any lack of, or limits upon, the enforceability
of any term or provision of Sections 13 or 14); (vi) failure to make any
Payment on or before the date payable; (vii) failure to meet and/or maintain
the Standards; (viii) Franchisee (a) is adjudicated, or is, bankrupt or
insolvent; (b) makes an assignment for the benefit of creditors; or (c) seeks
protection from creditors by petition in bankruptcy or otherwise or there is
filed against Franchisee a similar petition which is not dismissed within
thirty (30) days; (ix) the appointment of a liquidator or receiver for
(a) all or substantially all of Franchisee's assets or (b) the Restaurant is
sought which is not dismissed within thirty (30) days; (x) breach or failure
to perform any other term or condition of this Agreement; (xi) Franchisee or
any Principal pleads guilty or no contest to or is convicted of a felony or a
crime involving moral turpitude or any other crime or offense that Friday's
reasonably believes is likely to adversely affect the Proprietary Marks, the
System or the goodwill associated therewith or Friday's interest therein; or
(xii) any (a) two (2) or more Events of Default shall arise under any single
subsection of this Section 16.01 or (b) three (3) or more Events of Default
shall arise under this Section 16.01 in any continuous twelve (12) month
period notwithstanding the previous cure of such Events of Default.
B. The parties agree that an Event of Default arising under
Section 16.01.A.(i), (iii), (iv) [with respect to Events of Default arising,
without limitation, under Sections 9.01 through 9.03, inclusive, and 13.03.C],
(v), (vi), (viii), (ix), (xi), or (xii) shall constitute a Material Event of
Default. The parties further agree that Events of Default committed by
Franchisee or any Principal arising under other Sections of this Agreement
may also be deemed to be Material Events of Default.
C. Upon the occurrence of an Event of Default by Franchisee
or any Principal, Friday's may exercise one or more of the following remedies
or such other remedies as may be available at law or in equity:
(1) cure such Event of Default at Franchisee's expense
and, in connection therewith, Franchisee (i) hereby grants to Friday's all
rights and powers necessary or appropriate to accomplish such cure; (ii) shall
indemnify and hold the Friday's Indemnitees harmless from and against all
costs, expenses (including reasonable fees of attorneys and other engaged
professionals), liabilities, claims, demands and causes of action (including
actions of third parties) incurred by or alleged against any Friday's
Indemnitee in connection with Friday's cure; and (iii) shall reimburse or pay
such costs or damages within ten (10) days of receipt of Friday's invoice
therefor;
(2) in the event of a Material Event of Default, upon
notice to Franchisee, terminate this Agreement and all rights granted
hereunder without waiving any (i) claim for damages suffered by Friday's or
(ii) other rights, remedies or claims (no notice of termination shall be
required with regard to a Material Event of Default under Sections
16.01.A.(viii) or (ix)); or
(3) with respect to an Event of Default arising from a
breach of the covenant contained in Section 13.03.C.(1), the affected
former employer shall be compensated by the breaching party (and Franchisee
shall be additionally liable for breaches by any Principal) for the
reasonable costs and expenses incurred by such employer in connection with
training such employee. Franchisee and each Principal acknowledge that such
expenses are impossible to accurately quantify and agree that, as liquidated
damages and not as a penalty, an amount equal to such employee's annual rate
of compensation in the final twelve (12) months of employment (or an
annualized rate if employed for a shorter period) by such former employer
shall be paid by the breaching party to the former employer at such time as
such employee commences employment.
<PAGE>
D. Friday's shall not exercise any remedies available
hereunder with respect to the following described Events of Default unless
such Events of Default remain uncured after (i) notice from Friday's thereof
and (ii) the expiration of the following cure periods:
(1) with respect to any Event of Default arising under
Section 16.01.A.(vi) - ten (10) days; or
(2) with respect to any Event of Default arising under
Sections 16.01.A.(i) - (v) inclusive, (vii) and (x) - thirty (30) days.
E. If any Events of Default arising under
Sections 16.01.A.(i) - (v) inclusive, (vii) or (x) cannot reasonably be cured
within thirty (30) days, Franchisee shall provide Friday's notice thereof
(together with Franchisee's best estimate of the time period required to
complete such cure) and immediately undertake efforts to cure such default
within the cure period, and continue such efforts with diligence to
completion. In no event, however, shall such cure period be extended without
the prior written consent of Friday's.
F. Franchisee and each Principal agree that Friday's
exercise of the rights and remedies set forth herein is reasonable. Friday's
may, in addition to pursuing any other remedies, specifically enforce such
obligations, covenants and agreements or obtain injunctive or other equitable
relief in connection with the violation or anticipated violation of such
obligations, covenants and agreements.
16.02 A. The following shall constitute Events of Default by
Friday's: (i) failure to comply with or perform Friday's obligations and
agreements herein or (ii) Friday's (a) is adjudicated, or is, bankrupt or
insolvent; (b) makes an assignment for the benefit of creditors; or (c) seeks
protection from creditors by petition in bankruptcy or otherwise or there is
filed against Friday's a similar petition which is not dismissed within
thirty (30) days.
B. Upon the occurrence of a Material Event of Default by
Friday's, Franchisee may, upon notice to Friday's, terminate this Agreement
and all rights granted hereunder without waiving any (i) claim for damages
suffered by Franchisee or (ii) other rights, remedies or claims. Any
termination of this Agreement by Franchisee other than as provided in this
Section 16.02 shall be deemed a termination by Franchisee without cause.
C. Franchisee shall not exercise any remedies available
hereunder with respect to any Events of Default unless such Events of Default
remain uncured after (i) notice from Franchisee thereof and (ii) the
expiration of thirty (30) days following such notice.
D. If any Events of Default cannot reasonably be cured
within thirty (30) days, Friday's shall provide Franchisee notice thereof
(together with Friday's best estimate of the time period required to complete
such cure) and immediately undertake efforts to cure such default within the
cure period, and continue such efforts with diligence to completion. In no
event, however, shall such cure period be extended without the prior written
consent of Franchisee.
16.03 Subject to the provisions of Section 16.06, all rights and
remedies of either party shall be cumulative, and not exclusive, of any other
right or remedy described herein or available at law or in equity. The
expiration or termination of this Agreement shall not release any party from
any liability or
<PAGE>
obligation then accrued or any liability or obligation continuing beyond, or
arising from, such expiration or termination. Nothing in this Agreement shall
impair either party's right to obtain injunctive or other equitable relief.
16.04 The failure of any party to exercise any right or remedy or to
enforce any obligation, covenant or agreement herein shall not constitute a
waiver by, or estoppel of, that party's right to any of the remedies
described herein including, without limitation, to enforce strict compliance
with any such obligation, covenant or agreement. No custom or practice shall
modify or amend this Agreement. The waiver of, or failure or inability of any
party to enforce, any right or remedy shall not impair that party's rights or
remedies with respect to subsequent Events of Default of the same, similar or
different nature. The delay, forbearance or failure of any party to exercise
any right or remedy in connection with any Event of Default or default by
other franchisees shall not affect, impair or constitute a waiver of such
party's rights or remedies herein. Acceptance of any Payment shall not waive
any Event of Default.
16.05 Franchisee and each Principal shall, jointly and severally,
pay all costs and expenses (including reasonable fees of attorneys and other
engaged professionals) incurred by Friday's in successfully enforcing, or
obtaining any remedy arising from the breach of, this Agreement. The
existence of any claims, demands or actions which Franchisee or any Principal
may have against Friday's, whether arising from this Agreement or otherwise,
shall not constitute a defense to Friday's enforcement of Franchisee's or any
Principal's representations, warranties, covenants, agreements or obligations
herein.
