Coffee Plantation Franchise Agreement - Coffee People Inc.
COFFEE PLANTATION(R)
FRANCHISE AGREEMENT
This Coffee Plantation(R) Franchise Agreement is made and entered into
by and between Coffee People, Inc., an Oregon corporation (referred to as the
"Franchisor," "we," "us" or "our"), with its principal office currently at 11480
Commercial Parkway, Castroville, California 95012, and
__________________________________________________________________ (individually
and collectively referred to as the "Franchisee," "you" or "your") whose
principal address is __________________________________________________. If
there is more than one Franchisee, their obligations under this Agreement and
all other agreements (whether past, present or future) are, and shall be, joint
and several.
IN A NUMBER OF PLACES IN THIS AGREEMENT, YOU'RE ASKED TO INITIAL CERTAIN
ITEMS. INITIALING BY YOU CONFIRMS, WITHOUT LESSENING THE IMPORTANCE OR BINDING
NATURE OF EACH OF THE PROVISIONS OF THIS AGREEMENT, THAT YOU RECOGNIZE THE
SPECIAL SIGNIFICANCE OF THOSE ITEMS AND THE FACT THAT THEY'VE BEEN FULLY
DISCUSSED WITH YOU, AND READ, UNDERSTOOD AND AGREED TO BY YOU. PLEASE INITIAL
BELOW AND AT ALL OTHER POINTS INDICATED.
YOUR INITIALS: __________ / __________
1. BUSINESS BACKGROUND AND PRELIMINARY AGREEMENTS
1.1 INTRODUCTION. We've developed, and plan to continue to develop,
methods of operating Coffee Plantation(R) Stores ["Plantation Store(s)"] which
offer, at retail, bulk specialty coffees, teas, beverages, coffee and tea makers
and related supplies, accessories and gifts and other items as approved by us
from time-to-time in our sole and absolute discretion (the "Products.")
Plantation Stores generally offer beverages for immediate consumption on the
premises and some Plantation Stores carry pastries, cookies and baked goods and
have seating areas, in each case as consented to by us.
Plantation Stores are operated with formats, signs, equipment, layout,
systems, methods, procedures and designs approved by us and which utilize a
special architectural design, offer the Products, and utilize certain
trademarks, service marks, trade dress and other commercial symbols, including
"Coffee Plantation." Plantation Stores operate at locations that feature the
"Coffee Plantation(R) System" (as defined below), any element of which we can
modify from time-to-time in our sole and absolute discretion and with which you
will promptly comply.
1
<PAGE> 2
We selectively award, to qualified persons, franchises (the "Franchise")
to own and operate a Plantation Store using the Coffee Plantation System and the
Names and Marks and Trade Dress. Where we deem it appropriate, the Franchise
(and this Agreement) may be subject to a separate written Addendum signed by you
and us and granting you rights to operate variations of the standard Plantation
Store, such as a Coffee Plantation Drive-Through Unit (sometimes referred to as
"Motor Moka(R)"), a Coffee Plantation Espresso Bar/Kiosk (the "Bar/Kiosk"), or
otherwise.
You've applied for a franchise to own and operate a Plantation Store or
other facility at premises identified in Section 2.1 below and your application
has been approved by us in reliance on all of the representations made in your
application.
1.2 DEFINITIONS. The following terms have the meanings listed below.
Other terms used in this Agreement are defined and construed in the context in
which they occur.
"AFFILIATE" - Any person, company or other entity which controls, is
controlled by or is under common control with another person, company or
other entity, as well as any spouse, parent, child and/or sibling and
any entity controlled by any spouse, parent, child and/or sibling. Our
affiliates include (but are not necessarily limited to), at present,
Gloria Jean's Gourmet Coffees Franchising Corp., Gloria Jean's Gourmet
Coffees Corp., Edglo Enterprises, Inc., Gloria Jean's Inc., Coffee
People Inc., Second Cup USA Holdings Ltd. and The Second Cup Ltd.)
"AGREEMENT" - This Coffee Plantation(R) Franchise Agreement.
"DESIGNATED EQUIPMENT" - Equipment that meets our requirements and is to
be obtained and used by you in the operation of your Plantation Store.
"FRANCHISE" - The right to operate a single Plantation Store at the
Premises pursuant to the terms and conditions of this Agreement.
"FRANCHISOR-RELATED PERSONS/ENTITIES" - Collectively and individually,
but not necessarily limited to, the following, whether past, present or
future: Gloria Jean's Gourmet Coffees Franchising Corp., Gloria Jean's
Gourmet Coffees Corp., Edglo Enterprises, Inc., Gloria Jean's Inc.,
Coffee People Inc., Second Cup USA Holdings Ltd. and The Second Cup
Ltd., the partners, shareholders, officers, directors,
2
<PAGE> 3
agents, attorneys, accountants, and/or employees and/or any affiliates,
of any of the foregoing and each of their respective partners,
shareholders, officers, directors, agents, attorneys, accountants,
and/or employees, as well as any company(ies)/person(s) acting by,
through, under or in concert or affiliated or associated in any way with
any of the foregoing, as well as any past, present and/or future
predeccesors, successors and/or assigns of any of the foregoing.
"GOOD STANDING" - "Good Standing" includes (but is not limited to) you
and each affiliate of yours (a) not being in default or threat of
default under this Agreement and/or any other agreement, or any other
legal obligation, to us and/or any affiliate of ours and (b) operating
each Coffee Plantation(R) Franchise, in which you and/or any affiliate
of yours has any ownership or other interest, in full compliance with
the System and Manuals and all of our other requirements.
"MANUAL(S)" - One or more handbooks, manuals, bulletins and/or volumes,
other written materials (including materials distributed electronically
or otherwise), and video, audio and/or software media, regardless of
title, containing (among other things) specifications, standards,
policies and procedures prescribed from time-to-time by us and to be
followed by you in connection with your operation, marketing or
otherwise of your Plantation Store and your performance under this
Agreement, including (but not limited to) all goods and services to be
sold and/or provided at or from your Plantation Store and/or in
association with the Marks. The Manuals include all changes and
supplements issued by us in the future, each of which you'll promptly
comply with.
"NAMES AND MARKS" - The trademarks, service marks and other commercial
symbols now and/or in the future owned by us and which we designate,
from time-to-time, to be used to identify the services and/or products
offered by Plantation Stores, including (but not limited to) "Coffee
Plantation", the Trade Dress and certain associated logos.
"PLANTATION STORE" - The Coffee Plantation(R) Store which you're
franchised to operate at the Premises pursuant to this Agreement,
including any Bar/Kiosk, Drive-Through Unit or other facility which we
authorize you to operate.
"PREMISES" - The location at which you will operate a single Plantation
Store, as permitted and accepted by us pursuant to this Agreement.
"PRODUCTS" - Bulk specialty coffees, teas, beverages, bakery items,
coffee and tea makers and related supplies,
3
<PAGE> 4
accessories and gifts and other items as approved by us from
time-to-time to be offered at or from your Plantation Store, in our sole
and absolute discretion.
"SERVICES" - Services approved by us from time-to-time to be offered at
or from your Plantation Store, in our sole and absolute discretion.
"SIMILAR BUSINESS"- Any business that now or in the future offers,
sells, distributes, provides or is otherwise involved or deals with,
whether at wholesale, retail or otherwise, any goods and/or services
(including, among others, the Products) now or in the future authorized
by us to be offered at or from Plantation Stores, or similar products,
including any business awarding franchises or licenses to others to
operate or be involved with any such business.
"STORE" - The Plantation Store you're authorized to own and operate
pursuant to this Agreement.
"SYSTEM" - The distinctive format and method of doing business now or in
the future developed, used and/or modified by us in our sole and
absolute discretion for the operation of a retail sales outlet
specializing in the sale of specialty coffees, teas, food products,
other beverages and other related gift items, including (but not limited
to) (a) distinguishing characteristics related to the image, design,
appearance, layout and color scheme of a Plantation Store, (b) design,
style, color and other distinguishing characteristics of fixtures,
showcases, signs and furnishings, (c) layout, design and selection of
equipment, (d) specifications used in preparing Products for sale, (e)
methods used for selecting, purchasing, marketing, displaying and
selling Products, (f) operating, marketing and other systems, procedures
and standards and (g) the standards of quality, service and cleanliness
used in the operation of a Plantation Store.
"TRADE DRESS" - The Plantation Store design and image developed by us
for Plantation Stores, as it currently exists and as it may be revised
and further developed by us from time-to-time in our sole and absolute
discretion.
"US," "WE," "OUR" OR "FRANCHISOR" - Coffee People, Inc., an Oregon
corporation.
"YOU," "YOUR" OR "FRANCHISEE" - The individual(s) signing this Agreement
as Franchisee. (If there's more than one Franchisee, each is jointly and
severally obligated under
4
<PAGE> 5
this Agreement and all other agreements/documents with us.)
2. AWARD OF FRANCHISE
2.1 AWARD OF FRANCHISE. Subject to the provisions of this Agreement, we
award you a franchise to operate a retail Plantation Store at
______________________________________________ only, or a substitute premises
approved (in accordance with Section 4 below) by us, and to use the Coffee
Plantation System, and the Names and Marks and Trade Dress, in the operation
thereof, for a term commencing on the effective date of this Agreement and
ending upon the expiration of the initial or remaining initial term of the lease
or sublease for the premises of your Plantation Store. Termination or expiration
of this Agreement shall constitute a termination or expiration of the Franchise.
You will not conduct any business or other activity from your Plantation Store,
or using the Coffee Plantation System, Name and Marks, Trade Dress or otherwise,
other than as expressly authorized under this Agreement.
You understand and agree that critical to the Coffee Plantation(R)
System and this Agreement, as well as your possible success, is full adherence
by you to each element of the Coffee Plantation(R) System, including (among
other things), use and sale of only those Products, Designated Equipment and
suppliers as are approved by us from time-to-time, your using only prescribed
building and equipment layouts and designs, your strictly adhering to our
then-current standards of quality, service and cleanliness, your close and
personal working relationship with your Plantation Store, and your personal
accountability for the performance of your obligations under this and other
agreements. Accordingly, you will continuously comply with all such (and other)
elements of the then-current Coffee Plantation System. You agree that you will
at all times faithfully, honestly and diligently perform your obligations
hereunder, and that you will continuously exert your best efforts to promote,
enhance and maximize the business of your Plantation Store and the goodwill of
the Name and Marks.
YOUR INITIALS: __________ / __________
2.2 NON-EXCLUSIVITY. The Franchise is a "spot" franchise only and is
awarded for a single location only, with you having no other rights. You do not
have, have not paid for, and have no expectation of receiving any benefits of,
any "exclusive territory" or any "exclusive," "protected" or "reserved"
territorial, similar or other rights, no such rights are granted or will be
inferred and there is, and will be, no limitation of
5
<PAGE> 6
any type on the rights of us, or any of the Franchisor-Related Persons/Entities,
to locate and/or consent to the location of other Plantation Stores or other
distribution facilities and/or channels of distribution of any type (including,
without limitation, Motor Moka(R), other drive-through units and/or any other
channels of distribution), whether or not using the Coffee Plantation System,
the Names and Marks and/or Trade Dress, and/or involved in any Similar Business
or otherwise, at any location, regardless of the distance from, impact on, or
vicinity of, your Plantation Store or the number of Plantation Stores, other
outlets or otherwise in any area or market and you have no right to exclude,
control or impose conditions on the location or development of future Coffee
Plantation (or other) Franchisor-owned, franchised or other units of any type
(including, without limitation, Motor Moka(R), other drive-through units and/or
any other channels of distribution) or at any location. In particular, you
understand and agree that some or all of the Franchisor-Related Persons/Entities
currently, and may in the future, own and operate, and/or franchise or otherwise
license, Similar Businesses (and/or other competitive outlets/businesses) and
concepts located (or to be located) anywhere, including in proximity to you, and
that such businesses may now or in the future be in direct or indirect
competition with you.
We (and each and all of the Franchisor-Related Persons/Entities), and
those we, and/or any of the Franchisor-Related Persons/Entities, appoint, retain
(without limitation of any kind or nature) all rights with respect to; (a)
Plantation Stores, the Coffee Plantation System, the Names and Marks and Trade
Dress, the sale of Products and any other products and services under any name,
mark, trade dress or otherwise, anywhere in the world: (b) the right to operate
or grant others the right to operate specialty coffee stores, other coffee
beverage facilities or any other businesses anywhere in the world at such
locations as we (and the Franchisor-Related Persons/Entities) deem appropriate
in our (and their) sole and absolute discretion, regardless of the proximity to,
or impact on, your Plantation Store and on such terms and conditions as we,
and/or any of the Franchisor-Related Persons/Entities wish; (c) the right to
roast, develop, wholesale, market, distribute, sell or otherwise Products or
other items/services through any channel of distribution (including, without
limitation, mail order, Internet, World Wide Web, at wholesale and/or retail,
through grocery stores, supermarkets, discount stores, convenience stores or
otherwise), to be located anywhere and selling, etc. to anyone located anywhere,
whether under or in association with the Coffee Plantation System, the Names and
Marks and/or Trade Dress or any other name, mark, trade dress or otherwise,
regardless of the proximity to, or impact on, your Plantation Store, on such
terms and conditions, as we and/or any of the Franchisor-Related
6
<PAGE> 7
Persons/Entities, in our (and their) sole and absolute discretion, wish; and (d)
own, operate, franchise, license or otherwise any business located anywhere,
regardless of the proximity to, or impact on, your Plantation Store, whether
competitive or not and whether or not under the Coffee Plantation (or any other
system), the Names and Marks and/or Trade Dress or any other name, mark, trade
dress or otherwise, including to or with such persons/entities, and on such
terms and conditions, as we and/or any of the Franchisor-Related
Persons/Entities wish, in our (and their) sole and absolute discretion.
Since you do not have any territorial or similar rights, there is no
restriction regarding you soliciting or servicing customers located anywhere,
although you may do so only from your Plantation Store or as otherwise expressly
approved by us in writing.