16.06 IN THE EVENT OF A DISPUTE BETWEEN THEM WHICH IS NOT SUBJECT
TO, NOR ARISES UNDER, SECTION 18, FRIDAY'S, FRANCHISEE AND PRINCIPALS HEREBY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO OR CLAIM FOR ANY
PUNITIVE, EXEMPLARY, INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, BUT SPECIFICALLY EXCLUDING,
HOWEVER, DAMAGES TO THE REPUTATION AND GOODWILL ASSOCIATED WITH AND/OR
SYMBOLIZED BY THE PROPRIETARY MARKS) AGAINST THE OTHER ARISING OUT OF ANY
CAUSE WHATSOEVER (WHETHER SUCH CAUSE BE BASED IN CONTRACT, NEGLIGENCE, STRICT
LIABILITY, OTHER TORT OR OTHERWISE) AND AGREE THAT EACH SHALL BE LIMITED TO
THE RECOVERY OF ANY ACTUAL DAMAGES SUSTAINED BY IT. IF ANY OTHER TERM OF THIS
AGREEMENT IS FOUND OR DETERMINED TO BE UNCONSCIONABLE OR UNENFORCEABLE FOR
ANY REASON, THE FOREGOING PROVISION SHALL CONTINUE IN FULL FORCE AND EFFECT.
17. OBLIGATIONS UPON TERMINATION OR EXPIRATION; RENEWAL OPTION
17.01 Upon any termination or expiration of this Agreement, (or any
Renewal Franchise Agreement if the renewal option described in Section 17.09
has been exercised), and subject to Section 2.A of the Development Agreement
(if then in effect), Friday's may establish, or authorize others to
establish, T.G.I. Friday's-Registered Trademark- Restaurants in the
Restricted Area.
17.02 Upon any termination or expiration of this Agreement, (or any
Renewal Franchise Agreement if the renewal option described in Section 17.09
has been exercised), all rights granted to Franchisee herein shall terminate
and Franchisee shall:
A. immediately cease to operate the Restaurant under the
System;
<PAGE>
B. immediately cease to use (subject to Franchisee's rights
under other franchise agreements executed pursuant to the Development
Agreement, if then in effect) (i) any Confidential Information; (ii) the
System and the Standards; and (iii) the Proprietary Marks and other
distinctive signs, symbols and devices associated with the System;
C. immediately deliver to Friday's all Confidential
Information and all copies thereof (without regard to form or format), and
all records, files, instructions, correspondence, and all other materials
related to operating the Restaurant, retaining copies thereof only as
reasonably required to comply with law; and
D. cancel any assumed name or equivalent registration
which contains any of the Proprietary Marks or any other name, service mark
or trademark of Friday's or TGIFM.
Franchisee shall furnish evidence of compliance with these
obligations within five (5) days after any termination or expiration hereof.
17.03 A. Franchisee grants to Friday's the option, exercisable by
giving written notice within thirty (30) days after any termination or
expiration of this Agreement, (or any Renewal Franchise Agreement if the
renewal option described in Section 17.09 has been exercised), to acquire (i)
Franchisee's rights and obligations under the Occupancy Contract, or (ii)
Franchisee's right, title, and interest in or to the Site (if Franchisee owns
or possesses such right, title or interest other than rights as a tenant),
together (in each instance) with the Furnishings, at fair market value (based
on the going-concern value as a T.G.I. Friday's-Registered Trademark-
Restaurant), free and clear of all liens, encumbrances or claims, and subject
to such other terms and conditions as are usual and customary for such
acquisitions.
B. Without regard to whether Friday's exercises the option
set forth in Section 17.03.A., Franchisee grants to Friday's the further
option, to be exercised by giving written within thirty (30) days after
termination or expiration of this Agreement, (or any Renewal Franchise
Agreement if the renewal option described in Section 17.09 has been
exercised), to purchase all or any portion of the items described in Section
17.04.A (1)-(4) and (5), at fair market value, free and clear of all liens,
encumbrances or claims, and subject to such other terms and conditions as are
usual and customary for such acquisitions.
C. If Friday's does not exercise its option under Section
17.03.A, Friday's shall have and is hereby granted a right of first refusal
with respect to the sale by Franchisee of all or any portion of the
Furnishings, Franchisee shall promptly notify Friday's of any proposed sale
of the Furnishings and shall provide such information and documents relating
thereto as Friday's may require. Within thirty (30) days after receipt of
such notice, information and documents, Friday's may notify Franchisee that
it intends to exercise its right of first refusal with regard to the
Furnishings upon the same terms and conditions. If such transaction shall not
be consummated within a reasonable period of time after Friday's has given
such notice, then Friday's right of first refusal under this Section shall be
a continuing right and failure to exercise such right shall not constitute a
waiver of any other provision of this Agreement, including such right of
first refusal with respect to future offers.
D. If Friday's exercises its option under Section 17.03.A
but the parties cannot agree on the fair market value of Franchisee's right,
title, or interest in and to the Site and the Furnishings within fifteen (15)
days of the exercise of such option(s), Friday's shall notify Franchisee of
its designation of an appraiser to determine such fair market value. Within
fifteen (15) days of such notice,
<PAGE>
Franchisee shall designate, by written notice to Friday's, an appraiser and
such appraisers shall select a third appraiser. If either party fails to so
designate an appraiser, the appraiser designated by the other party within
such period shall be the sole appraiser. The appraisers shall agree upon the
fair market value of the Site and the Furnishings or both, whichever shall
apply, within fifteen (15) days after the appointment of the last of the
appraisers to be so appointed. A decision by a majority of the appraisers
shall control. Appraisal costs shall be borne equally by Friday's and
Franchisee. In the event Friday's elects, in its sole discretion, to proceed
with all or any part of such acquisition, said acquisition shall be completed
not later than thirty (30) days after the fair market value is established by
agreement or by decision of the appraisers. The purchase price, less any sums
otherwise due Friday's from Franchisee, shall be paid to Franchisee at a
closing which shall take place at Friday's offices, or such other location as
shall be mutually agreed to by the parties. At such closing, the parties
shall execute such instruments of conveyance and/or transfer as reasonably
required by Friday's. If Friday's exercises its option under Section 17.03.A,
possession of the Site shall transfer immediately upon closing.
17.04 A. If Friday's does not exercise its option to acquire the
Occupancy Contract or Franchisee's right, title and interest in and to the
Site, Franchisee shall within thirty (30) days after the expiration of
Friday's option make such alterations to the Restaurant as may be necessary,
in Friday's reasonable judgment, to distinguish the appearance of the Site
from that of other T.G.I. Friday's-Registered Trademark- Restaurants in the
System including, but not be limited to:
(1) removal of decorative memorabilia,
including wall hangings, the racing scull, gas pumps or street lamps
and brass railings;
(2) removal of stained glass and Tiffany
lamps and chandeliers;
(3) removal of proprietary phone booth;
(4) removal of red and white striped outside
awnings;
(5) removal or painting of interior awnings
and exterior and interior walls to a solid color other than a color
specified in the Standards; and
(6) removal of signage.
B. If Friday's does not elect to purchase all or any
portion of the Furnishings which bear any Proprietary Mark or are otherwise
proprietary in nature, Franchisee shall dispose of such Furnishings only in a
manner to which Friday's has given consent within the same period of time as
required under this Section for the removal of all other Furnishings.
17.05 Subsequent to any termination or expiration of this Agreement
(or any Renewal Franchise Agreement, if the renewal option described in
Section 17.09 has been exercised), Franchisee shall not (i) use of the
Proprietary Marks or any reproduction, counterfeit, copy or colorable
imitation of any of the Proprietary Marks which could cause confusion,
mistake or deception as to source of origin or which could dilute Friday's or
TGIFM's rights in and to any of the Proprietary Marks; (ii) utilize any
designation of origin, description or representation which suggests an
association or connection with Friday's; or (iii) utilize the System or any
part thereof.
17.06 Until all Payments are made and any damages, costs or expenses
incurred or suffered by Friday's have been paid, Friday's shall have, and
Franchisee shall be deemed to have granted, a lien
<PAGE>
against any and all of the Furnishings and Franchisee's interest in the
Occupancy Contract and Site.
17.07 Franchisee and each Principal shall, jointly and severally,
pay all costs and expenses (including reasonable fees of attorneys and other
engaged professionals) incurred by Friday's in connection with the successful
enforcement of this Section 17. In the event Franchisee fails to comply with
this Section 17, Friday's may enter upon the Site, without being guilty of
trespass or otherwise liable, for the purpose of carrying out Franchisee's
obligations in this Section 17 at Franchisee's expense.
17.08 Franchisee, at the option of Friday's, shall assign to
Friday's all rights to the telephone numbers of the Restaurant and execute
all forms required by any telephone company to transfer such service and
numbers to Friday's, and Franchisee shall thereafter use different telephone
numbers at or in connection with any subsequent business conducted by
Franchisee.
17.09 This Agreement shall not automatically renew upon the
expiration of the Term. Franchise shall have an option to renew the Term of
this Agreement for a Renewal Term, if, and only if, each of the following
terms and conditions has been fully met to the reasonable satisfaction of
Friday's ("Renewal Compliance). If Renewal Compliance is not achieved prior
to the expiration of the Term, Franchisee shall not be entitled to continue
the operation of the Restaurant beyond the expiration of the Term, it being
understood that Renewal Compliance is a condition to the effectiveness of any
Renewal Franchise Agreement and the Renewal Term.
A. Franchisee must give Friday's written notice of
its election to renew the term of this Agreement no later than one (1) year,
but no earlier than three (3) years, prior to the expiration of the Term of
this Agreement.
B. Franchisee must deliver evidence of Control of the Real
Estate for the Renewal Term.
C. Franchisee must satisfy all of Friday's then-current
financial requirements (including the analysis of net worth, debt-to-equity
ratios and capitalization) for a new franchisee. Franchisee must submit
certified financial statements for the fiscal year preceding the Renewal
Election Date prepared by a Certified Public Accountant, supported by income
tax returns and such other documentation as is reasonably requested by
Friday's. If a Principal's individual net worth is used to satisfy all or a
portion of the financial requirements for the Franchisee, the Principal must
submit a current certified financial statement.
D. Franchisee must have satisfied all monetary obligations
owed to Friday's and its Affiliates, have timely met those obligations for
the two year period prior to the Renewal Election Date and continue to timely
meet those obligations throughout the balance of the Term.
E. Franchisee, during the Term of this Agreement, at the
Renewal Election Date and throughout the balance of the Term, must not be in
default of and must have operated the Restaurant substantially in accordance
with the terms of this Agreement and the standards, specifications and
procedures of the System as set forth and described in each of the Operating
Manuals otherwise.
F. The entire Restaurant facility, interior and exterior,
must be brought up to then-current System standards (the "Facility and
Equipment Upgrades") and reflect an acceptable System image. As part of the
Facility and Equipment Upgrades, Franchisee must (i) repair, upgrade or
replace, at Franchisee's expense, such equipment, signage, interior and
exterior decor items, fixtures, furnishings,
<PAGE>
supplies, computers and other technology-driven systems, including hardware
and software, products and materials (collectively, "Equipment"), required
for the operation of the Restaurant as Friday's may reasonably require, (ii)
obtain any new or additional Equipment reasonably required by Friday's in
order for Franchisee to meet then-current System standards or to provide the
Restaurant's services by alternative means such as through carry-out or
delivery, and (iii) otherwise modernize the Restaurant to reflect the
then-current System standards and image.
G. Franchisee must submit to Friday's all standard form
information and documentation reasonably requested by Friday's as a basis for
the issuance and consummation of a franchise. Franchisee, each of
Franchisee's Principals and Friday's must execute a Mutual General Release
relating to this Agreement and the Restaurant.
H. Franchisee must pay a franchise fee for the Renewal Term
equal to fifty percent (50%) of the franchise fee being charged by Friday's,
at the time the Renewal Franchise Agreement is issued, for a new franchise to
a multi-unit developer having opened more than two restaurants.
I. Franchisee must execute and deliver to Friday's, prior
to the expiration of the Term, the then-current form of franchise agreement
for the Renewal Term. The renewal franchise agreement (the "Renewal Franchise
Agreement") shall be on the standard form of franchise agreement being issued
to new franchisees entering the System at the time such Renewal Franchise
Agreement is issued. The royalties payable under the Renewal Franchise
Agreement shall be calculated at the same royalty rate and under the same
terms as set forth in this Agreement.
18. INDEMNIFICATION
A. Franchisee and each Principal will, at all times,
indemnify and hold harmless, to the fullest extent permitted by law, from all
"losses and expenses" (as defined below) 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 any of the
following:
(1) The infringement, alleged infringement,
or any other violation or alleged violation by Franchisee or any Principal of
any patent, mark or copyright or other proprietary right owned or controlled
by third parties.
(2) The violation, breach or asserted
violation or breach by Franchisee or any Principal of any contract, federal,
state or local law, regulation, ruling, standard or directive or any
industry standard.
(3) Libel, slander or any other form of
defamation of Friday's or the System, by Franchisee or any Principal.
(4) The violation or breach by Franchisee or
any Principal of any warranty, representation, agreement or obligation in
this Agreement.
(5) Acts, errors or omissions of Franchisee
or any of its agents, servants, employees, contractors, partners, affiliates
or representatives.
B. Franchisee and each Principal agree to give Friday's
immediate notice of any
<PAGE>
such action, suit, proceeding, claim, demand, inquiry or investigation.
C. Friday's shall at all times have the absolute right to
retain counsel of its own choosing in connection with any action, suit,
proceeding, claim, demand, inquiry or investigation. Friday's shall at all
times have the absolute right to investigate any action, suit proceeding,
claim or demand itself.
D. Franchisee and each Principal shall indemnify Friday's
for its attorneys' fees, expenses, and costs incurred in connection with the
exercise of Friday's rights under Section 18.C. This provision shall not be
construed so as to limit or in any way affect Franchisee's indemnity
obligations pursuant to the other provisions of Section 18.
E. In the event that Friday's exercise of its rights under
Section 18.C. actually results in Franchisee's insurer with respect to
insurance required to be maintained by Franchisee pursuant to Section 11
(hereinafter, the "Insurer") refusing to pay on a third party claim, all
causes of action and legal remedies which Franchisee might have against the
Insurer shall be automatically assigned to Friday's without the need for any
further action on Friday's or Franchisee's part. For the purposes of Section
18.01, "actually results" means that, but for Friday's exercise of its rights
under Section 18.C. the Insurer would not have refused to pay on said
third-party claim.
F. In the event that Friday's exercise of its rights under
Section 18.C. actually results in the Insurer refusing to pay on a
third-party claim, Franchisee shall not be required to indemnify Friday's for
the latter's attorneys' fees, expenses and costs incurred in connection with
that claim.