We (and each and all of the Franchisor-Related Persons/Entities) can
acquire, or engage in any other transaction with, other businesses (competitive
or not), with companies and/or units located anywhere, including in proximity to
your Plantation Store, including arrangements where other units are converted to
the Coffee Plantation(R) or other format (including using the Coffee Plantation
System and/or the Names and Marks and/or Trade Dress) and/or any other format
and/or in which we and/or any of the Franchisor-Related Entities are acquired
and/or company-owned, franchised or other businesses (including your Plantation
Store) are converted to another format (whether competitive or not), maintained
as a new concept under the Coffee Plantation System and/or the Names and Marks
and/or Trade Dress or maintained as a separate concept.
We (and each and all of the Franchisor-Related Persons/Entities) can
develop or become associated with other concepts (including dual branding and/or
other franchise systems) for the same, similar, related, competitive or
different products and/or services, whether or not using the Coffee Plantation
System and/or the Names and Marks and/or Trade Dress, and may grant franchises
or other rights with respect to locations and/or businesses in connection
therewith, in each case in our sole and absolute discretion. Units offering
these concepts can be located anywhere, in our sole and absolute discretion,
including in proximity to your Plantation Store.
YOUR INITIALS: __________ / __________
3. SUCCESSOR FRANCHISE
3.1 YOUR RIGHTS. Your rights and our obligations under
7
<PAGE> 8
this Agreement terminate at the expiration of the initial term, but at that
time, subject to the conditions below, you will be eligible to be awarded a
successor franchise (which may materially differ from this Agreement and its
requirements) for your Coffee Plantation Store for a single additional term
(without any further term, successor franchise or right of renewal), equal to
the term of the renewal or extension of the lease or sublease for the premises
of your Plantation Store (or the initial term of the lease or sublease for the
premises, if such initial term of the lease or sublease has not expired as of
the effective date of the renewal of the franchise) on the terms, and under the
conditions, set forth in our then-current form of Franchise Agreement (but
without any provision for further successor franchises or renewal); provided,
however, that in no event shall we be obligated to negotiate or obtain any
renewal, extension or otherwise of any lease or sublease, or solicit or accept
any proposal from the landlord (or other person/entity controlling the premises)
for a renewal, extension or otherwise of any lease or sublease, even if on the
same terms and conditions as have previously been applicable to the premises.
3.2 YOUR OBLIGATIONS. Any award of the successor franchise must meet all
of the following conditions, each of which are agreed to be reasonable, together
with such other conditions as are reasonable at the time:
(1) You (and each affiliate of yours) have fully and continuously
complied with this Agreement and all other agreements with us (and/or any
affiliate of ours), in each case without any defaults, cured or uncured, during
the term (including all of the conditions set out below);
(2) You maintain possession of your Premises and by the
expiration date of this Agreement have refurbished, remodeled, expanded and
otherwise brought your Plantation Store and its operation into full compliance
with all then-applicable standards (including then-applicable design standards,
including equipment, and appearance) applicable to franchises awarded for new
Plantation Stores, are in full compliance with any lease or sublease
requirements applicable to your Plantation Store premises and present evidence
satisfactory to us that you have the right to remain in possession of your
Coffee Plantation Store for the duration of the successor franchise; or, in the
event you are unable to maintain possession of the premises, or in our judgment
your Coffee Plantation Store should be relocated, you secure substitute premises
consented to by us and have furnished, stocked and equipped such premises to
bring your Plantation Store and inventory into full compliance with our
then-current requirements by the expiration date of this Agreement;
8
<PAGE> 9
(3) You have given us written notice of election to obtain the
successor franchise, not less than six (6) months, but not more than twelve (12)
months, prior to the expiration of the term of this Agreement. Within ninety
(90) days after our receipt of such timely notice, we will furnish you with
written notice of: (a) any reasons which could cause us not to award the
successor franchise, including any deficiencies which require correction and a
schedule for correction thereof by you, and (b) our then-current requirements
relating to the image, appearance, decoration, furnishing, equipping, stocking
and programs of a Coffee Plantation Store, and a schedule for you to complete
such upgrading, modifications or otherwise, as a condition of receiving the
successor franchise. Prior to the expiration date of this Agreement, you will
fully cure all such deficiencies and fully satisfy all such requirements and
conditions. You understand and agree that we may refuse to award a successor
franchise if, in our reasonable judgment, you (or any affiliate of yours) have
failed to render satisfactory performance as a Franchisee in any operational or
other areas (including, but not limited to, safety, compliance with the System
and all Manuals, adverse impact on the Marks and associated goodwill, etc.),
whether or not such failure constitutes or constituted a default. The award of
the successor franchise will be conditioned (among other things) on your (and
your affiliates') continued compliance with all the terms and conditions of this
Agreement (and all other agreements with us and/or any affiliate) up to the date
of expiration and correction of any deficiencies within the periods specified by
us.
(4) You (and each affiliate of yours) have satisfied all monetary
obligations owed to us and any company affiliated with us and have timely and
fully met such and all other obligations throughout the term of this Agreement;
(5) You've executed our then-current form of Franchise Agreement
and related documents (with appropriate modifications to reflect the fact that
the successor Franchise Agreement relates to the award of a successor franchise
without the right to further successor franchises or renewals), including
guarantees, as are then customarily used by us in the award of franchises for
Coffee Plantation Stores, and the economic and other terms of which may
materially differ from the terms of this Agreement, including, without
limitation, higher royalty fees and/or marketing contributions; provided,
however, you will not be required to pay the then-current initial franchise fee.
In our sole and absolute discretion, and to further your and our mutual
interests in having consistent documents to cover all of your units, and to
update documents to reflect changed competitive and other conditions, we can
require you to sign our then-current form of Franchise Agreement to cover all
Coffee
9
<PAGE> 10
Plantation Stores in which you (or any affiliate) then have an interest;
(6) You've complied with our then-current qualification and
training requirements. We may require your personnel to attend and successfully
complete any retraining program(s), and at such times and location(s), as we
then specify. There will be no charge for any retraining program(s), but you'll
be responsible for all travel, meals, lodging and other expenses of your
personnel.;
(7) You (and each owner and/or affiliate of yours) have executed
a general release, in form prescribed by us, of any and all claims, liabilities
and/or obligations, of any nature whatsoever, however arising, known or unknown,
against us and/or any or all of the Franchisor-Related Persons/Entities. If you
fail to execute such a release, the awarding of a successor franchise will be
the equivalent of the granting of such release, since you and we agree that it
would be inappropriate and improper for you to continue in a franchise (or
other) relationship with us, and have the right to use the Marks and System, if
you had any claims, liabilities and/or obligations, of any nature whatsoever,
however arising, known or unknown, against us (or other persons/entities covered
by such a release) or otherwise failed to execute such a release, particularly
in view of the fact that you are not being charged a full initial franchise fee
in connection with the successor franchise; and
(8) You've paid us a non-refundable (unless the successor
franchise is denied) successor franchise fee equal to fifty percent (50%) of our
then-current initial franchise fee for a first franchise (subject to a $10,000
minimum which is subject to adjustment for inflation as described in this
Agreement). We must receive the fee from you at the time of your election.
Failure by you and/or your owners to timely complete such requirements
will be deemed an election by you not to obtain the successor franchise.
YOUR INITIALS: __________ / __________
3.3 RELEASES ON GRANTS OF ADDITIONAL, ETC. FRANCHISES. If, at any time,
you or any affiliate is to receive one or more successor, additional, other
and/or further franchise(s) from us or any of the Franchisor-Related
Persons/Entities, whether or not a successor franchise, you, each of your
affiliates, each owner of the Franchisee, the new franchisee and each owner
thereof will at each such time execute a general release, in form prescribed by
us, of any and all claims, liabilities and/or obligations, of
10
<PAGE> 11
any nature whatsoever, however arising, known or unknown, against us and/or any
or all of the Franchisor-Related Persons/Entities, except (where so required by
applicable law) for any claims exclusively related to the offer and sale of the
successor, additional, other and/or further franchise(s).
YOUR INITIALS: __________ / __________
4. LOCATION OF STORE
You may operate your Plantation Store only at the location and premises
identified in Section 2.1, or a substitute location and/or premises hereafter
approved by us. The premises may be used only for the operation of a Plantation
Store. If your lease or sublease for the premises of your Plantation Store
terminates prior to expiration without your fault, or if the premises are
damaged, condemned or otherwise rendered unusable, we will grant permission for
relocation of your Plantation Store to a location and premises consented to by
us in our sole and absolute discretion, within a reasonable period of time and
you, each of your affiliates and each owner of the Franchisee will execute a
general release, in form prescribed by us, of any and all claims, liabilities
and/or obligations, of any nature whatsoever, however arising, known or unknown,
against us and/or any or all of the Franchisor-Related Persons/Entities. You
must lease or sublease and develop such premises in compliance with
then-applicable standards utilized in the granting of franchises for a
Plantation Store and the term of the Franchise will be extended to coincide with
the initial term of the lease or sublease for the substitute premises. Any such
relocation shall be at your sole expense.
5. DEVELOPMENT AND OPENING OF YOUR STORE
5.1 LEASE OR SUBLEASE OF PREMISES OF YOUR STORE. You will,
contemporaneously with the execution of this Agreement or such later date
specified by us, lease or sublease the premises of your Plantation Store
identified in Section 2.1 in the form and manner prescribed by us and deliver a
copy of such executed lease or sublease to us immediately after execution
thereof. We have the right to review and consent to any lease or sublease for
the premises of your Plantation Store. You agree not to execute any lease or
sublease which has not been consented to in writing by us. We may require that
the premises of your Plantation Store be subleased directly from us or our
affiliate according to the terms of our, or our affiliate's, standard form of
sublease or, at our option, that the lease obtained by you be collaterally
assigned to us pursuant to the terms of our standard collateral assignment of
lease form.
11
<PAGE> 12
Any lease or sublease for the Premises must be reasonably satisfactory
to us and must, in any event, contain all of the following provisions, each of
which you agree is reasonable:
(a) Providing us with the right, at our sole option at any time and
without further consideration, to receive an assignment of your leasehold
interest and take possession of the Premises, whether on termination,
cancellation, recission or expiration of your rights under any lease/sublease or
under this Agreement or otherwise, in each case without the lessor's or
sublessor's consent and specifying that the lessor/sublessor will accept us as a
substitute tenant on notice from us that we are exercising our rights. (If we
exercise this option and you, and each affiliate of yours, are not in default,
or under notice of default, and if your rights have not been terminated or
expired, under this Agreement or any other agreement with us or any affiliate of
ours, we'll sublease the Premises to you on the same terms as we lease it,
subject to our usual security deposit and other conditions.) You agree to do all
acts necessary or appropriate to accomplish such assignment, on our request and
will, at the same time you sign this Agreement, sign the Collateral Assignment
of Lease attached hereto;
(b) Obligating the lessor/sublessor to provide us with all sales and
other information it may have, whether provided by you or otherwise, related to
the operation of your Plantation Store;
(c) Evidencing your right to operate your Plantation Store in accordance
this Agreement and the Manuals, subject only to the provisions of applicable
law;
(d) Prohibiting you from subleasing or assigning all or any part of your
rights, extending the term or renewing or modifying the lease without our prior
written consent, which may be withheld in our sole and absolute discretion;
(e) Requiring the lessor/sublessor to concurrently provide us with a
copy of any written notice of default under the lease sent to you and granting
us the right (but without any obligation on our part) to cure any default under
the lease, if you fail to do so, within fifteen (15) days after the expiration
of the period in which you can cure the default and then, at our further option,
to receive an assignment of your leasehold interest but without any liability
for any other defaults of yours;
(f) Providing that the premises will be used only for the operation of a
Plantation Store pursuant to a Franchise Agreement with us in good standing;
(g) Providing that any default by the Franchisee under this
12
<PAGE> 13
Agreement or any other agreement with us (or any of our affiliates) may, at our
option, constitute a default under the lease (you agreeing that any default by
you under the lease may, at our option, constitute a default under this
Agreement); and
(h) Providing that no sale, assignment or transfer of your leasehold
interest will be approved or otherwise consented to, or any change, addition, or
other modification to the lease or other instruments be made, without obtaining
our prior written consent.
You won't execute a lease or sublease, or any modification or amendment,
without our prior written consent, which we can withhold in our sole and
absolute discretion. You'll deliver a copy of the signed lease or sublease to us
within five (5) days after it's signed. If you own the Premises and we request,
you'll enter into a lease with us for a term equal to the term of the Franchise
(with matching renewal options) on commercially reasonable terms, and will
sublease the Premises from us on the same terms as the prime lease.
If such provisions are not included in the lease or other instruments,
we may, without liability and at our sole option at any time (a) require that
you immediately cause such provisions to be inserted or (b) terminate your
rights and our obligations under this Agreement. If you own (or acquire) the
Premises, you will enter into arrangements with us granting us benefits
substantially identical to those set out above.
YOUR INITIALS: __________ / __________
5.2 DEVELOPMENT OF YOUR PLANTATION STORE. Unless we exercise our option
to provide store development services by us or an affiliate (which we have no
obligation to do), we'll furnish you with (and may update from time-to-time)
specifications and other requirements for design, decoration, layout, equipment,
furniture, fixtures, signs and other items for Plantation Stores (the
"Plantation Store Design Specifications"), with which you'll promptly comply.
You agree that the Plantation Store Design Specifications are an integral part
of the System and that your Plantation Store will be developed, constructed,
designed and operated in full compliance with the latest Plantation Store Design
Specifications at all times.
We may require you to use our services (or those of an entity we
designate) as your agent (and at your sole expense) to develop, build-out, etc.
your Plantation Store, pursuant to the terms and conditions, and including the
compensation and other arrangements, of our then-current Store Development
Agreement, but we have no obligation to provide such services until and
13
<PAGE> 14
unless we require you to sign such Agreement. Your Plantation Store Development
Agreement will set forth the fee paid to us (or our affiliates) for its services
(the "Development Fee") and the parties' other responsibilities.
You won't make any commitments with respect to any location or operate a
Plantation Store and/or use the System or any of the Marks, from or at any
location (nor will you relocate your Plantation Store) until and unless we've
accepted such location. If there is any disagreement or dispute relating to any
aspect of your site, you and we will resolve it through good faith
mediation/arbitration as provided in this Agreement.
While we may, as a courtesy, assist you in evaluating or negotiating any
lease (or other documents or arrangements) or otherwise assist you in your
efforts to select and obtain a site by providing consultation, evaluation and/or
otherwise (including providing references to potential contractors, real estate
agents, site selection specialists and other professionals, some of whom may be
affiliated and/or associated with us), we strongly recommend that you have all
matters related to site selection and securing reviewed by your own independent
attorney, real estate broker, architect and other professionals retained by you.
While the selection of a site by you is subject to our reasonable consent, and
although this franchise may be awarded for a specific existing location, neither
we nor any company or person will recommend or approve any particular location
or any related services to you. Acceptance by us of any location is in no way a
recommendation, approval or endorsement of such location nor a representation or
warranty as to its legal or business availability, suitability, appropriateness,
success potential or otherwise and we cannot guarantee success for any location.
You're the only person and/or company with any liability or responsibility for
those decisions and matters.
In any case, you understand and agree that the selection and securing of
a site, the negotiation of a lease or purchase, the selection of developers,
real estate agents, site selection specialists, contractors, etc., financing and
all other matters related in any way to your site are exclusively and entirely
your sole and ultimate responsibility and that neither we, any of
Franchisor-Related Persons/Entities nor any other person or company affiliated
or associated with us in any way will have any liability or responsibility with
respect to any matters related in any way to the site for your Plantation Store,
including (but not limited to) site location, identification, evaluation,
selection, lease/purchase negotiation, financing, review of documents,
construction, build out, development, compliance with local requirements,
suitability for any use or purpose and/or any other aspect of the development
process (and any related steps)
14
<PAGE> 15
or otherwise, all such responsibilities being solely yours.
We will (unless you and we execute a Store Development Agreement) make
available to you standard plans and specifications to be utilized by you in the
construction or otherwise of your Plantation Store. You'll obtain, at your sole
expense, all further qualified architectural and engineering services to prepare
surveys, site and foundation plans and adapt any plans and specifications to
your location and all applicable laws, regulations and ordinances. Any changes
from plans provided by us must be submitted to us for our consent, which we may
grant, condition or withhold in our sole and absolute discretion. Neither we nor
any other person or company recommended by and/or affiliated in any way with us
will have any liability with respect to any plans, specifications and/or other
items/services provided to you and/or to be utilized by you in the construction
or otherwise of your Plantation Store, or any deviations or modifications
therefrom, nor with respect to the preparation, construction, operation or
otherwise of your Plantation Store, whether in accordance with standard plans or
otherwise, all such responsibilities being solely yours.
We make no representations, guarantees or otherwise as to the costs of
development and build-out (or otherwise) of your Plantation Store, the date on
which your Plantation Store will be open for business or otherwise, such matters
not being within our sole control.
You agree that without our ability to limit our (and others') liability
as set forth in this Agreement (and, in particular, this Section), we wouldn't
be willing to award this Franchise to you (and would consider developing the
location as a company-owned unit) or to be involved in any way in assisting you
in any of these matters.
YOUR INITIALS: __________ / __________
5.3 FIXTURES, EQUIPMENT, STOREFRONT, SUPPLIES AND SIGNS. Your Plantation
Store's initial fixtures, equipment and Storefront shall be part of our
development of your Plantation Store. Thereafter, you agree to use in the
operation of your Plantation Store only those fixtures, items of equipment,
supplies and signs that we have approved for a Plantation Store as meeting its
specifications and standards for appearance, function, design, quality and
performance and you further agree to place or display at the premises of your
Plantation Store (interior and exterior) only such signs, emblems, lettering,
logos and display materials that are from time to time approved in writing by
us, in each case at your sole cost and expense. If
15
<PAGE> 16
you propose to purchase, lease or otherwise use any fixture, equipment, supply
or sign which is not then approved by us, you shall first notify us in writing
and shall submit to us sufficient specifications, photographs, drawings and/or
other information or samples for a determination by us of whether such fixture,
equipment, supply or sign complies with its specifications and standards, which
determination shall be made and communicated in writing to you within a
reasonable time.
5.4 STORE OPENING. You won't open your Plantation Store for business
until: (1) we notify you that all of your pre-opening obligations have been
fulfilled; (2) pre-opening training of all of your personnel has been completed;
(3) all amounts then due us (or any affiliate) have been paid and all
pre-opening obligations of yours fully performed; and (4) we've been furnished
with copies of all insurance policies (or such other evidence of insurance
coverage and payment of premiums as we request) and leases/subleases as required
by this Agreement. You agree to use your best efforts to merchandise your
Plantation Store as soon as possible after obtaining possession of your
Plantation Store premises and to open your Plantation Store for business and
commence the conduct of its business by the period required by your lease or
sublease or, if sooner, within five (5) days after notice from us that it is in
suitable condition therefor. We will supply our employee who will assist you for
a period of up to seven (7) days in the opening of your Store and we may, in our
sole and absolute discretion, provide similar assistance for up to five (5)
additional days. In addition, we may provide our employee for such additional
days(s) as we deem appropriate in assisting you with the opening of your
Plantation Store. If you (or your affiliate) already own(s) a Plantation Store,
all pre-opening and opening assistance will be provided at our sole and absolute
discretion.
5.5 TERMINATION UPON YOUR FAILURE TO OPEN YOUR STORE. If you fail to
lease or sublease your Plantation Store premises as required by this Agreement,
or fail to proceed with the merchandising or fail to open your Plantation Store
by the date required in this Agreement, we, at our sole option, shall have the
right to terminate this Agreement effective upon giving written notice to you,
in each case with no refund of any amounts paid to us or any affiliate. In
connection with such termination, you will execute documents acceptable to us,
providing for (1) continuation of your indemnification, confidentiality and
non-competition obligations and the dispute avoidance and resolution provisions
of this Agreement, including those of Article 19, together with the provisions
of Article 23, and (2) a general release, in form prescribed by us, of any and
all claims, liabilities and/or obligations, of any nature whatsoever, however
arising, known or unknown, against us and/or
16
<PAGE> 17
any or all of the Franchisor-Related Persons/Entities.
YOUR INITIALS: __________ / __________
5.6 GRAND OPENING PROGRAM. You will spend at least One Thousand Dollars
($1,000) (we recommend $4,000) to conduct grand opening advertising and
promotions, such advertising and promotions (which must be approved in advance
in writing by us) to occur during a time period designated by us.
6. TRAINING AND OPERATING ASSISTANCE
6.1 TRAINING. Prior to the opening of your Plantation Store, we will
furnish, and you (or your controlling shareholder, general partner, managing
member or similar person if you are a business entity), shall attend, and
complete to our satisfaction, a training program on the operation of a
Plantation Store, furnished at such time and place as we may designate. Such
training will be given by us without charge, but you will be solely responsible
for the compensation of the trainee, as well as such trainee's travel, lodging
and personal expenses. Such initial training will consist of approximately
fifteen (15) days or such additional time as we may elect. If you (or your
affiliate) already own(s) a Plantation Store, all training will be provided at
our sole and absolute discretion.
Upon your successful completion of the training program, you may (at our
option) be permitted to train your Plantation Store managers. We do not have to
provide training for your Plantation Store managers but we can require that each
of your Plantation Store managers attend, and complete to our satisfaction, such
initial and ongoing training as we require from time-to-time. We may charge a
reasonable fee for training your Plantation Store managers.
You'll be responsible for all travel, living, incidental and other
expenses and compensation of you and your personnel attending any training
program.
If we, in our sole and absolute discretion, determine that you (or a
managing partner or shareholder consented to by us) have not successfully
completed (or are not making satisfactory progress in) your initial training, we
may cancel all of your rights (and all of our obligations) under this Agreement
and/or any other agreements with you and return the Initial Franchise Fee (less
$10,000 to cover our sales, training and other expenses, among other things) to
you, and you will return all manuals and you (and each affiliate of yours)
execute documentation providing for a general release, in a form
17
<PAGE> 18
prescribed by us, of any and all claims, liabilities and/or obligations, of any
nature whatsoever, however arising, known or unknown, against us and/or any or
all of the Franchisor-Related Persons/Entities and we will provide you with a
similar release, except that your indemnity, non-competition, confidentiality
obligations, and the dispute avoidance and resolution provisions of this
Agreement, including those of Article 19, together with the provisions of
Article 23, will be preserved, and at our option, if the premises were not
leased from us or our affiliates, you will assign the lease or sublets the
premises to us or our affiliates. We will not exercise this termination right
until you have had at least two (2) individuals (one of whom may be you) fail to
successfully complete training.
If, whether as a result of observations, test results or otherwise
during initial training or thereafter (including during operation of your
Plantation Store) we determine, in our sole and absolute discretion, that it's
appropriate, we can require that a manager or other person designated by us be
placed in your Plantation Store to supervise its day-to-day operations for the
purpose of assuring compliance with our standards and you will pay all costs in
connection therewith, including salary, normal corporate benefits, travel,
meals, lodging and incidental expenses.
You (or a managing partner or shareholder consented to by us) and your
Plantation Store manager must attend and successfully complete additional and/or
refresher training programs (if we designate them as mandatory) conducted at
location(s) specified by us, including national and regional conferences,
conventions and meetings, and your other employees may be required to attend
mandatory training programs presented by us at your Plantation Store. We may
charge a reasonable fee for any training programs, aside from the initial owner
training which is included in the Initial Franchise Fee.
6.2 HIRING AND TRAINING OF EMPLOYEES BY YOU. You (or a manager meeting
all of our training and other requirements) will hire all employees of your
Plantation Store, be exclusively responsible for the terms of their employment
and compensation and implement a training program for employees of your
Plantation Store in compliance with our standards. You agree to maintain at all
times a staff of trained employees sufficient to operate your Plantation Store
in compliance with our standards. You agree that all management personnel hired
by you may be required to sign an Employment Agreement containing
non-competition and confidential information covenants substantially similar to
those contained in this Agreement.
6.3 OPERATING ASSISTANCE. We will advise you from time to
18
<PAGE> 19
time of operating problems of your Plantation Store disclosed by reports
submitted to or visitations made by us. We will furnish to you such assistance
in connection with the operation of your Plantation Store as is from time to
time deemed appropriate by us. Operating assistance may consist of advice and
guidance with respect to:
1. methods and operating procedures to be utilized by a Plantation
Store;
2. additional Products and services authorized for a Plantation
Store;
3. purchasing of Products and supplies;
4. formulating and implementing advertising, merchandising and
promotional programs; and
5. the establishment of administrative, bookkeeping, accounting,
inventory control, sales training and general operating
procedures for the proper operation of a Plantation Store.
You understand and agree that all advice and guidance provided by us is
only supportive of the operation of your Plantation Store and that the overall
success of your Plantation Store is primarily dependent upon your business
abilities and efforts. We will not charge you for such operating assistance
unless such operating assistance is made necessary by your failure to comply
with this Agreement or if you request operating assistance in excess of what is
normally provided by us. Any such charges will be reasonable and payable upon
your receipt of an invoice for the same. In addition, we reserve the right to
impose, and you will pay, reasonable fines and penalties if you repeatedly
refuse or fail to comply with this Agreement and/our our standards and
specifications.
6.4 COMPUTER HARDWARE AND SOFTWARE SYSTEMS. Since the effective and
efficient operation of a Plantation Store may be intimately connected with the
use and maintenance of appropriate computer hardware and software systems, with
direct interconnection to (and access by) our computer hardware and software
systems, you must purchase, use, maintain and update computer and other systems
(including point-of-sale systems) and software programs which meet our
specifications as they evolve over time and which, in some cases, may only be
available through us and/or our affiliates. You must maintain your systems
on-line to provide full access for computer systems used by us and you must
promptly update and otherwise change your computer hardware and software systems
as we require from time-to-time, at
19
<PAGE> 20
your expense. We may require that all maintenance, support, upgrades, etc. be
performed by us, an affiliate or a supplier designated by us. You'll pay all
amounts charged by any supplier or licensor of the systems and programs used by
you, including charges for use, maintenance, support and/or update of these
systems or programs.
7. MANUAL
During the term of the Franchise, we will loan you (or allow you
electronic or other access to), one copy of a manual, which consists of one or
more manuals (hereinafter referred to as the "Manual"), for a Plantation Store
containing mandatory and suggested specifications, standards and operating
procedures prescribed from time to time by us for a Plantation Store and
information relative to your obligations hereunder. We can modify any aspect of
the Manuals, the Coffee Plantation(R) System or specifications, standards,
policies and procedures of Coffee Plantation Stores, to, among other things,
specify brands, types and/or models of equipment which must be used by you in
the operation of your Coffee Plantation Store, to specify changes in the
Products and Services used and/or offered by you, and/or to specify changes in
the decor, format, image, products, services, operations or otherwise of a
Coffee Plantation Store. You'll promptly and continuously comply, at your sole
expense, with all provisions of, and additions/deletions/changes to, the
Manuals. You have no expectation that the Manuals (and the Coffee Plantation(R)
System) will not be changed over time and you and we, in fact, anticipate that
such changes will take place, in response to competitive challenges, commercial
opportunities and otherwise. You'll keep your copy of the Manuals current by
immediately inserting all modified pages and (at our option) destroying or
returning to us all superseded material. In the event of a dispute about the
contents of the Manuals, the master copies maintained by us will be controlling.
Any such additions/deletions/changes will take precedence over all prior
communications and in the event of a dispute, the master Manuals maintained at
our office shall control. The provisions of the Manuals as modified from time to
time by us and communicated to you constitute provisions of this Agreement and
as such are binding upon you. The Manuals contain proprietary information of
ours and you agree to keep the Manuals and information contained therein
confidential at all times during and after the term of the Franchise.