G. In the event that the Insurer subsequently reverses its
previous decision to not pay a claim, by in fact paying that claim,
Franchisee shall be required to indemnify Friday's for the latter's
attorneys' fees, expenses and costs incurred in connection with that claim,
just as if the Insurer had never denied the claim.
H. In the event that Franchisee encourages, requests, or
suggests that the Insurer deny a claim, Franchisee shall indemnify Friday's
for its attorneys' fees, expenses and costs in connection with that claim.
I. Subject to the provisions of Section 18.B. above, in
order to protect persons or property, or its reputation or goodwill, or the
reputation or goodwill of others, Friday's may, at any time and without
notice, as it, in its judgment deems appropriate, consent or agree to
settlements or take such other remedial or corrective action as it deems
expedient with respect to the action, suit, proceeding, claim, demand,
inquiry or investigation if, in Friday's sole judgment, there are reasonable
grounds to believe that:
(1) any of the acts or circumstances
enumerated in Section 18.A. above have occurred; or
(2) any act, error, or omission of
Franchisee or any Principal may result directly or indirectly in damage,
injury or harm to any person or any property.
J. In addition to their indemnity obligations under Section
18.D. Franchisee and each Principal shall indemnify Friday's for any and all
losses, compensatory damages, exemplary or punitive damages, fines, charges,
costs, expenses, lost profits, settlement amounts, judgments,
<PAGE>
compensation for damages to the Friday'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, which
result from any of the items set forth in Section 18.A.
K. Friday's does not assume any liability whatsoever for
acts, errors, or omissions of those with whom Franchisee or any Principal may
contract, regardless of the purpose. Franchisee and each Principal shall hold
harmless and indemnify Friday's for all losses and expenses which may arise
out of any acts, errors or omissions of these third parties.
L. Under no circumstances shall Friday's be required or
obligated to seek recovery from third parties or otherwise mitigate its
losses in order to maintain a claim against Franchisee or any Principal.
Franchisee and each Principal agree that the failure to pursue such recovery
or mitigate loss will in no way reduce the amounts recoverable by Friday's
from Franchisee or any Principal.
M. Notwithstanding anything to the contrary contained in
this Agreement, Franchisee is not required to indemnify Friday's with regard
to any infringement, alleged infringement or other violation or alleged
violation by Franchisee or any Principal of any patent, mark, or copyright or
other proprietary right owned or controlled by a third party, arising in
connection with the use of the Proprietary Marks and System franchised to
Franchisee when used in the manner authorized and required by Friday's
pursuant to this Agreement. In the event Franchisee is involved in such an
action, Friday's agrees to indemnify Franchisee and Principals in connection
with the defense thereof, and to indemnify and hold Franchisee and Principals
harmless from any and all losses, damages, claims, liabilities, expenses,
including attorney's fees (prior to litigation, during litigation, and on
appeal) and all costs (whether taxed or not taxed) in connection with
proceedings regarding the same. Franchisee shall give notice to Friday's of
any such claim no later than fifteen (15) days after Franchisee becomes aware
of same or is given notice thereof. This indemnity shall be inoperative to
the extent that failure to have timely provided such notice to Friday's
materially impairs Friday's ability to defend any such claim, in whole or in
part, or to minimize the costs of this indemnity. Franchisee shall not be
required to defend Friday's with regard to Franchisee's utilization pursuant
to this Agreement of the Proprietary Marks and System provided such
utilization is in strict compliance with that authorized and required by
Friday's pursuant to this Agreement.
19. NOTICES
All notices required or desired to be given hereunder shall be in
writing and shall be sent by personal delivery, expedited delivery service,
facsimile or certified mail, return receipt requested to the following
addresses (or such other addresses as designated pursuant to this Section 19):
if to Friday's: TGI Friday's Inc.
Attention: General Counsel
7540 LBJ Freeway, Suite 100
Dallas, Texas 75251
Facsimile No.: (972) 450-5636
if to Franchisee or any Principal: _____________________________
_____________________________
_____________________________
<PAGE>
_____________________________
_____________________________
Facsimile No.: (___) ________
Notices posted by personal delivery, expedited service or given by
facsimile shall be deemed given the next business day after transmission.
Notices posted by certified mail shall be deemed received three (3) Business
Days after the date of posting. Any change in the foregoing addresses shall
bev effected by giving fifteen (15) days written notice of such change to the
other party.
20. FORCE MAJEURE
No party shall be liable for any inability to perform resulting from
acts of God or other causes (other than financial inability or insolvency)
beyond their reasonable control; provided, however, that nothing herein shall
excuse or permit any delay or failure (i) to remit any Payment on the date
due or (ii) for more than one-hundred eighty (180) days. The party whose
performance is affected by an event of force majeure shall, within three (3)
days of the occurrence of such event, give notice thereof to the other party
setting forth the nature thereof and an estimate of its duration. The
foregoing not withstanding, if, through no fault of Franchisee, the
Restaurant is damaged or destroyed by an event such that it cannot, in
Friday's judgment, reasonably be restored within ninety (90) days thereafter,
then Franchisee may, within sixty (60) days after such event, apply for
Friday's consent to relocate and/or reconstruct the Restaurant, which consent
shall not be unreasonably withheld. If franchisee fails to make such
application, this Agreement shall be deemed terminated for cause.
21. SEVERABILITY
21.01 Should any term, covenant or provision hereof, or the
application thereof, be determined by a valid, final, non-appealable order to
be invalid or unenforceable, the remaining terms, covenants or provisions
hereof shall continue in full force and effect without regard to the invalid
or unenforceable provision. In such event such term, covenant or provision
shall be deemed modified to impose the maximum duty permitted by law and such
term, covenant on provision shall be valid and enforceable in such modified
form as if separately stated in and made a part of this Agreement.
Notwithstanding the foregoing, if any term hereof is so determined to be
invalid or unenforceable and such determination adversely affects, in
Friday's reasonable judgment, Friday's ability to realize the principal
purpose of the Agreement or preserve its or TGIFM's rights in, or the
goodwill underlying, the Proprietary Marks, the System, or the Confidential
Information, Friday's may terminate this Agreement upon notice to Franchisee.
21.02 Captions in this Agreement are for convenience only and
shall not affect the meaning or construction of any provision hereof.
22. INDEPENDENT CONTRACTOR
22.01 Franchisee is an independent contractor. Friday's does not
operate the Franchisee's business. Nothing herein shall create the
relationship of principal and agent, legal representative, joint ventures,
partners, employee and employer or master and servant between the parties. No
fiduciary duty is owed by, or exists between, the parties. Franchisee shall
hold itself out to the public to be an independent contractor operating the
business pursuant to a franchise from Friday's.
22.02 Nothing herein authorizes Franchisee or any Principal to make any
contract, agreement,
<PAGE>
warranty or representation or to incur any debt or obligation in Friday's
name.
23. DUE DILIGENCE AND ASSUMPTION OF RISK
23.01 Franchisee and each Principal (i) have conducted such due
diligence and investigation as each desires; (ii) recognize that the business
venture described herein involves risks; and (iii) acknowledge that the
success of such business venture is dependent upon the abilities of
Franchisee and Principals. EXCEPT AS PROVIDED IN ITEM 19 OF FRIDAY'S UNIFORM
FRANCHISE OFFERING CIRCULAR FOR THE SALE OF T.G.I. FRIDAY'S(R) RESTAURANTS IN
EFFECT ON THE DATE OF THIS AGREEMENT, FRIDAY'S EXPRESSLY DISCLAIMS THE MAKING
OF, AND FRANCHISEE AND EACH PRINCIPAL ACKNOWLEDGE THAT THEY HAVE NOT RECEIVED
OR RELIED UPON, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
POTENTIAL PERFORMANCE OR VIABILITY OF THE BUSINESS VENTURE CONTEMPLATED BY
THIS AGREEMENT.