YOUR INITIALS: __________ / __________
8. STORE IMAGE AND OPERATING STANDARDS
20
<PAGE> 21
8.1 CONDITION AND APPEARANCE OF YOUR STORE, PERIODIC UPGRADING. Because
your Store's full compliance with the Coffee Plantation System is a vital
component in the possible success of all Coffee Plantation outlets and can
directly affect the value of the Names and Marks and Trade Dress and their
associated goodwill, you agree that: (1) neither your Plantation Store nor the
Premises will be used for any purposes other than the operation of a Plantation
Store in full compliance with this Agreement and the Manuals; (2) you'll
maintain the condition and appearance of your Plantation Store, its equipment,
furniture, fixtures, signs, and the Premises in accordance with our
specifications and standards and consistent with the approved image of a
Plantation Store and as provided under the Manuals, as changed from time-to-time
and as an attractive, clean, convenient and efficiently operated specialty
retail food store offering high quality Products and efficient and courteous
Services; (3) you will perform such ongoing repair, maintenance and upgrading,
with respect to the decor, equipment, furniture, fixtures, signs and otherwise,
of your Plantation Store and the Premises, as may be required by us from
time-to-time to maintain its condition, appearance, and efficient operation,
including, without limitation: (a) thorough cleaning, repainting and
redecorating of the interior and exterior; (b) interior and exterior repair of
the Premises; (c) repair or replacement of damaged, worn out or obsolete
equipment, furniture, fixtures, signs and otherwise and as is required by your
lease or sublease; (4) you will not make any material alterations or
replacements to the Premises or other items, or to the appearance of your
Plantation Store as originally approved by us, without our prior written consent
and any approval that may be necessary under the lease or sublease for the
premises; and (5) you will place or display at the Premises (interior and
exterior) and on all other items only such signs, emblems, lettering, logos and
display and advertising materials that are from time-to-time designated by us;
in each case at your sole cost. You will use and display the Names and Marks and
Trade Dress only in such manner, and using such equipment and other systems, as
we authorize from time-to-time, in each case promptly complying with any changes
we may require, all at your sole cost and expense.
If at any time in our reasonable judgment the general state of repair,
appearance or cleanliness of the premises of your Plantation Store or its
fixtures, equipment or signs does not meet our standards, we will so notify you,
specifying the action to be taken by you to correct such deficiency. If you fail
or refuse to initiate within fifteen (15) days after receipt of such notice or
such lesser period required by the lease or sublease, and thereafter continue a
bona fide program to undertake and complete any such required maintenance, we
may, but will not be obligated, to enter upon the premises and effect such
repairs,
21
<PAGE> 22
painting and replacement of fixtures, equipment or signs on your behalf and you
will pay the entire costs therefor to us on demand.
We may, at intervals and to the extent determined by us in our sole and
absolute discretion, require you to upgrade your Plantation Store and the
Premises (including, but not limited to, remodeling, expansion, redecoration,
re-equipping, refurbishment and refurnishing the Premises, your Plantation Store
and changing any products and services offered) to meet our then-current
standards and requirements, which may require additional investment by you, and,
subject to approval by us of plans, layouts, designs and otherwise, and you will
promptly and fully comply with all such requirements.
YOUR INITIALS: __________ / __________
8.2 DESIGNATED EQUIPMENT, PRODUCTS AND/OR SUPPLIERS. The reputation and
goodwill of each Plantation Store is based on, and can be maintained only by,
the satisfaction of all customers who rely on the availability of a wide variety
of quality Designated Equipment, Products and Services, compliance with the
Coffee Plantation System and courteous and efficient service provided by all
employees of Plantation Stores. We've already specified, and plan to specify in
the future, various suppliers of Designated Equipment, Products and/or Services,
as well as other items, to be used or provided by Plantation Stores and that
meet our standards and requirements, in each case in our sole and absolute
discretion. Your Plantation Store will purchase/lease, use and offer all of, and
only, such types, brands and/or quality of Designated Equipment, Products and
Services as we designate and, where we so require, use only suppliers as
designated by us. Designated suppliers may include, and may be limited to, us
and/or companies affiliated with us. We may designate a single supplier or
limited number of suppliers, may designate a supplier only as to certain items
and may require concentration of purchases with one or more suppliers to obtain
lower prices, advertising support and/or other benefits in our sole and absolute
discretion. Specification of a supplier may be conditioned on requirements
relating to frequency of delivery, standards of service, including prompt
attention to complaints, or other criteria, and may be temporary, pending a
further evaluation of such supplier by us, in each case in our sole and absolute
discretion.
You shall at all times maintain an adequate and representative inventory
of Products, sufficient in quality, quantity and variety, to satisfy customer
demand and realize the full potential of your Plantation Store, as prescribed
from time
22
<PAGE> 23
to time by us. The inventory of your Plantation Store shall contain a full
inventory of each Coffee Plantation brand or other private brands of ours which
shall be given prominent display. We and our affiliates shall not have any
liability to you if we or they are at any time unable for any reason to offer
any Coffee Plantation brand or other brand of Products for purchase by you or at
competitive prices. The Products may be offered by an affiliate of us.
You'll notify us in writing (and submit to us such information,
specifications, and samples as we request) if you propose to purchase, use or
offer any type, brand and/or quality of items that have not been previously
specified by us, or if you propose to use any supplier who has not been
previously specified by us for the proposed item and will arrange for
pre-payment of reasonable charges connected with our review and evaluation of
any proposal. We'll notify you within a reasonable time whether or not you're
authorized to purchase or use the proposed type, brand and/or model of such
items or to deal with the proposed supplier. We may, from time-to-time, withhold
and/or revoke our approval of particular items or suppliers in our sole and
absolute discretion and business judgment. On receipt of written notice of
revocation, you must immediately cease to sell or use any disapproved items and
cease to deal with or use items from any such suppliers, unless we, in our sole
and absolute discretion, direct otherwise.
You are prohibited from developing, creating, generating, owning,
licensing, leasing or otherwise utilizing any computer media and/or electronic
media (including but not limited to the Internet, world wide web, bulletin
boards, news group and/or Telnet) which may be used, or in any manner uses,
displays or utilizes the Coffee Plantation trademarks, tradenames, or other
commercial symbols or offers to sell or sells any of the Products and/or
services which are or may at a later date be offered for sale in Plantation
Stores. If you desire to utilize any computerized or electronic media in
conjunction with the operation of your Plantation Store, you must obtain our
prior written approval of such usage, and we may in our sole and absolute
discretion approve or not approve such usage. If we grant approval, we or our
affiliates will be the owners of and/or control the approved computerized or
electronic content and media.
YOUR INITIALS: __________ / __________
8.3 SPECIFICATIONS, STANDARDS AND OPERATING PROCEDURES. You agree that
the operation of your Plantation Store, continuously in compliance with our high
standards, is vitally
23
<PAGE> 24
important to us and other Coffee Plantation Franchisees and is a vital element
in the possible success of your Plantation Store, the Plantation Stores of other
Franchisees and of us and that a lack of uniform high standards can place all
Plantation operators at a competitive disadvantage and in a position of business
risk. Accordingly, you'll operate your Plantation Store, and use the Marks, in
prompt, continuous and full compliance with the Coffee Plantation(R) System and
the Manuals, as each is modified by us from time-to-time in our sole and
absolute discretion and without limitation, you promptly complying with each
such modification.
In particular, you'll promptly comply with all of our ongoing
requirements, standards and operating procedures relating to the operation,
appearance, function, cleanliness, menu, products, ingredients, days and hours
of operation, and otherwise of a Plantation Store (including, without
limitation, use of specified equipment, products, services, programs and
computer hardware and software), and with our other requirements for a
Plantation Store, as they may be developed or changed by us from time-to-time in
our sole and absolute discretion. You'll purchase, use and offer each of the
systems, services, equipment and products designated by us and, where we so
require, use only suppliers authorized by us and will not use or offer any
systems, services, equipment, products or suppliers not specified by us.
Mandatory specifications, standards and operating procedures prescribed from
time-to-time by us in the Manuals, or otherwise communicated to you, will
constitute provisions of this Agreement as if fully set forth herein. All
references to this Agreement include all such mandatory specifications,
standards and operating procedures.
YOUR INITIALS: __________ / __________
8.4 SUPPLIERS OF SPECIALTY COFFEE. In recognition that the quality and
uniformity of the specialty coffee and tea carried by Plantation Stores is of
paramount importance to the reputation and goodwill of Plantation Stores, you
must purchase all coffee offered at your Plantation Store from us or an
affiliate of ours. In the event our affiliates cease supplying you with coffee,
we may designate a supplier or suppliers of coffee. In such event, in addition
to the criteria listed elsewhere in this Agreement, a proposed supplier must
also meet our criteria as to the size of the coffee bean, the method of
preparation of the bean, the region of origin of the bean, the quality of
flavoring used in bean preparation, the consistency of bean color and moisture
content after roasting, the type of packaging and the type of roaster used and
other standards as we designate from time-to-time in our sole and absolute
discretion.
24
<PAGE> 25
YOUR INITIALS: __________ / __________
8.5 USE OF SUPPLIES IMPRINTED WITH NAMES AND MARKS. You shall only use
displays, boxes, bags, paper, forms, packaging materials, labels and other
Products and supplies imprinted with the Names and Marks as prescribed from time
to time by us.
8.6 STANDARDS OF SERVICE. Your Plantation Store shall at all times give
prompt, courteous and efficient service to its customers. Among other things, we
may specify (and change from time-to-time) service standards and you will comply
with all then-current service and other standards. You and your Plantation Store
shall in all dealings with customers, suppliers and the public adhere to the
highest standards of honesty, integrity, fair dealing and ethical conduct.
8.7 PRODUCT STANDARDS. You shall not advertise, offer for sale, sell or
otherwise distribute any Products or other items which do not meet our
then-current standards. All reasonable complaints by your customers shall be
honored by you pursuant to the policies set-forth in the Manuals.
8.8 SPECIFICATIONS, STANDARDS AND PROCEDURES. You agree to comply with
all specifications, standards and operating procedures (whether contained in the
Manuals or any other document or notice and as issued and/or changed by us from
time-to-time in our sole and absolute discretion) relating to the operation of a
Plantation Store, including, without limitation, those relating to:
1) recipes, preparation procedures and authorized ingredients;
2) type, quality and shelf life of Products offered;
3) Product dating programs, including removal of "out of date"
Product;
4) merchandising techniques;
5) the safety, maintenance, cleanliness, function and appearance of
the Plantation Store premises and its fixtures, equipment and
signs;
6) uniforms and aprons to be worn by and general appearance of
Plantation Store employees;
7) use of Names and Marks and Trade Dress;
25
<PAGE> 26
8) hours during which your Plantation Store will be open for
business;
9) use and retention of standard forms;
10) use and illumination of signs, posters, displays, standard
formats and similar items; and
11) identification of you as the owner of your Plantation Store.
You're required to participate in any and all programs which we elect to
utilize as operational tools in the operation of your Plantation Store. These
operational tools may include (but are not limited to) programs involving
customer satisfaction, quality control, operational standards, product standards
and the like (the "Programs"). The Programs may be created or developed by us,
our affiliates or by third parties and the content, duration and frequency of
the Programs will vary and will be determined solely by us. You will be required
to pay for the Programs and the costs will vary according to the program and
frequency of the program.
8.9 COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES. You shall secure
and maintain in force all required licenses, permits and certificates relating
to the operation of your Plantation Store and operate your Plantation Store in
full compliance with all applicable laws, ordinances and regulations. All
advertising and promotion by you shall be completely factual and shall conform
to the highest standards of ethical advertising. You agrees to refrain from any
business or advertising practice which may be injurious to our business and/or
the goodwill associated with the Names and Marks and Trade Dress and other
Plantation Stores.
8.10 MANAGEMENT OF YOUR PLANTATION STORE. Your Plantation Store must be
managed only by you, or a full-time manager, who (in each case) has successfully
completed our training and other requirements, which may change over time. The
employment of any full-time manager is subject to our prior approval.
Notwithstanding the employment of a full-time manager, you (or the Franchisee's
controlling owner if Franchisee is a business entity) must attend and complete
initial and any required ongoing training, unless waived by us, in our sole and
absolute discretion. If you have completed the Initial Training, you shall be
qualified to train your managers, unless we direct otherwise. If we, in our sole
and absolute discretion, determine that your full-time manager is not properly
performing his or her duties, you shall take such corrective measures as are
necessary to immediately rectify the situation. You shall keep us informed
26
<PAGE> 27
at all times of the identity of any employee(s) acting as full-time manager(s)
of your Plantation Store.
If you (or any affiliate) owns and/or operates more than one Plantation
Store, the manager of each of your Plantation Stores must have at least a twenty
five percent (25%) equity interest in such Plantation Store(s.) You will have 90
days to replace any 25% equity manager.
8.11 EXCLUSIVE RELATIONSHIP, RESTRICTIONS ON SIMILAR BUSINESSES DURING
FRANCHISE TERM AND AFTER TRANSFER, TERMINATION, EXPIRATION, REPURCHASE, ETC. You
and we share a mutual interest in avoiding situations where persons or companies
who are, or have been, Coffee Plantation Franchisees operate or otherwise become
involved with, a Similar Business, anywhere, either during the term of, or after
the termination or expiration, of your rights under, this Agreement.
This mutual interest exists since you and we both agree that (1) such
activities would, as a practical and realistic business matter, make use of
techniques, methods, systems and procedures learned by the operator while
he/she/it was a Coffee Plantation Franchisee, (2) the operation of a Similar
Business, irrespective of location or vicinity to any existing or future
Plantation Store, would inevitably draw on and benefit from the operator's
training and experience as a Coffee Plantation Franchisee, including techniques
not known to you or other operators prior to becoming a Coffee Plantation
Franchisee, (3) operation of such a business, and use of any such techniques,
methods, systems and procedures, would damage both us and other Coffee
Plantation Franchisees and unfairly limit reasonable expansion alternatives open
to us and our Franchisees, particularly in light of the limited number of goods
and services provided by us and our Franchisees and the limited number of
favorable locations or areas available, thereby placing us and other Coffee
Plantation operators at a competitive disadvantage, (4) there would be an
extreme difficulty and expense involved in accurately determining actual
financial impact from such activities by a current or former Coffee Plantation
Franchisee, (5) such activities would expose us and our Franchisees to a
strategy under which a person could acquire a Plantation franchise, learn all of
our methods of doing business including innovations by other Coffee Plantation
Franchisees, default under the franchise agreement or otherwise obtain
termination or expiration and then open an unlimited number of locations drawing
on their experience and training as a Coffee Plantation Franchisee, including
access to favorable locations, (6) the possibility of such occurrences would
discourage the free flow of information and innovation within the Coffee
Plantation(R) System, resulting in reduced growth and a decline in the value of
the investments made by us and our
27
<PAGE> 28
Franchisees in Plantation Stores and the System, making subsequent sales or
operation of Plantation franchises in the area of a Similar Business, or other
areas, extremely difficult and placing us and our Franchisees at a disadvantage
in the competitive marketplace, (7) such activities could reduce your level of
time and attention given to your operation of an Plantation Store and thereby
reduce its chances for success, and (8) such activities would constitute an
unfair and inequitable method of competition with us and other Coffee Plantation
Franchisees and is the type of behavior to which you (as a Coffee Plantation
Franchisee) would strenuously object if engaged in by another Coffee Plantation
Franchisee.
In addition, you acknowledge and agree that (1) you will receive
valuable training and confidential information throughout the term of the
Franchise, including, without limitation, information regarding our promotional,
operation, sales, and marketing methods and techniques and the System which was
not known to you before becoming a Coffee Plantation Franchisee, (2) we would be
unable to protect such confidential information and other information and
techniques against unauthorized use or disclosure, would be unable to encourage
a free exchange of ideas and information among Coffee Plantation Franchisees and
the goodwill and other assets of our business and those of other Coffee
Plantation Franchisees would be at risk if franchise owners and members of their
immediate families were permitted to hold interests in or perform services for a
Similar Business during or after the term of the Franchise Agreement, (3) your
ownership and/or operation of, or any other relationship with, a Similar
Business would necessarily benefit from, and be inconsistent with, your status
and obligations as a Coffee Plantation Franchisee and (4) the requirements of
this section have been expressly bargained for and are an express condition of
our award of the Franchise to you.
You acknowledge that you've considered, as reasonable business
alternatives, other franchise opportunities, as well as the possibility of your
entering our industry as a non-franchised participant (in each instance not
being subject to the restrictions of this Agreement), each of the restrictions
on competition contained in this Agreement (including, but not limited to, those
in this Section) are fair, reasonable and necessary for the protection of all
members of the Plantation family of companies, including you and your fellow
Coffee Plantation Franchisees and represent a reasonable balancing of the
legitimate long-term interests of us, you and other Coffee Plantation
Franchisees, and will not impose any undue hardship on you, since you have other
valuable opportunities, skills, experience, education and abilities unrelated to
the ownership and/or operation of a Plantation Store and which will provide you
28
<PAGE> 29
with the opportunity to derive significant income from other endeavors.
Therefore, to protect your and our investments and those of all Coffee
Plantation Franchisees, you and we agree as follows: (1) during the term of this
Agreement (and any other Franchise Agreement with us) and any extension thereof,
and (2) for three (3) years after any transfer, repurchase, the termination
(whether for cause or otherwise) of your rights, the expiration of this (or any
other) Agreement (without award of an Additional Term), and/or the date on which
you cease to operate your last Plantation Store, whichever is later, neither
you, any affiliate of yours, nor any shareholder or partner of yours (in the
event you are or become a corporation or partnership), nor any member of your
immediate family nor any member of the immediate family of any affiliate,
shareholder or partner of yours will [except for Plantation Stores operated in
good standing under franchise agreements with us]: (a) have any direct or
indirect interest as a disclosed or beneficial owner in any Similar Business
located, or operating units located, anywhere; (b) have any direct or indirect
interest (whether through a member of the immediate family of yours or any owner
of you, or otherwise) as a disclosed or beneficial owner in any entity which is
awarding franchises or licenses or establishing joint ventures or other business
enterprises for the operation of Similar Businesses located, or operating units
located, anywhere; (c) perform services as a director, officer, manager,
employee, consultant, representative, agent, or otherwise for any Similar
Business or any entity which is awarding franchises or licenses or establishing
joint ventures to operate Similar Businesses anywhere; or (d) directly or
indirectly employ, or seek to employ, any person who is employed by us or any
affiliate or by any other Coffee Plantation Franchisee, nor induce nor attempt
to induce any that person to leave said employment without the prior written
consent of us and that person's employer; provided that if the foregoing
restriction regarding our and the employer's consent is unenforceable, you will
first notify us and that employer before taking any action with respect to any
such employment or offer of employment. You confirm that prior to entering into
the franchised business you possessed (and still possess) valuable skills
unrelated to the franchised business, have the ability to be gainfully employed
in other fields entirely acceptable to you and that the strict enforcement of
the restrictions of this Agreement will not work any undue or significant
hardship on you or your family.
If any of the restrictions of this Section are determined to be
unenforceable due to excessive duration, geographic scope, business coverage or
otherwise, you and we agree that they will be reduced to the level that provides
the greatest restriction
29
<PAGE> 30
but which is still enforceable, notwithstanding any choice-of-law or other
provisions in this Agreement to the contrary. The time period of the competitive
restrictions described in this Agreement will be extended by the length of time
in which you or any other person or entity are in breach of any provision of
this Agreement (including the limitations of this Section.) The provisions of
this Section will continue in full force and effect through the extended time
period. The restrictions of this Section don't apply to the ownership of shares
of a class of securities listed on a stock exchange or traded on the
over-the-counter market that represent less than three percent (3%) of the
number of shares of that class issued and outstanding. If you violate any
obligations under this Agreement (or otherwise) with respect to a Similar
Business, our remedies will include (but are not limited to) the right to obtain
a temporary restraining order, preliminary and/or permanent injunction (or other
equitable relief), notwithstanding any provisions to the contrary.
On our request, you will obtain written non-competition commitments from
the persons subject to the non-competition provisions of this Agreement, in such
form as we direct and naming you and us as beneficiaries of such agreements.
If the restrictions of this Section are unenforceable or are reduced to
a level which we, in our sole and absolute discretion, find unacceptable, we
may, in addition to any other remedies available to us, require you to pay a fee
(either paid immediately on a present value basis or over time, as we select) of
one-half (1/2) of the royalties and marketing contributions which would be
payable if the business in question was a franchised Plantation Store, for three
(3) years, such amount having been jointly selected by you and us as fair and
appropriate damages and in consideration of (1) the difficulty of accurately
predicting actual damages, (2) the fact you will inevitably benefit in the
operation of such business from your training and experience as a Coffee
Plantation Franchisee, (3) the possible impact on the expansion and operation of
our system, including the expense and difficulty of a sale of a franchise in
your area and (4) you not having any rights, nor we having any obligations,
under this Agreement or otherwise during such period.
YOUR INITIALS: __________ / __________
8.12 INSURANCE. You'll maintain in force policies of insurance issued by
carriers approved by us covering various risks, as specified by us, including
(but not limited to) the following: (1) comprehensive general liability
insurance against
30
<PAGE> 31
claims for bodily and personal injury, death and property damage caused by, or
occurring in conjunction with, your Plantation Store, under one or more policies
of insurance containing minimum liability coverage prescribed by us from
time-to-time; (2) all risk property and casualty insurance for the replacement
value of your Plantation Store and all associated items (including, but not
limited to, leasehold improvements, furniture, fixtures, equipment, signs,
inventory, supplies, and materials) and (3) business interruption insurance
providing for continued payment of all amounts due (or to become due) us and/or
any affiliate of ours under this Agreement or otherwise.
For your information, our current insurance requirements (which can be
changed by us at any time in our sole and absolute discretion and with such
changes you'll promptly comply) for your Plantation store include the following:
Type of Insurance Limits and Other Details
Property Direct risks of physical loss (special form) including
Earthquake Sprinkler Leakage if the building is
sprinklered. Coverage to include contents, building (if
owned or required by lease) and business income [50%
co-insurance or loss of earnings at 12 months including
Extra Expense]
Commercial General Liability $2,000,000 General Aggregate
$2,000, 000 Products Aggregate
$1,000,000 Each Occurrence
$1,000,000 Personal Injury/Advertising Injury $5,000
Medical Payments
$50,000 Fire Legal
Workers' Compensation Statutory
$1,000,000 Employer's Liability
Automobile $1,000,000 Bodily Injury/Property Damage
$1,000,000 Uninsured Motorist
$5,000 Medical Payments
(Covered Autos: All Owned, Leased, Non- Owned
and Hired Vehicles)
We may periodically specify the types and amounts of coverage required
under such insurance policies and require different and/or additional kinds of
insurance at any time,
31
<PAGE> 32
including excess liability insurance. Each insurance policy must name us, our
affiliates and the Franchisor-Related Persons/Entities as additional named
insureds, will contain a waiver of all subrogation rights against us, our
affiliates, the Franchisor-Related Persons/Entities and any successors and
assigns, and will provide for thirty (30) days' prior written notice to us of
any material modifications, cancellation, or expiration of such policies.
Prior to the expiration of the term of each insurance policy, you'll
furnish us with (1) a copy of each renewal or replacement insurance policy to be
maintained by you for the immediately following term and (2) evidence of
pre-payment of the premium. If you fail to maintain required insurance coverage,
or to furnish satisfactory evidence thereof and the payment of the premiums
therefor, we, in addition to our other rights and remedies hereunder, may (but
aren't required to) obtain such insurance coverage on your behalf and you'll
fully cooperate with us in our efforts to obtain the insurance policies,
promptly execute all forms or instruments required, allow any required
visitations of your Plantation Store, and pay to us, on demand, any costs and
premiums incurred by us.
Your obligations to maintain insurance coverage will not be affected by
reason of any separate insurance maintained by us, nor will the maintenance of
such insurance relieve you of any obligations under this Agreement or otherwise.
8.13 FRANCHISEE ADVISORY COUNCIL. We will actively encourage the
formation of a Franchisee Advisory Council to be selected by all Coffee
Plantation(R) Franchisees and we will periodically meet with such Council to
consult with and advise us regarding the operation and development of the Coffee
Plantation(R) System, including such matters as strategic marketing plans,
advertising programs, public relations, research and development, operating
policies and practices, program development, etc. We'll give appropriate
consideration to all input from such Council but retain the ultimate authority
and responsibility for all such decisions.
8.14 PROGRAM PARTICIPATION. We may impose conditions on your
participation in any program, whether with suppliers or otherwise (including,
but not limited to, any program involving payments from third party suppliers),
as we determine in our sole and absolute discretion, including, but not limited
to, our requiring you to be in compliance with such standards and qualifications
as we designate (in our sole and absolute discretion) and/or you (and each
affiliate of yours) being a Plantation Franchisee in good standing and not in
default under this, or any other, agreement with us and/or any affiliate of
32
<PAGE> 33
ours.
YOUR INITIALS: __________ / __________
8.15 CONTINUED PAYMENT OF ROYALTIES AND OTHER OBLIGATIONS DURING
CLOSURE, ETC. You and we recognize that closure of your Plantation Store may
become necessary from time-to-time for remodeling, due to fire or other
casualty, governmental action, shopping center or street closure, etc. of
course, if your Plantation Store, the Premises or any significant assets used in
the operation of the franchise are damaged or become inoperable or if your
Plantation Store is closed for any reason, you will promptly undertake all steps
necessary to remedy such conditions and return your Plantation Store to full
operation as soon as possible. If any closure of your unit takes place for any
reason, you will immediately notify us, submit a plan for re-opening (with
discussion of budget, deadlines, possible relocation and subject to our
reasonable approval) and diligently take (at your expense) all steps necessary
to fully re-open your Plantation Store for business as soon as possible. In any
event, all financial obligations of yours to us or any affiliate, whether under
this Agreement or otherwise, will remain in full force and effect during such
closure and any amounts due or to become due us or any affiliate calculated
based on Gross Sales or similar amounts (such as percentage royalties,
percentage Marketing Fund Contributions, percentage rent, etc.) will continue to
be paid during such closure, as specified below. During any closure, weekly
Gross Sales will be assumed to be equal to the average weekly Gross Sales during
the 3 four-week periods (or shorter period if your Plantation Store was not open
for such 3 four-week periods) prior to such closure beginning. Since you will
continue to have this obligation to pay percentage and other amounts based on
average assumed Gross Sales (as well as your obligation to pay minimum amounts)
even though your Plantation Store is closed, you will maintain business
interruption insurance as provided in this Agreement or otherwise specified by
us.
YOUR INITIALS: __________ / __________
9. PROPRIETARY AND CONFIDENTIAL INFORMATION OF OURS
We have, and plan to develop and acquire from time-to-time, certain
confidential and proprietary information and trade secrets, including but not
necessarily limited to, the following categories (the "Confidential
Information"): (1) methods, techniques, specifications, standards, policies,
procedures,
33
<PAGE> 34
information, concepts, systems, and knowledge of and experience in the
development, operation and franchising of Plantation Stores; (2) marketing
programs for Plantation Stores; (3) specifications for, and suppliers of,
certain materials, equipment, furniture and fixtures for Plantation Stores; (4)
methods, procedures and techniques for preparing, marketing and presenting the
Products and Services; and (5) information regarding the Products and Services
authorized to be offered from, or used at, Plantation Stores. In any dispute
between you and us involving any question as to whether or not certain
information is, in fact, confidential and/or proprietary to us, or any related
issues, the burden of proof and the burden of going forward will be on you.
We'll disclose, to you, during training, in the Manuals and in guidance
and assistance furnished to you during the term of the Franchise, parts of the
Confidential Information needed for the operation of a Plantation Store, and you
may learn additional Confidential Information of ours during the term of the
Franchise. You will not acquire any interest in the Confidential Information,
other than the right to utilize it in the operation of a franchised Plantation
Store at the Premises and pursuant to this Agreement.
You acknowledge and agree that the Confidential Information is a
valuable asset of ours, includes trade secrets of ours and will be disclosed to
you solely on the condition that you will forever: (1) not use the Confidential
Information in any way other than the operation of your Plantation Store under a
Franchise Agreement in good standing with us; (2) maintain the absolute secrecy
and confidentiality of the Confidential Information during and after the term of
this Agreement; (3) not make unauthorized copies of any portion of the
Confidential Information; and (4) adopt and implement all reasonable procedures
prescribed by us from time-to-time to prevent unauthorized use or disclosure of,
or access to, the Confidential Information. Specifically, you will not sell,
rent or allow anyone to use any list of customers (such list being part of the
Confidential Information and our property) other than in connection with the
mailing of advertising materials approved by us for your Plantation Store. You
agree that any unauthorized use or duplication of any part of the Confidential
Information, including in any other business, would be an unfair method of
competition with us and other Plantation Store Franchisees.
So as to assist in the development of the Coffee Plantation System and
for the mutual benefit of all Plantation operators, we'll have the perpetual
right to use and to authorize our affiliates and/or other Plantation Stores to
use, and you'll fully and promptly disclose to us, all ideas, concepts, methods,
34
<PAGE> 35
techniques and otherwise relating to the development, marketing, operation
and/or otherwise of a Plantation Store, or which would be usable therein, which
are conceived or developed by you and/or your employees during the term of this
Agreement, in each case without compensation or other obligation.