23.02 Franchisee and each Principal have received, read and
understand this Agreement, the documents referred to herein and the
Attachments and Schedules hereto. Franchisee and each Principal have had
ample time and opportunity to consult with their advisors concerning the
potential benefits and risks of entering into this Agreement.
24. MISCELLANEOUS
24.01 Time is of the essence to this Agreement.
24.02 There are no third party beneficiaries to this Agreement
except for the acknowledgments and agreements contained in Section 9, the
remedy provided for breach of Franchisee's or any Principal's covenant
contained in Section 13.03.C.(1), the provision for liquidated damages
contained in Section 16.01.C.(3) and the rights and remedies provided for in
EXHIBIT B.
24.03 This Agreement may be executed in any number of counterparts
each of which when so executed shall be an original, but all of which
together shall constitute one (1) and the same instrument.
24.04 Franchisee and each Principal acknowledge that each has been
offered certain products and services in connection herewith and understands
that System franchisees are free to obtain these and any other products or
services used in the operation of the Restaurant from sources of their own
choosing, subject only to compliance with the Standards and the requirements
of Sections 6.06, 6.07, 7.07 and 7.09.
24.05 All references herein to the masculine, neuter or singular
shall be construed to include the masculine, feminine, neuter or plural,
unless otherwise suggested by the text.
24.06 This Agreement will become effective only upon execution
hereof by the President or a Vice President of Friday's.
24.07 Franchisee and each Principal acknowledge that each has
received a complete copy of this Agreement, the documents referred to herein
and the Attachments hereto at least five (5) business days prior to the date
on which this Agreement was executed. Franchisee and each Principal further
acknowledge that each has received the disclosure document required by the
Trade Regulation Rule of the Federal Trade Commission entitled "Disclosure
Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures" at least ten (10) business days prior to the date on which
<PAGE>
this Agreement was executed.
25. CHOICE OF LAW; JURISDICTION; VENUE
25.01 FRANCHISEE AND ITS PRINCIPALS ACKNOWLEDGE THAT FRIDAY'S MAY
GRANT NUMEROUS FRANCHISES THROUGHOUT THE UNITED STATES ON TERMS AND
CONDITIONS SIMILAR IN CERTAIN MATERIAL RESPECTS TO THOSE SET FORTH IN THIS
AGREEMENT, AND THAT IT IS OF MUTUAL BENEFIT TO FRANCHISEE AND ITS PRINCIPALS
AND TO FRIDAY'S THAT THESE TERMS AND CONDITIONS BE UNIFORMLY INTERPRETED.
THEREFORE, THE PARTIES AGREE THAT TO THE EXTENT THE LAW OF THE STATE OF TEXAS
IS HELD ENFORCEABLE, TEXAS LAW SHALL APPLY TO THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT (EXCEPT FOR TEXAS CHOICE OF LAW RULES) AND
SHALL GOVERN ALL QUESTIONS WHICH ARISE WITH REFERENCE HERETO.
25.02 THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT SHALL BE PERFORMED
IN SUBSTANTIAL PART IN DALLAS COUNTY, TEXAS. THE PARTIES THEREFORE AGREE THAT
ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE PERFORMANCE THEREOF WHICH CANNOT BE AMICABLY SETTLED, EXCEPT
AS OTHERWISE PROVIDED HEREIN, SHALL BE RESOLVED BY A PROCEEDING IN A COURT IN
DALLAS COUNTY, TEXAS, AND FRANCHISEE AND PRINCIPALS EACH IRREVOCABLY ACCEPT
AND SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND THE
FEDERAL COURTS LOCATED IN DALLAS COUNTY, TEXAS FOR SUCH CLAIMS, CONTROVERSIES
OR DISPUTES; PROVIDED, HOWEVER, WITH RESPECT TO ANY ACTION WHICH INCLUDES
INJUNCTIVE RELIEF, OR ANY ACTION FOR THE RECOVERY OF ANY PROPERTY, REAL OR
PERSONAL, FRIDAY'S MAY BRING SUCH ACTION IN ANY STATE WHICH HAS JURISDICTION.
26. ENTIRE AGREEMENT
This Agreement and the Addenda, Exhibits and Schedules hereto
constitute the entire agreement between Friday's, Franchisee and the
Principals concerning the subject matter hereof. All prior agreements,
discussions, representations, warranties and covenants are merged herein.
THERE ARE NO WARRANTIES, REPRESENTATIONS, COVENANTS OR AGREEMENTS, EXPRESS OR
IMPLIED, BETWEEN THE PARTIES CONCERNING THE SUBJECT MATTER HEREOF, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING,
EXCEPT THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. EXCEPT THOSE PERMITTED TO
BE MADE UNILATERALLY BY FRIDAY'S HEREUNDER, NO AMENDMENT, CHANGE OR VARIANCE
FROM THIS AGREEMENT SHALL BE BINDING ON EITHER PARTY UNLESS MUTUALLY AGREED
TO BY FRIDAY'S AND FRANCHISEE AND EXECUTED IN WRITING.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
TGI FRIDAY'S INC. FRANCHISEE
By: ______________________ By: _______________________
<PAGE>
Name: ______________________ Name: _______________________
Title: ______________________ Title: _______________________
Date: ______________________ Date: _______________________
<PAGE>
Each Principal acknowledges, covenants and represents as follows:
(1) each has read the terms and conditions of this Agreement;
(2) each is a "Principal" as described in this Agreement;
(3) each is the owner of and has the right to vote the percent of
the Securities of Franchisee indicated next to the signature below of each
Principal;
(4) each makes all of the representations, warranties, covenants and
agreements of the Franchisee (including liability to make Payments) and a
Principal set forth in this Agreement (including, without limitation, the
covenants and agreements concerning Transfer, non-competition and maintenance of
Confidential Information) and is obligated to perform thereunder;
(5) each individually, jointly and severally, irrevocably and
unconditionally guarantees that all of Franchisee's obligations under the terms
and conditions of this Agreement will be timely paid and performed;
(6) each acknowledges that Friday's may, without notice to Principals,
waive, renew, extend, modify, amend or release any indebtedness or obligation of
Franchisee, or settle, adjust, or compromise any claims against Franchisee;
(7) each waives all demands and notices of every kind with respect to
this guaranty including, without limitation, notice of presentment, demand for
payment or performance by Franchisee, notice of any default by Franchisee or any
guarantor, and notice of any release of any guarantor or other security for this
Agreement or the obligations of Franchisee, and each acknowledges that Friday's
may pursue its rights against Principals without first exhausting its remedies
against Franchisee and without joining any other guarantor hereto, and no delay
on the part of Friday's in the exercise of any right or remedy shall operate as
a waiver of such right or remedy;
(8) each has derived and expects to derive financial or other benefit,
directly or indirectly, from this Agreement and the transaction described
herein;
(9) each acknowledges that his/its execution of this Agreement, and
his/its undertakings and agreements herein, have induced Friday's to enter into
the transactions described herein, and to execute, this Agreement;
(10) each consents to and shall be bound by any amendment of this
Agreement made by Friday's and Franchisee pursuant to the terms hereof; and
(11) each has executed, concurrent herewith, the Guaranty Agreement in
EXHIBIT B.
<CAPTION>
PRINCIPALS Securities
Voting %
____________________________ __________
Name:
<PAGE>
Name: __________
Name: __________
Name: __________
<PAGE>
EXHIBIT 10.9
ADDENDUM A TO FRANCHISE AGREEMENT
COVENANT AND AGREEMENT FOR CONFIDENTIALITY
This agreement ("Agreement") is made by [PRINCIPAL'S NAME], [an
individual residing in the state of _______________ OR a corporation/partnership
organized under the laws of the State of _________________] ("Principal"), and
TGI Friday's Inc., a corporation organized under the laws of the State of New
York ("Friday's"), in connection with that certain Franchise Agreement dated
_________________, _____ (the "Franchise Agreement"), by and between Friday's
and _____________________ ("Franchisee").
WHEREAS, Friday's and Franchisee have entered into the Franchise
Agreement; and
WHEREAS, the Confidential Information provides economic advantages
to Friday's and is not generally known to, and not legally available to,
third parties; and
WHEREAS, Friday's has taken and intends to take all steps necessary
to maintain the confidentiality of the Confidential Information; and
WHEREAS, Principal will receive, and desires to receive, the
Confidential Information in his capacity as a Principal of Franchisee; and
WHEREAS, this Agreement is executed and delivered pursuant to
Section 8.05 of the Franchise Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, Principal and Friday's agree as follows:
1. Capitalized terms used herein and not otherwise defined shall
have the meanings attributed to them in the Franchise Agreement.
2. Friday's shall disclose to Principal some or all of the
Confidential Information which may be utilized by Principal solely (a) in his
capacity as a Principal of Franchisee and (b) in connection with Franchisee's
performance of its duties and obligations pursuant to the Franchise
Agreement. No other use or disclosure of any of the Confidential Information
shall be made by Principal. Principal acknowledges and agrees that Friday's
or TGIFM is the exclusive owner of the Confidential Information, the System
and the Proprietary Marks. Principal shall not, directly or indirectly,
contest or impair Friday's or TGIFM's ownership of, or interest in, the
Confidential Information, the System or the Proprietary Marks.
3. Principal shall receive the Confidential Information in strict
confidence. The Confidential Information may be utilized by Principal only (a)
so long as Principal remains a Principal of Franchisee and (b) during the Term.
The Confidential Information shall not be used in any manner that is adverse or
detrimental to, or competitive with, Friday's, TGIFM or Franchisee. Except as
permitted pursuant to the Franchise Agreement or this Agreement, the
Confidential Information shall not, without the prior written consent of
Friday's, be (i) copied, (ii) compiled (in total or in part) with other
information, or (iii) disclosed to any third party.
4. Principal shall not communicate, disclose or use the Confidential
Information, or any part
<PAGE>
thereof, except as (a) permitted herein, or (b) required by law. The
Confidential Information may be disclosed to Principal's agents, consultants,
contractors and employees who need to know the Confidential Information for
the sole purpose of providing services to Principal in his capacity as a
Principal of Franchisee. Prior to such disclosure of any Confidential
Information, each of such agents, consultants, contractors and employees
shall (a) be advised by Principal of the confidential and proprietary nature
of the Confidential Information and (b) agree to be bound by the terms and
conditions of this Agreement. Notwithstanding such agreement, Principal shall
indemnify the Friday's Indemnitees from and against any damages, costs
(including reasonable fees of attorneys and other engaged professionals) and
expenses resulting from any disclosure or use of the Confidential
Information, or any part thereof, by such agents, representatives or
employees contrary to the terms hereof.
5. In the event Principal or Principal's agents, representatives, or
employees receive notice of any request, demand or order to transfer or disclose
all or any portion of the Confidential Information, Principal shall immediately
notify Friday's thereof, and shall fully cooperate with and assist Friday's in
prohibiting or denying any such transfer or disclosure. Should such transfer or
disclosure be required by a valid, final, non-appealable court order, Principal
shall fully cooperate with and assist Friday's in protecting the confidentiality
of the Confidential Information to the maximum extent permitted by law.
6. Immediately upon Friday's request or upon any termination or
expiration of the Term, Principal shall return the Confidential Information
including, without limitation, that portion of the Confidential Information
which consists of analyses, compilations, studies or other documents containing
or referring to any part of the Confidential Information, prepared by Principal,
its agents, representatives or employees, and any copies thereof.
7. Each of the representations, warranties, covenants, acknowledgments
and agreements of Principal, and the rights and remedies of Friday's in
connection therewith, contained in the Franchise Agreement including, without
limitation, those contained in Sections 8, 9, 13.03.C, 14.02, 14.03, 14.04 and
16 of the Franchise Agreement, are incorporated in this Agreement by reference
as if fully set forth. In connection with Friday's enforcement of such rights
and remedies (or other rights and remedies of Friday's under this Agreement),
any court of competent jurisdiction selected by Friday's shall have personal
jurisdiction over Principal, to which jurisdiction Principal irrevocably
consents. The parties agree that to the extent the law of the State of Texas is
held enforceable, Texas law shall apply to the interpretation and construction
of this Agreement (except for Texas choice of law rules) and shall govern all
questions which arise with reference hereto.
8. Friday's may, in addition to pursuing any other remedies,
specifically enforce such obligations, covenants and agreements or obtain
injunctive or other equitable relief in connection with the violation or
anticipated violation of such obligations, covenants and agreements without the
necessity of showing (i) actual or threatened harm; (ii) the inadequacy of
damages as a remedy; or (iii) likelihood of success on the merits, and without
being required to furnish bond or other security. Nothing in this Agreement
shall impair Friday's right to obtain equitable relief.
9. Should any term, covenant or provision hereof, or the
application thereof, be determined by a valid, final, non-appealable order to
be invalid or unenforceable, the remaining terms, covenants or provisions
hereof shall continue in full force and effect without regard to the invalid
or unenforceable provision. In such event such term, covenant or provision
shall be deemed modified to impose the maximum duty permitted by law and such
term, covenant or provision shall be valid and enforceable in such modified
form as if separately stated in and made a part of this Agreement.
<PAGE>
10. Any of Principal's agreements, obligations or covenants which
contemplate performance thereof after the termination or expiration of this
Agreement shall survive such termination or expiration.
11. Principal acknowledges and warrants that he has derived and
expects to derive financial or other advantage and benefit, directly or
indirectly, from the Franchise Agreement, this Agreement and/or the provision
of the Confidential Information to Franchisee and/or Principal.
IN WITNESS WHEREOF, this Agreement has been executed by the parties on the dates
indicated below.
PRINCIPAL TGI FRIDAY'S INC.
___________________________ By: ____________________
Name: _____________________ Name: ____________________
Date: _____________________ Title: ____________________
Date: ____________________
<PAGE>
EXHIBIT 10.9
ADDENDUM B TO FRANCHISE AGREEMENT
COVENANT AND AGREEMENT FOR CONFIDENTIALITY
This agreement ("Agreement") is made by [EMPLOYEE'S NAME], an
individual residing in the state of _______________ ("Employee"), and
["FRANCHISEE'S NAME"], [an individual residing in the state of _______________
OR a corporation/partnership organized under the laws of the State of
_________________] ("Franchisee"), in connection with that certain Franchise
Agreement dated ________________, _____, (the "Franchise Agreement") by and
between TGI Friday's Inc. ("Friday's") and Franchisee.