You'll cause each of your employees, agents, principals and affiliates
to execute and deliver to you an agreement containing substantially the same
provisions as set forth in this Section, in a form or forms consented to by us.
An original of each executed Confidentiality Agreement will be available for our
inspection during business hours. You will, on our request, deliver to us copies
of any Confidentiality Agreement.
YOUR INITIALS: __________ / __________
10. MARKETING
10.1 MARKETING FUND. Our experience and business judgment is that a
unified marketing program, on both a local and broader level, is an essential
factor in the potential success of all Plantation Stores, to achieve top-of-mind
awareness in potential customers, to build and retain goodwill associated with
the Names and Marks thereby hopefully benefiting all Coffee Plantation
operators, to create improved brand loyalty among new and future customers and
to achieve a favorable retail position for all Plantation Stores. To maximize
the possibility of obtaining these goals, you and we have agreed to a marketing
program as follows:
We've instituted an advertising, publicity and marketing fund (the
"Marketing Fund") for such advertising, advertising-related, marketing and/or
public relations programs, services and/or materials as we, in our sole and
absolute discretion, may deem necessary or appropriate to promote Plantation
Stores. The Marketing Fund may be combined with any marketing fund otherwise
established for Plantation Stores and the funds merged for use in accordance
with this Agreement. You will contribute to the Marketing Fund three percent
(3%) of the Gross Sales of your Plantation Store (we may reduce or waive this
amount on an individual or other basis in our sole and absolute discretion.)
Marketing Fund Contributions will be calculated and paid at the same time, in
the same manner, and for the same periods, as royalty payments. We will cause
each Plantation Store owned by us or any affiliate to make contributions to the
Marketing Fund based on the contribution rate generally in effect at the time
such Plantation Store most recently came under our ownership. You understand
that, due to differing forms of Franchise Agreements or otherwise, some Coffee
Plantation Franchisees may
35
<PAGE> 36
have different Marketing Fund and/or other obligations than in this Agreement.
We will have sole and absolute discretion over all matters relating to
the Marketing Fund in any way, including (but not limited to) its management,
all financial matters, expenditures, receipts and/or investments by the
Marketing Fund, timing of expenditures, creative concepts, content, materials
and endorsements for any marketing programs, together with the geographic,
market, and media placement and allocation thereof. The Marketing Fund may be
used, in our sole and absolute discretion, to (among other things) pay costs of
new product development, menu boards and other signage, preparing, producing,
distributing and using marketing, advertising and other materials and programs;
administering national, regional and other marketing programs, purchasing media,
employing advertising, public relations and other agencies and firms; and
supporting public relations, market research and other advertising and marketing
activities, as well as any expenses associated with any Franchisee Advisory
Council(s), if those Councils, and such expenses, are approved by us in our sole
and absolute discretion. A brief statement regarding the availability of
information regarding the purchase of Coffee Plantation franchises may be
included in advertising and other items produced and/or distributed using the
Marketing Fund. Where approved by a majority of any Franchisee Advisory Council,
the Marketing Fund may also be used for research, secret shoppers, store
development testing and other purposes.
We can, in our sole and absolute discretion, arrange for services, goods
and otherwise, including (but not limited to) creative concepts, production,
placement, purchase of media, legal, accounting and other services, to be
provided to the Marketing Fund by us, any of the Franchisor-Related
Persons/Entities and our and/or their employees or agents, including
persons/entities who may be owned, operated, controlled by, and/or affiliated
with, us (such as an "in-house advertising agency") or who may be independent.
We may use the Marketing Fund to compensate and reimburse any of such
persons/entities (including ourselves) as we deem appropriate in our sole and
absolute discretion (including payment of commissions) and to compensate
ourselves and/or others for administrative and other services, materials, etc.
rendered to the Marketing Fund, provided that any compensation to us or any
affiliate will not be unreasonable in amount. While we are not required to
submit any proposed or other expenditures by (or any other matters relating to)
the Marketing Fund for approval by any Franchisee Advisory Council, if
Franchisor does submit any matters for approval and approval is granted by a
majority of such Franchisee Advisory Council, such approval will be final and
binding on you.
36
<PAGE> 37
You will participate in all marketing programs instituted by the
Marketing Fund or us but will retain full freedom to set your own prices, except
that we may, to the greatest degree permitted by applicable law, specify maximum
prices above which you will not sell or otherwise provide any goods or services
and you will comply with all such maximum prices. The Marketing Fund will, as
available, furnish you with marketing, advertising and promotional formats and
sample materials and may charge the direct cost of producing them plus shipping
and handling. We may, in our sole and absolute discretion, use the Marketing
Fund to pay the costs of advertising, advertising-related, marketing and/or
public relations programs, services and/or materials with respect to locations,
programs or concepts where Products and/or Services offered under the Name
and/or Marks are to be offered in conjunction with products and/or services
offered under other marks, including (but not limited to) any co-branding, dual
franchising or other programs, and any other franchised or non-franchised
alternative channel of distribution, whether controlled by us or not.
The Marketing Fund will be accounted for separately from our other funds
(but may be commingled with our other funds) and will not be used to defray any
of our general operating expenses, except for such salaries, administrative
costs, overhead and other expenses as we may reasonably incur in activities
related to the Marketing Fund and its programs (including, without limitation,
conducting market research, preparing advertising and marketing materials,
insurance, legal costs and collecting and accounting for the Marketing Fund.) In
any event, we may charge the Marketing Fund for attorney's fees and other costs
related in any way to our defense of any claims against us and/or any of the
Franchisor-Related Persons/Entities regarding the Marketing Fund or with respect
to collecting amounts due and/or expenditures by or from the Marketing Fund. We
may, in our sole and absolute discretion, spend in any fiscal year an amount
greater or less than the aggregate contributions to the Marketing Fund in that
year and the Marketing Fund may borrow from us or other lenders to cover
deficits of the Marketing Fund or cause the Marketing Fund to invest any surplus
for future use by the Marketing Fund. You authorize us to collect for remission
to the Marketing Fund any advertising or promotional monies or credits offered
by any supplier based upon purchases by you or otherwise. In any event, and
notwithstanding any designation by you, any provisions of this Agreement to the
contrary or otherwise, your Marketing Fund contributions may be applied, in our
sole and absolute discretion, to any obligations of you to us or any affiliate,
including (but not limited to) royalties, marketing contributions, purchases,
interest, rent or otherwise. All interest earned on monies contributed to, or
held in, the
37
<PAGE> 38
Marketing Fund may be retained in our General Account and/or applied and/or
expended by us as we determine in our sole and absolute discretion and is not
subject to the restrictions of this Agreement. A statement of monies collected
and costs incurred by the Marketing Fund will be prepared annually by us and be
furnished to you upon written request. We may (but are not required to) have
financial statements of the Marketing Fund audited and any costs in connection
therewith will be paid by the Marketing Fund. We will have the right to cause
the Marketing Fund to be incorporated or operated through an entity separate
from us as we deem appropriate in our sole and absolute discretion, and such
successor entity will have all rights and duties of ours relating to the
Marketing Fund.
Franchisor may (but is not required to) remit a portion of Marketing
Fund contributions back to a franchisee on such terms and conditions as
Franchisor determines in Franchisor's sole and absolute discretion, including
(but not limited to) reimbursement of local advertising expenditures made by a
Franchisee and Franchisor may waive and/or compromise claims for contributions
to, and/or claims against or with respect to, the Marketing Fund in Franchisor's
sole and absolute discretion, using the Marketing Fund to pay any such claims.
We will have sole and absolute discretion as to whether or not Franchisor takes
legal or other action against any franchisee who is in default of his or her
obligations with respect to the Marketing Fund (including obligations to make
contributions) or otherwise and whether a franchisee may be allowed to make
direct advertising expenditures in place of contributions to the Marketing Fund.
We have no obligation to ensure that expenditures by the Marketing Fund
in or affecting any geographic area or Plantation Store are or will be
proportionate or equivalent to the contributions to the Marketing Fund by
Plantation Stores operating in that geographic area or that any Plantation Store
will benefit directly or in proportion to its contribution to the Marketing Fund
or from the development of advertising and marketing materials and/or programs,
the placement of advertising or otherwise. We will have no obligation to cause
other Plantation Stores, licensees or outlets (some of which may be under
different arrangements) to contribute to the Marketing Fund, any cooperative or
engage in local marketing. You agree that we (and each of the Franchisor-Related
Persons/Entities) will not have any direct or indirect liability or obligation
to you, the Marketing Fund or otherwise with respect to the management,
maintenance, direction, administration or otherwise of the Marketing Fund. You
agree that neither we (nor any of the Franchisor-Related Persons/Entities) will
be liable for any act or omission, whether with respect to the Marketing Fund or
otherwise which is consistent with this Agreement or other
38
<PAGE> 39
information provided to you, or which is done in subjective good faith. You and
we, each having a mutual interest in, and agreeing on the critical practical
business importance of, your and our relationship being governed solely by
written instruments signed by the parties to be bound (and not having either of
us subject to the uncertainty and ambiguity inherent in the application of legal
or other concepts not expressly agreed to in writing by you and us), agree that
your and our rights and obligations with respect to the Marketing Fund and all
related matters are governed solely by the express terms of this Agreement and
that this Agreement (and the parties' relationship and all rights and
obligations with respect to the Marketing Fund) are not in the nature of a
"trust," "fiduciary relationship" or similar special arrangement and is only an
ordinary commercial relationship between independent businesspersons for their
independent economic benefit. We may maintain Marketing Fund assets in one or
more accounts designated as "trust accounts" (or similarly designated), for
purposes of protecting such assets from claims of third-party creditors or
otherwise, but such designation and/or treatment will not operate to create any
"trust," "fiduciary relationship" or similar special arrangement as to the
Marketing Fund, its assets or otherwise.
YOUR INITIALS: __________ / __________
10.2 MARKETING BY YOU. You shall submit for prior approval by us, any
and all advertising and promotional materials prepared by you for your
Plantation Store and you shall not use any disapproved or unapproved advertising
or promotional materials. You shall comply with any advertising requirements
contained in any lease or sublease for the premises of your Plantation Store.
All advertising and promotional materials including any computerized media or
electronic media used by you must be completely factual, comply with all
applicable laws and conform to the highest standards of ethical advertising and
policies prescribed from time to time by us.
You shall list and advertise your Plantation Store in the principal
classified telephone directory distributed within its primary trading area, in
such business classifications as we prescribe from time to time, utilizing our
standard classified telephone directory advertisement at your sole expense. When
more than one Plantation Store serves a metropolitan area, we may require all
such Plantation Stores to be listed in the classified directory advertisement
and you shall pay an equal share of the cost thereof.
39
<PAGE> 40
YOUR INITIALS: __________ / __________
11. STORE RECORDS AND REPORTING.
11.1 BOOKKEEPING, ACCOUNTING AND RECORDS, CASH REGISTER, COMPUTER AND
OTHER SYSTEMS. You'll establish and maintain at your own expense a bookkeeping,
accounting, recordkeeping and records retention system conforming to
requirements prescribed by us from time-to-time (including, without limitation,
requirements for timely entering of information into data bases of a computer
program designated by us and periodic printouts of reports generated by such
computer program).
Each transaction related to your Plantation Store will be processed on a
computer system as prescribed by us. You will use (and only use) the cash
register, computer and other systems (including hardware and software) as
designated by us from time-to-time in our sole and absolute discretion. We may,
from time-to-time in our sole and absolute discretion, designate different cash
register, computer and other systems for use in your Plantation Store and may
modify such systems, each of which you'll promptly and fully comply with at your
sole expense.
As directed by us, you will participate in our electronic reporting
system covering sales and other items, with direct interconnection to (and full,
on-line access by) our computer hardware and software systems. You will
continuously use, maintain and update electronic cash register, computer and
other systems (including point-of-sale systems) and software programs which meet
such specifications as we designate, from time-to-time and in our sole and
absolute discretion, and which, in some cases, may include components only
available from us, our affiliates and/or suppliers approved by us. You will
maintain your cash register, computer and all other systems on-line to provide
full access for computer systems used by us and you will promptly update and
otherwise change your electronic cash register, computer hardware and software
systems as we require from time-to-time in our sole and absolute discretion, at
your sole expense. We reserve the right to have full access to such electronic
cash register, computer and other systems and the sales information and data
contained therein and to retrieve, analyze, download, and use the software and
all data contained therein (as well as any other information reported to us) at
any time and as we determine in our sole and absolute discretion. You will
promptly and fully pay all amounts charged by any supplier or licensor (which
may be us and/or an affiliate) of the systems and programs used by you,
including charges for use, maintenance, support and/or update of these systems
or programs.
40
<PAGE> 41
We may require you to obtain specified computer hardware and/or
software, including, without limitation, a license to use proprietary software
developed by us or others and you agree to do so. Modification of specifications
for the components of the cash register, computer and other systems may require
you to incur costs to purchase, lease and/or license new or modified computer
hardware and/or software and to obtain service and support for the cash
register, computer and other systems during the term of this Agreement. We
cannot estimate the future costs of the cash register, computer and other
systems (or additions, modifications, maintenance or support) and your related
costs may not be fully amortizable over the remaining term of this Agreement.
You agree to pay all costs in connection with obtaining/maintaining/upgrading,
etc. the computer hardware and software comprising the cash register, computer
and other systems (and additions, modifications, maintenance or support). Within
sixty (60) days after you receive notice from us, you will obtain, install and
thereafter use the components of the cash register, computer and other systems
that we designate from time-to-time. We have the right to charge a reasonable
fee for the license, modification, maintenance or support of proprietary
software that we may license to you and other goods and services that we or any
affiliates furnish to you related to the cash register, computer and other
systems.
YOUR INITIALS: __________ / __________
11.2 REPORTS, FINANCIAL STATEMENTS AND TAX RETURNS. You will provide to
us the such information regarding the operation of your Plantation Store as we
specify from time-to-time and in the manner we designate, which may be either
through computer software that we specify, or faxed or mailed copies of reports
or documents, as designated by us, including through full, direct, on-line
access to your cash register, computer and other systems.