WHEREAS, Friday's and Franchisee have entered into the Franchise
Agreement;
WHEREAS, the Confidential Information provides economic advantages
to Friday's, and is not generally known to, and is not legally available to,
third parties;
WHEREAS, Friday's has taken and intends to take all steps necessary
to maintain the confidentiality of the Confidential Information;
WHEREAS, it will be necessary for certain employees of Franchisee to
have access to and to use some or all of the Confidential Information in
connection with the performance of their job functions related to the
development, construction and operation of Restaurants under the System;
WHEREAS, Employee is the [INSERT TITLE] of Franchisee;
WHEREAS, Employee needs to receive, and desires to receive and use, the
Confidential Information in the course of his employment by Franchisee in order
to effectively perform his job function;
WHEREAS, the Agreement is executed and delivered pursuant to Section
8.05 of the Franchise Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, Employee and Franchisee agree as follows:
1. Capitalized terms used herein and not otherwise defined shall have
the meanings attributed to them on ANNEX A hereto.
2. Franchisee, or Friday's, acting on behalf of Franchisee, shall
disclose to Employee some or all of the Confidential Information which may be
utilized by Employee solely (a) in his capacity as the [TITLE] of Franchisee and
(b) in connection with Employee's performance of his job functions. No other use
or disclosure of any of the Confidential Information shall be made by Employee.
Employee acknowledges and agrees that Friday's or TGIFM is the exclusive owner
of the Confidential Information, the System and the Proprietary Marks. Employee
shall not, directly or indirectly, contest or impair Friday's or TGIFM's
ownership of, or interest in, the Confidential Information, the System or the
Proprietary Marks.
3. Employee shall receive the Confidential Information in strict
confidence. The
<PAGE>
Confidential Information may be utilized by Employee only (a) so
long as Employee is employed by Franchisee and (b) during the Term. The
Confidential Information shall not be used in any manner that is adverse or
detrimental to, or competitive with, Friday's, TGIFM or Franchisee. Except as
permitted pursuant to this Agreement, the Confidential Information shall not,
without the prior written consent of Friday's, be (i) copied, (ii) compiled (in
total or in part) with other information, or (iii) disclosed to any third party.
4. Employee shall not communicate, disclose or use the Confidential
Information, or any part thereof, except as (a) permitted herein, or (b)
required by law. The Confidential Information may be disclosed to fellow
employees as necessary to train or assist such other employees of Franchisee in
the performance of their job functions with respect to the development,
construction or operation of a Restaurant. Prior to such disclosure of any
Confidential Information, each such employee shall (i) be advised by Employee of
the confidential and proprietary nature of the Confidential Information and (ii)
agree to be bound by the terms and conditions of this Agreement.
5. In the event Employee receives notice of any request, demand, or
order to transfer or disclose all or any portion of the Confidential
Information, Employee shall immediately notify Franchisee thereof, and shall
fully cooperate with and assist Friday's in prohibiting or denying any such
transfer or disclosure. Should such transfer or disclosure be required by a
valid, final, non-appealable court order, Employee shall fully cooperate with
and assist Friday's in protecting the confidentiality of the Confidential
Information to the maximum extent permitted by law.
6. Immediately upon Friday's request, upon Employee's termination of
employment with Franchisee, or upon the conclusion of the use for which any
Confidential Information was furnished, Employee shall return the Confidential
Information including, without limitation, that portion of the Confidential
Information which consists of analyses, compilations, studies or other documents
containing or referring to any part of the Confidential Information, and any
copies thereof, to Franchisee or Friday's.
7. In order to protect the goodwill and unique qualities of the System
and the confidentiality and value of the Confidential Information, and in
consideration of the disclosure to Employee of the Confidential Information,
Employee covenants that, during the period of his employment by Franchisee and
for a period of one (1) year following termination of such employment, Employee
shall not, directly or indirectly:
A. employ or seek to employ any person (or induce such person
to leave his or her employment) who is, or has within one (1) year been,
employed (i) by Friday's or Franchisee; (ii) by any developer or franchisee
of Friday's; or (iii) in any other concept or system owned, operated or
franchised by an Affiliate, as a director, officer or in any managerial
capacity;
B. own, maintain, operate or have any interest in any Competing
Business;
C. own, maintain, operate or have any interest in any
Competing Business which business is, or is intended to be, located in the
county in which the Restaurant is located; or
D. own, maintain, operate or have any interest in any
Competing Business which business is, or is intended to be, located within a
radius of three (3) miles of any restaurant which is a part of any concept or
system owned, operated or franchised by Friday's or any Affiliate.
8. In connection with the enforcement of rights and remedies under
this Agreement, any
<PAGE>
court of competent jurisdiction selected by Franchisee or Friday's shall have
personal jurisdiction over Employee, to which jurisdiction Employee
irrevocably consents. THE PARTIES AGREE THAT TO THE EXTENT THE LAW OF THE
STATE OF TEXAS IS HELD ENFORCEABLE, TEXAS LAW SHALL APPLY TO THE
INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT (EXCEPT FOR TEXAS CHOICE OF
LAW RULES) AND SHALL GOVERN ALL QUESTIONS WHICH ARISE WITH REFERENCE HERETO.
9. A. Employee acknowledges and agrees that (i) Friday's is a third
party beneficiary to this Agreement and (ii) Friday's exercise of the rights and
remedies set forth herein is reasonable.
B. Franchisee or Friday's may, in addition to pursuing any
other remedies, specifically enforce such obligations and covenants or obtain
injunctive or other equitable relief in connection with the violation or
anticipated violation of such obligations and covenants without the necessity of
showing (i) actual or threatened harm; (ii) the inadequacy of damages as a
remedy; or (iii) likelihood of success on the merits, and without being required
to furnish bond or other security. Nothing in this Agreement shall impair
Franchisee's or Friday's right to obtain equitable relief.
C. With respect to Employee's breach of the covenants
contained in Section 7.A hereof, the affected former employer shall be
compensated by Employee for the reasonable costs and expenses incurred by such
employer in connection with training such employee. Franchisee and Employee
acknowledge that such expenses are impossible to accurately quantify and agree
that, as liquidated damages and not as a penalty, an amount equal to such
employee's annual rate of compensation in the final twelve (12) months of
employment (or an annualized rate if employed for a shorter period) by such
former employer shall be paid by Employee to the former employer at such time as
such employee commences employment.
10. Should any term, covenant or provision hereof, or the application
thereof, be determined by a valid, final, non-appealable order to be invalid or
unenforceable, the remaining terms, covenants or provisions hereof shall
continue in full force and effect without regard to the invalid or unenforceable
provision. In such event, such term, covenant or provision shall be deemed
modified to impose the maximum duty permitted by law and such term, covenant or
provision shall be valid and enforceable in such modified form as if separately
stated in and made a part of this Agreement.
11. Any of Employee's agreements, obligations or covenants which
contemplate performance thereof after the termination or expiration of this
Agreement shall survive such termination or expiration.
IN WITNESS WHEREOF, this Agreement has been executed by the parties on the dates
indicated below.
EMPLOYEE FRANCHISEE
______________________ By: ___________________
Name: ________________ Name: ___________________
Date: ________________ Title: ___________________
Date: ___________________
<PAGE>
EXHIBIT 10.9
ANNEX A TO COVENANT AND AGREEMENT FOR CONFIDENTIALITY
AFFILIATE - Carlson Restaurants Worldwide Inc., or any subsidiary thereof or any
subsidiary of TGI Friday's Inc.
COMMENCEMENT DATE - _____________, _____.
COMPETING BUSINESS - a restaurant business or bar/restaurant offering the same
or similar products and services as offered by restaurants in the System or
restaurants in any other concept or system owned, operated or franchised by
Friday's or any Affiliate, including, without limitation, waiter/waitress
service, sit-down dining and bar services.