Our current information requirements (which we may expand or otherwise
change from time-to-time in our sole and absolute discretion) are as follows,
including receipt by us by the deadlines specified:
(1) within 24 hours of the end of each fiscal week a report of
Gross Sales by hard copy, electronically or otherwise as we designate;
(2) within seven (7) days after the close of each fiscal
four-week period (or otherwise as we require from time-to-time in our sole and
absolute discretion) forwarding (by hard copy, electronically or otherwise as we
designate) to us of "z" tapes and/or other information from your cash register,
together
41
<PAGE> 42
with a statement reconciling reports of Gross Sales and all amounts owed to us,
including (but not limited to) royalties, marketing fund contributions and
percentage rent;
(3) a report, as of the end of each fiscal four-week period (or
otherwise as we require from time-to-time in our sole and absolute discretion),
of Gross Sales, net sales, product costs, labor costs, inventory activity and
copies of the recap for the preceding fiscal four-week period by hard copy,
electronically or otherwise as we designate, together with copies of such other
information and supporting records as we designate. Such reports will be
maintained on the Premises for our inspection at any time but we may require you
to regularly submit such reports, no later than 10 days after the close of each
fiscal four-week period (or otherwise as we require from time-to-time in our
sole and absolute discretion);
(4) within twenty (20) days after the end of each twelve (12) or
sixteen (16) fiscal week period as determined by us, a period profit and loss
statement and a balance sheet for your Plantation Store, prepared, verified and
signed by you;
(5) within forty-five (45) days after the end of each fiscal year
of your Plantation Store, an unaudited fiscal year-end balance sheet, income
statement reflecting all year-end adjustments and statement of changes in
financial position, in each case for your Plantation Store, prepared in
accordance with generally accepted accounting principles consistently applied,
and verified and signed by you;
(6) within sixty (60) days after such returns are filed, exact
copies of your Plantation Store's state sales tax returns and those portions of
your tax returns relating to your Plantation Store; and
(7) on request by us, such other data, information and supporting
records for such periods as we from time-to-time require. Each report and
financial statement submitted by you' to us will be verified as correct and
signed by you personally if a sole proprietorship, by a partner if a
partnership, or by an executive officer if a corporation. We reserve the right
to require you, at your own expense, to have audited financial statements
prepared by a certified public accountant on an annual basis and presented to us
with such account's report.
You'll maintain and to furnish to us, on request, for the term of
this Agreement and any successor franchises, plus 3 years, complete copies of
(a) all records of or relating to your Plantation Store and (b) all income,
sales and other tax returns filed by you reflecting activities of your
Plantation Store, you
42
<PAGE> 43
hereby waiving any privileges with regard to any records and/or tax returns.
YOUR INITIALS: __________ / __________
12. NAMES AND MARKS AND TRADE DRESS
12.1 OWNERSHIP OF NAMES AND MARKS AND TRADE DRESS. Your right to use the
Names and Marks and Trade Dress is derived solely from this Agreement and is
limited to the operation of your Plantation Store in compliance with this
Agreement (and the Manuals) at the location and premises authorized hereunder,
and by all applicable standards, specifications and operating procedures
prescribed by us, in our sole and absolute discretion, from time to time during
the term of this Franchise. You agree that all usage of the Names and Marks and
Trade Dress, including usage on computerized or electronic media (including but
not limited to the World Wide Web, the Internet, Telnet, newsgroups, bulletin
boards, FTP, e-mail and the like) by you, and any goodwill established thereby,
belongs to, and shall inure to the exclusive benefit of, us. You further agree
that after the termination or expiration of the Franchise you will not directly
or indirectly at any time or in any manner identify you, any owner or other
business as a Plantation Store, a former Plantation Store or as a franchisee of
or otherwise associated with us, or use in any manner or for any purpose any of
the Names and Marks or Trade Dress, or other indicia of a Plantation Store.
12.2 LIMITATIONS ON YOUR USE OF NAMES AND MARKS AND TRADE DRESS. You
agree to use the Names and Marks and Trade Dress as the sole service mark and
trade name identification of your Plantation Store. You shall display a notice
in such form as we may prescribe that you are an independent owner of your
Plantation Store pursuant to this Agreement. You shall not use any of the Names
and Marks as part of any corporate name or with any prefix, suffix or other
modifying words, terms, designs or symbols (other than logos licensed to you
hereunder), or in any modified form, nor may you use any Names and Marks and
Trade Dress in connection with the sale of any unauthorized product or service
or in any other manner including via computerized media and electronic media not
explicitly authorized in writing by us. All bank accounts, licenses, permits or
other similar documents shall contain the actual name of the person or entity
owning your Plantation Store and may contain "d/b/a Coffee Plantation." You
shall obtain any fictitious name, assumed name or "doing business" registration
as may be required by law.
12.3 NOTIFICATION OF INFRINGEMENTS AND CLAIMS. You shall immediately
notify us of any apparent infringement of or
43
<PAGE> 44
challenge to your use of any of the Names and Marks and/or Trade Dress or claim
by any person of any rights in any of the Names and Marks and/or Trade Dress and
you shall not communicate with any person other than us and our respective
counsel in connection with any such infringement, challenge or claim. We shall
have sole and absolute discretion to take such action as we and they deem
appropriate and the right to exclusively control any litigation or Patent and
Trademark Office or other administrative proceeding arising out of any such
infringement, challenge or claim or otherwise relating to any Names and Marks
and/or Trade Dress. You agree to execute any and all instruments and documents,
render such assistance, and do such acts and things as may, in the opinion of us
or our counsel be necessary or advisable to protect and maintain our interests
in any litigation or Patent and Trademark office or other proceeding or to
otherwise protect and maintain our interests in any of the Names and Marks and
Trade Dress.
12.4 DISCONTINUANCE OF USE OF NAMES AND MARKS AND TRADE DRESS. If it
becomes advisable at any time, in our sole and absolute discretion, for you to
modify or discontinue the use of any of the Names and Marks and/or Trade Dress
or use one or more additional or substitute name(s), trademarks, service marks
or trade dress, you will promptly comply (at your sole expense) with our
directions to modify or otherwise discontinue the use of such Names and Marks
and/or Trade Dress, or use one or more additional or substitute names,
trademarks, service marks and/or trade dress, including (but not limited to)
replacement of all signage, etc. Neither we nor any of the Franchisor-Related
Persons/Entities will have any liability or obligation (whether of defense,
indemnity, expense reimbursement or otherwise) to you, and you agree to make no
claim, for, or in connection with, any modification, discontinuance or
otherwise, and/or any dispute regarding the Names and Marks and/or Trade Dress
and/or your and/or our rights in or to them. We make no guaranty that a
modification, discontinuance or otherwise may not be required, whether as a
result of expiration, termination or limitation of our rights to the Names and
Marks and/or Trade Dress or otherwise.
You understand that there is always a possibility that there might be
one or more businesses, similar to the business covered by the Franchise,
operating in or near the area(s) where you may do business or otherwise, using a
name, marks and/or trade dress similar to ours and with superior rights to such
name and/or marks as a result of prior use or otherwise. We strongly urge you to
research this possibility, using telephone directories, local filings and other
means, prior to your signing this Agreement, any other documents, expending or
paying any sums or making any commitments and you understand that if you fail to
do
44
<PAGE> 45
so, you are at risk.
YOUR INITIALS: __________ / __________
13. INITIAL FRANCHISE FEE
13.1 INITIAL FRANCHISE FEE, NON-REFUNDABLE. Your initial franchisee fee,
which will be paid to us on signing this Agreement, is Twenty Five Thousand
Dollars ($25,000.) The initial franchise fee is fully earned by us on signing of
this Agreement and is entirely nonrefundable (as are all amounts paid to us
and/or any affiliate) except for possible partial or other refund (in each case
at our sole option) as expressly provided in other Sections of this Agreement.
You understand that the initial franchise fee may not be same for all
franchisees and may take into account factors such as size of territory,
previous business relationship with us or otherwise.
YOUR INITIALS: __________ / __________
13.2 RELEASES. The execution of this Agreement will constitute, and you
(and each affiliate of yours, together with each owner of you, if you are a
business entity, and/or any affiliate of yours) will, as a condition to the
granting of this and/or any future or other Franchise, execute, in a form
prescribed by us, a general release, of any and all claims, liabilities and/or
obligations, of any nature whatsoever, however arising, known or unknown,
against us and/or any or all of the Franchisor-Related Persons/Entities,
excepting only (where so required by applicable law) those claims solely related
to the offer and sale of the new Franchise, you agreeing that it would be
inappropriate from a business standpoint to enter into further franchise
relationships with us while there might be a possibility of claims based on a
prior relationship. For example, if you own Franchises Nos. 1 and 2 and are
being awarded Franchise No. 3, the release by you would cover all matters other
than (where so required by applicable law) those solely related to the offer and
sale of Franchise No. 3. We can make no assurance as to whether additional or
future franchises may be granted to you or the prices, terms or conditions
relating thereto. If we should, through inadvertence or otherwise, fail to
require such separate release at any time, the execution of this Agreement, and
each Franchise Agreement after this one, will be regarded as the equivalent of
the granting of such releases. A copy of the release language currently required
by us (which we may modify in the future, in our sole and absolute discretion)
is attached as Exhibit 13.2
45
<PAGE> 46
YOUR INITIALS: __________ / __________
13.3 UPDATING OF AGREEMENTS. In addition, and in the interests of
consistency, efficiency of administration, improved ability to meet competitive
challenges and ongoing improvement of the Coffee Plantation(R) System (among
other things), on award of this or any other and/or subsequent Coffee Plantation
or other franchise to you (and/or any affiliate) by us (and/or any affiliate),
and/or as a condition to any transfer (as defined below) or relocation by you
(and/or any affiliate) and/or the award of any successor franchise to you
(and/or any affiliate), we may require that any or all existing franchise
agreement(s) with you (and/or any affiliate) be cancelled and the then-current
form of Coffee Plantation(R) Franchise Agreement(s) be executed (using the
then-current royalties, marketing fund contributions and other provisions) with
respect to each Plantation Store owned and/or operated by you (and/or any
affiliate), with appropriate modifications to reflect the facts that, for such
pre-existing units only: (a) no initial franchise fee will be charged and (b)
the expiration date of the initial term, and the duration of any successor
franchise, will not be changed with respect to such pre-existing units as a
result of your signing such new agreement(s). (For example, if your Franchise
Agreement for a pre-existing unit had an expiration date of January 1, 2005,
with a successor franchise expiring January 1, 2015, the expiration date of the
new Franchise Agreement for that pre-existing unit would be January 1, 2005,
with a successor franchise expiring January 1, 2015.)
YOUR INITIALS: __________ / __________
14. ROYALTY
14.1 ROYALTY - PERCENTAGE. Every fiscal week (or otherwise as we require
from time-to-time in our sole and absolute discretion), you'll pay us six
percent (6%) of the Gross Sales received or earned during the preceding fiscal
week or other period (weeks currently run from Sunday through Saturday, but we
can change this in our sole and absolute discretion.)
Royalties are to be received by us electronically or otherwise on the
5th day after each week for the preceding week (or otherwise as we require from
time-to-time in our sole and absolute discretion), subject to prior payment by
means of electronic funds transfer or otherwise as provided in this Agreement.
46
<PAGE> 47
YOUR INITIALS: __________ / __________
14.2 DEFINITION OF "GROSS SALES". As used in this Agreement, the term
"Gross Sales" shall mean and include all revenues, whether cash or credit and
whether or not such sales are made at or from the premises of your Plantation
Store or any other location, including, if approved by us via computerized or
electronic media, (but excluding sales tax collected and paid when due to the
appropriate taxing authority and actual customer refunds, adjustments and
credits) which are, or could be, received or earned (1) by or with respect to
your Plantation Store, (and/or at or from the Premises) (2) by you (or on/for
your behalf or benefit) and which relate to the type of products, services or
any other items which are or could be provided, sold, rented or otherwise
distributed at, through or in association with a Plantation Store and/or (3) by
you (or on your behalf or for your benefit) with respect to products and
services which are, or could be, provided, sold, or otherwise distributed in
association with any use of the Names and Marks, the Trade Dress, the Plantation
System, or any related techniques, systems, procedures, or know-how or the
operation of any Similar Business. All transactions will be recorded at full
list retail selling price and without discount. You'll not divert any business
or take any other actions (or fail to take any actions) which would have the
effect of reducing the Gross Sales with respect to which royalties are payable
and you will use your best efforts to maximize Gross Sales. All sales and/or
billings, whether collected or not, will be included in Gross Sales, with no
deduction for credit card or other charges.
YOUR INITIALS: __________ / __________
14.3 PAYMENT OF ROYALTY AND MARKETING FUND CONTRIBUTION, ELECTRONIC
FUNDS TRANSFER. You must participate in our then-current electronic funds
transfer program authorizing us to utilize a pre-authorized bank draft system on
a weekly basis (or otherwise as we specify from time-to-time in our sole and
absolute discretion.) All royalties, Marketing Fund Contributions and other
amounts due us (or any affiliate) for each period must be received by us (and
such affiliate) or credited to our (or our affiliate's) account by
pre-authorized bank debit before 5:00 p.m. on the 5th day after each week or
other point in time specified by us. We may, from time-to-time, specify periodic
amounts for regular electronic or other transfer to our (or our affiliate's)
account, based on past reports of sales by you and reasonable expectations of
royalties, Marketing Contributions and other amounts to become due from you. You
will
47
<PAGE> 48
participate in our then-current electronic reporting and collection system
covering sales and other items.
YOUR INITIALS: __________ / __________
14.4 INTEREST AND LATE FEES ON LATE PAYMENTS AND/OR REPORTS. All amounts
you may owe us and/or our affiliates will bear interest at the highest
applicable legal rate for open account business credit, but not to exceed one
and one-half percent (1.5%) per month. You'll pay a late fee of Three Hundred
Dollars ($300.00), plus $50.00 per day, for each report and/or each payment
received by us after its due date. You agree to pay a dishonored check fee of
Two Hundred Dollars ($200.00), for each dishonored check tendered by you.
Notwithstanding any provision in this Agreement to the contrary, in no event
will any amounts be charged as late fees or otherwise which exceed or violate
any applicable legal restrictions. Each of the foregoing amounts will be subject
to adjustment for inflation, as set forth in this Agreement.