CONFIDENTIAL INFORMATION - the System, the Development Manual, the Manuals,
other manuals, the Standards, written directives and all drawings, equipment,
recipes, computer and point of sale programs (and output from such programs);
and any other information, know-how, techniques, material and data imparted or
made available by Friday's which is (i) designated as confidential; (ii) known
by Franchisee or Employee to be considered confidential by Friday's; or (iii) by
its nature herein or reasonably considered confidential.
DEVELOPMENT MANUAL - Friday's manual, as amended from time to time, describing
(generally) the procedures and parameters required for the development of T.G.I.
Friday's-Registered Trademark- Restaurants.
INDEMNITEES - Friday's, its directors, officers, employees, agents,
shareholders, affiliates, successors and assigns and the respective directors,
officers, employees, agents, shareholders and affiliates of each.
MANUALS - Friday's confidential operating manuals, as amended from time to time
in Friday's sole discretion, which contain the instructions, requirements,
Standards, specifications, methods and procedures for the operation of the
Restaurant including (i) those relating to the selection, purchase, service and
sale of all products being sold at the Restaurant; (ii) those relating to the
maintenance and repair of the Restaurant, buildings, grounds, equipment, signs,
interior and exterior decor items, fixtures and furnishings; and (iii) those
relating to employee apparel and dress, accounting, bookkeeping, record
retention and other business systems, procedures and operations.
PROPRIETARY MARKS - certain trademarks, trade names, service marks, emblems
and indicia of origin designated by Friday's from time to time in connection
with the operation of Restaurants pursuant to the System in the Territory,
including, without limitation, "T.G.I. FRIDAY'S-Registered Trademark-",
"FRIDAY'S-Registered Trademark-" and "THE AMERICAN BISTRO-Registered
Trademark-".
RESTAURANT - a T.G.I. Friday's-Registered Trademark- Restaurant developed and
operated pursuant to the Franchise Agreement.
STANDARDS - the standards and specifications, as amended from time to time by
Friday's, in its sole discretion, contained in, and being a part of, the
Confidential Information pursuant to which Franchisee shall develop and operate
Restaurants in the Territory.
SYSTEM - a unique, proprietary system developed and owned by Friday's (which may
be modified or further developed from time to time in Friday's sole discretion)
for the establishment and operation of full-service restaurants under the
Proprietary Marks, which includes, without limitation, a distinctive image
consisting of exterior and interior design, decor, color scheme and furnishings;
special recipes,
<PAGE>
menu items and full service bar; employee uniform standards,
products, services and specifications; procedures with respect to operations and
inventory and management control; training and assistance; and advertising and
promotional programs.
TERM - the duration of the Franchise Agreement commencing on the Commencement
Date and continuing until _______________, 20___, unless sooner terminated.
TGIFM - TGI Friday's of Minnesota, Inc., a Minnesota corporation and a
subsidiary of Friday's.
T.G.I. FRIDAY'S-Registered Trademark- RESTAURANTS - restaurants operated in
accordance with the System under the Proprietary Marks.
<PAGE>
EXHIBIT 10.9
EXHIBIT A TO FRANCHISE AGREEMENT
COMMENCEMENT DATE AGREEMENT
This Commencement Date Agreement ("Agreement") is entered into this
____ day of _______________, _____, by and between TGI Friday's Inc.
("Friday's") and __________________ ("Franchisee").
Whereas, Friday's and Franchisee have entered into a Franchise
Agreement dated ________________, _____ ("Franchise Agreement") relating to the
operation of a T.G.I. Friday's-Registered Trademark- Restaurant; and
Whereas, Friday's and Franchisee desire to supplement the Franchise
Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Friday's and Franchisee agree as follows:
1. The Commencement Date of the term of the Franchise
Agreement is _____________________.
2. The term of the Franchise Agreement shall expire on
_________________________, unless sooner terminated as therein provided.
3. The street address of the Restaurant is _______________________.
4. This Agreement shall not amend or otherwise modify the terms and
conditions of the Franchise Agreement or the interpretation of the rights and
duties of Friday's and Franchisee thereunder. Except as otherwise defined
herein, the words and phrases used in this agreement as defined terms shall have
the meanings attributed to them in the Franchise Agreement.
IN WITNESS WHEREOF, Friday's and Franchisee have caused this
Commencement Date Agreement to be executed as of the day and year first above
written.
TGI FRIDAY'S INC.
(NAME OF FRANCHISEE)
By: By:
------------------------- --------------------------
Name: Name:
------------------------- --------------------------
Title: Title:
------------------------- --------------------------
<PAGE>
EXHIBIT 10.9
EXHIBIT B TO FRANCHISE AGREEMENT
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (the "Guaranty") is made as of the ____ day of
________________________, _____, by the undersigned (hereinafter referred to
individually and collectively as "Guarantors" whether one or more) in favor of
TGI Friday's Inc., a New York corporation ("Friday's").
WHEREAS, Friday's, [Franchisee's name], and certain other individuals
and/or entities entered into that certain Franchise Agreement dated
__________________, _____ (the "Franchise Agreement") regarding the construction
and operation of a T.G.I. Friday's-Registered Trademark- Restaurant
at ________________________ (the "Restaurant");
WHEREAS, as an inducement to Friday's to enter into the Franchise
Agreement, the undersigned Guarantor has agreed to make and deliver this
Guaranty to Friday's.
NOW THEREFORE, FOR VALUE RECEIVED, Guarantors, jointly and severally,
if more than one, hereby acknowledge and agree as follows:
1. Each has read the terms and conditions of this Guaranty and of the
Franchise Agreement.
2. Each is a "Principal" as defined in the Franchise Agreement.
3. Each reaffirms all of the representations, warranties, covenants and
agreements of the Franchisee (including liability to make Payments) and
Principals set forth in the Franchise Agreement (including, without limitation,
the covenants and agreements concerning Transfer, non-competition and
maintenance of Confidential Information) and is obligated to perform thereunder.
4. Each acknowledges that Friday's may, without notice to Guarantors
and without affecting the obligations of any of the Guarantors under this
Guaranty, waive, renew, extend, modify, amend or release any indebtedness or
obligation of Franchisee, or settle, adjust, or compromise any claims against
Franchisee;
5. Each waives all demands and notices of every kind with respect to
this Guaranty, including, without limitation, notice of presentment, demand for
payment or performance by Franchisee, notice of any default by Franchisee or any
Guarantor, and any release of any Guarantor or other security for the Franchise
Agreement or the obligations of Franchisee. Friday's may pursue its rights
against Guarantors without first exhausting its remedies against Franchisee and
without joining any other Guarantor hereto, and no delay on the part of Friday's
in the exercise of any right or remedy shall operate as a waiver of such right
or remedy;
6. Each individually, jointly and severally, irrevocably and
unconditionally guarantees that all of Franchisee's obligations under the terms
and conditions of the Franchise Agreement will be timely paid and performed;
7. Each has derived and expects to derive financial or other benefit,
directly or indirectly, from the Franchise Agreement and the transaction
described therein;
<PAGE>
8. Each acknowledges that his/its execution of the Franchise Agreement,
and his/its undertakings and agreements herein, have induced Friday's to enter
into the transactions described in, and to execute, the Franchise Agreement.
9. Each consents to and shall be bound by any amendment of
the Franchise Agreement made by Friday's and Franchisee pursuant to the
terms thereof.
GUARANTORS
Name:
Name:
Name:
Name:
Name:
Name:
<PAGE>
EXHIBIT 10.9
EXHIBIT C TO FRANCHISE AGREEMENT
DESCRIPTION OF RESTRICTED AREA
A three (3) mile radius surrounding the T.G.I. Friday's restaurant located at
_______________________.