14.5 APPLICATION OF PAYMENTS, SET-OFFS ETC. Except for payments
appropriately designated by you as payable to the Marketing Fund, we (and/or any
affiliate) can apply any payments received from you, whether designated as
payable to us or otherwise, to any past due or other indebtedness of yours (or
any affiliate of yours) for royalties, marketing contributions, purchases,
interest or otherwise as we choose in our sole and absolute discretion. We
(and/or any affiliate) can set off, from any amounts that may be owed to you (or
any affiliate of yours), any amount that you owe to us (and/or any affiliate) or
with respect to any marketing contribution. We can retain any amounts we have
received for your account (whether rebates or other funds and whether paid by or
due from suppliers or otherwise), as a credit and payment against any amounts
that you (or any affiliate of yours) owe or will owe to us (or any affiliate) or
with respect to any marketing contribution, without notice and at any time.
YOUR INITIALS: __________ / __________
14.6 INFLATION ADJUSTMENTS. Where so designated in this Agreement with
respect to certain amounts, such amounts will be adjusted as of July 1 of each
year, the first adjustment to be made as of the July 1 after the date of this
Agreement, (the first "adjustment date") in proportion to the changes in the
Consumer Price Index (U.S. Average, all items) maintained by the
48
<PAGE> 49
U.S. Department of Labor (or such equivalent index as may be adopted in the
future) between March 30 of the preceding year and March 30 of the year in which
the adjustment is to be made. We will notify you of the percentage adjustment
between March 30 and July 1 of each year.
YOUR INITIALS: __________ / __________
15. IN-PERSON REVIEW, VISITATIONS AND AUDITS
15.1 IN-PERSON REVIEW. When and if requested by us, you and your
director of operations/manager will, at your expense, meet with our
representatives at our then-current headquarters or other location designated by
us, for the purpose of discussing and reviewing your Plantation Store's
operations, status, financial performance and other matters.
YOUR INITIALS: __________ / __________
15.2 OUR VISITATIONS, ETC. We and/or our agents will have the right, at
any time during business hours, and without prior notice to you, to: (1) inspect
the Premises, the Designated Equipment and other equipment, furniture, fixtures,
signs, operating materials and supplies; (2) observe, photograph and video tape
(or otherwise record) the operations of your Plantation Store for such periods
as we deem necessary in our sole and absolute discretion; (3) remove samples of
any items for testing and analysis; (4) interview personnel of your Plantation
Store; (5) interview customers and employees of your Plantation Store; (6)
inspect, and/or conduct, supervise or observe a physical count of, the inventory
and assets of your Plantation Store; and (7) inspect and copy any books,
records, documents or otherwise relating to your Plantation Store. You'll
cooperate fully with us in connection with such matters. You'll present to your
customers such evaluation forms as are periodically prescribed by us and will
participate and/or request your customers to participate in any surveys
performed by or on behalf of us.
We have the right to have confidential and undisclosed "shoppers" and/or
other individuals visit your Plantation Store and you will reimburse us for the
reasonable fees and costs incurred in connection with those activities and we
will share their reports with you.
YOUR INITIALS: __________ / __________
49
<PAGE> 50
15.3 AUDIT AND INSPECTION. We (and/or our designees, including any
landlord or its agent pursuant to the lease or sublease for the premises for
your Plantation Store) will have the right at any time during business hours,
and without prior notice to you, to inspect and/or audit the properties, assets,
premises, business records, bookkeeping and accounting records, sales and income
tax records and returns (you waiving all privileges with respect thereto), cash
register tapes, invoices, payroll records, check stubs and bank deposit
receipts, computer files and other records of, and/or relating in any way to,
your Plantation Store and the books and records of any person(s), corporation or
partnership which holds, or does business with, the Franchise. You'll fully
cooperate with our representatives and independent accountants/attorneys hired
by us to conduct any such inspection or audit. Our right to audit includes the
right to access all cash registers, computers and other equipment by electronic
means. In the event any inspection or audit discloses an understatement of Gross
Sales, you will pay to us, within five (5) days after receipt of the inspection
or audit report, the royalties and marketing contributions due on the amount of
such understatement, plus interest (at the rate and on the terms provided
herein) from the date originally due until the date of payment. If any
inspection or audit is made necessary by your failure to furnish reports,
supporting records, other information or financial statements, or to furnish
reports, records, information or financial statements on a timely basis, or if
an understatement of Gross Sales for any period is determined by any audit or
inspection to be greater than two percent (2%), you will reimburse us for the
cost of the inspection or audit, including, without limitation, the charges of
any independent accountants, and the travel expenses, room and board and
applicable per diem charges for our and their employees. Should any audit reveal
an intentional understatement of Gross Sales for any period in any amount, or an
understatement (whether intentional or not) of Gross Sales for any period to be
greater than five percent (5%), or any other violation of this Agreement, we may
terminate all of your rights, and our obligations, hereunder, in addition to
exercising any other remedies we may have. These remedies are in addition to all
other remedies and rights of ours hereunder or under applicable law, including
termination.
YOUR INITIALS: __________ / __________
50
<PAGE> 51
16. TERMINATION OF THE FRANCHISE.
16.1 DEFAULTS WITH NO RIGHT TO CURE. Your rights and our obligations
under this Agreement will automatically terminate on delivery [or, in any event,
on three (3) calendar days after mailing] of notice of termination to you
(without further action by us and without opportunity to cure) if: (1) you or
any of your owners fail, in the time provided in, or otherwise in accordance
with, this Agreement to: (a) locate a site accepted by us; (b) obtain lawful
possession of the Premises; or (c) develop and open your Plantation Store; (2)
you or any of your owners abandons or fails to operate your Plantation Store for
more than seven (7) calendar days in accordance with our then-current standards
and specifications or the lease or sublease for the premises, or surrenders or
transfers control without our prior written approval; (3) you or any of your
owners has made any material misrepresentation or omission in your application
for the Franchise, including (but not limited to) failure to disclose any prior
litigation or criminal convictions (other than minor traffic offenses); (4) you
or any of your owners is judged bankrupt, becomes insolvent, makes an assignment
for the benefit of creditors, is unable to pay his or her debts as they become
due, or a petition under any bankruptcy law is filed against you or any of your
owners or a receiver or other custodian is appointed for a substantial part of
the assets of your Plantation Store; (5) you or any of your owners is convicted
by a trial court of or pleads no contest to a felony, or to any crime or offense
that may adversely affect the reputation of the Franchisee or any owner or your
Plantation Store or the goodwill associated with the Names and Marks or engages
in any misconduct which unfavorably affects the reputation of the Franchisee or
any owner or your Plantation Store, us or the goodwill associated with the Names
and Marks (including, but not limited to, health or safety hazards, drug or
alcohol problems, or allowing unlawful activities or unauthorized or illegal
items to be used or distributed at the Premises or in connection with the
Franchise); (6) you or any of the Franchisee's owners makes an unauthorized
"transfer" (as defined in this Agreement); (7) you or any of the Franchisee's
owners makes any unauthorized use or disclosure of or duplicates any copy of any
Confidential Information, makes any unauthorized use of the Marks, or uses,
duplicates, or discloses any portion of the Manuals or you and/or any other
person/entity violates any restriction on ownership, operation, etc., of a
Similar Business; (8) you or any of the Franchisee's owners loses the right to
possession of the Premises and does not relocate your Plantation Store to other
premises in accordance with this Agreement; (9) you make any misrepresentation
to us or any affiliate, including any misrepresentation of Gross Sales or any
amounts due us or any affiliate; (10) you (and/or any owner and/or affiliate of
yours) file any legal action (including
51
<PAGE> 52
arbitration, but not including mediation) against us and/or any of the
Franchisor-Related Persons/Entities and do not receive a final judgment or award
substantially in your favor on the merits; (11) you have failed to retain (or
otherwise fail to produce on request) any records required to be maintained by
our record retention policy or otherwise are required for us to confirm your
compliance with the provisions of this (or any other) agreement; or (12) you
sell or have present in your Plantation Store for sale or otherwise any coffee
not purchased from us or our affiliate.
YOUR INITIALS: __________ / __________
16.2 DEFAULTS WITH RIGHT TO CURE. Your rights and our obligations under
this Agreement will automatically terminate on our mailing of notice of
termination to you (without further action by us and without further opportunity
to cure beyond that set forth in this section), if you, any of the Franchisee's
owners or any affiliate of any of the foregoing:
(1) fail to report accurately the Gross Sales of your Plantation
Store (or fail to submit, in fully accurate and complete form and when
required, any other report due under this Agreement, any lease/sublease
or otherwise) or fail to make payments of any amounts due us, any
affiliate and/or any supplier/creditor of yours and do not correct such
failure within ten (10) calendar days after written notice is mailed to
you;
(2) cause or permit to exist any default under the lease or
sublease for the Premises and fail to cure such default within the
applicable cure period set forth in the lease or sublease; fail to
remain current in your obligations to taxing authorities, landlords,
equipment lessors, suppliers or others; or fail to comply with any other
provision of this Agreement (or any other agreement with us and/or any
affiliate of ours) or any specification, standard or operating procedure
or rule prescribed by us not providing for a shorter notice period; and,
in any such case, do not: (a) correct such failure within thirty (30)
calendar days after written notice of such failure to comply is mailed
to you; or (b) if such failure cannot reasonably be corrected within
such thirty (30) day period, undertake within thirty (30) calendar days
after such written notice is mailed to you, and diligently continue
until completion, efforts to bring your Plantation Store into full
compliance and furnish, at our request, proof acceptable to us of such
efforts and the date full compliance will be achieved; provided that, in
any event, such defaults must be fully cured within ninety (90) calendar
days after such written
52
<PAGE> 53
notice is mailed to you
YOUR INITIALS: __________ / __________
16.3 REPEATED DEFAULTS. Your rights and our obligations under this
Agreement will terminate immediately upon notice to you and without opportunity
to cure, if you or any affiliate fails on two (2) or more separate occasions
within any period of twelve (12) consecutive months, or on three (3) or more
separate occasions within any period of twenty-four (24) consecutive months, to
comply with any provisions (whether the same or different) of this Agreement
(and/or any other agreement with us and/or any of our affiliates) and/or the
Manuals, whether or not such failures to comply are timely corrected.
YOUR INITIALS: __________ / __________
16.4 CROSS-DEFAULTS, NON-EXCLUSIVE REMEDIES, ETC. Any default by you (or
any person/company affiliated with you) under this Agreement may be regarded as
a default under any other agreement (including, but not limited to, any lease
and/or sublease) between us (or any affiliate of ours) and you (or any affiliate
of yours) and any default by you (or any person/company affiliated with you)
under any other agreement (including, but not limited to, any lease and/or
sublease) between us (or any affiliate of ours) and you (or any person/company
affiliated with you) may be regarded as a default under this Agreement, in each
case with us (and any affiliate of ours) to have all remedies allowed at law,
including termination of your rights (and/or those of any person/company
affiliated with you) and our (and/or our affiliates') obligations. No right or
remedy which we may have (including termination) is exclusive of any other right
or remedy provided under law or equity and we may pursue any rights and/or
remedies available.
YOUR INITIALS: __________ / __________
16.5 NO EQUITY ON TERMINATION, ETC. Your ownership of the Franchise is
controlled by the provisions of this Agreement and you will have no equity or
other continuing interest in the Franchise, any goodwill associated with it or
otherwise, or any right to compensation, return of amounts paid or otherwise, at
the expiration and/or termination of the term of the Franchise.
16.6 EXTENDED CURE PERIOD. Notwithstanding anything contained herein to
the contrary, where we have the right to
53
<PAGE> 54
[ARTICLE] 5
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COFFEE
PEOPLE, INC. ANNUAL FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[MULTIPLIER] 1,000
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUN-27-1998
[PERIOD-START] JUN-29-1997
[PERIOD-END] JUN-27-1998
<EXCHANGE RATE> 1
[CASH] 2,822
[SECURITIES] 0
[RECEIVABLES] 4,418
[ALLOWANCES] 1,156
[INVENTORY] 4,052
[CURRENT-ASSETS] 13,470
[PP&E] 15,637
[DEPRECIATION] 2,926
[TOTAL-ASSETS] 55,695
[CURRENT-LIABILITIES] 8,193
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 44,630
[OTHER-SE] (338)
[TOTAL-LIABILITY-AND-EQUITY] 55,695
[SALES] 29,016
[TOTAL-REVENUES] 35,051
[CGS] 19,296
[TOTAL-COSTS] 19,296
[OTHER-EXPENSES] 14,558
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 46
[INCOME-PRETAX] 1,466
[INCOME-TAX] 728
[INCOME-CONTINUING] 738
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 738
[EPS-PRIMARY] .09
[EPS-DILUTED] .09
<PAGE> 55
terminate this Agreement, we shall have the right, to be exercised in our sole
and absolute discretion, to grant to you, in lieu of immediate termination of
this Agreement, an extended period of time to cure the breach which gave rise to
our right to terminate, but in no event shall such extended cure period be less
than thirty (30) days, nor more than six (6) months, from the last day of the
cure period otherwise applicable to such breach. You acknowledge that our
election to grant such an extended cure period shall not operate as a waiver of
any of our rights hereunder and that, in consideration for and at the time of
such an extension, you and each owner and/or affiliate of yours will execute a
general release of all claims, known or unknown, by or on behalf of you and/or
any owner and/or any affiliate of yours against us and/or any or all of the
Franchisor-Related Persons/Entities and if you fail to execute such a release,
the grant of such an extension will, in itself, constitute such a release.
YOUR INITIALS: __________ / __________
16.7 MANAGEMENT OF THE STORE AFTER ISSUANCE OF NOTICE OF DEFAULT. If we
issue a notice of default, we will have the right, in addition to our other
rights and remedies, (but no obligation) to appoint a manager to operate your
Plantation Store until you have cured all defaults. In addition to all other
amounts due us and/or any affiliate and/or supplier, you will pay all costs in
connection therewith, including salary, normal corporate benefits, travel,
meals, lodging and incidental expenses during such management period. All funds
from the operation of the Plantation Store during the period of management by us
will be kept in a separate fund and all expenses of the Plantation Store,
including compensation, other costs and travel and living expenses of our
appointed manager, shall be charged to you and may be paid out of such fund.
Operation of the Plantation Store during any such period shall be for and on
behalf of you; provided that we shall only have a duty to utilize reasonable
efforts in the operation of the Plantation Store and shall, in any case, not be
liable to you for any debts, losses or obligations incurred by the Plantation
Store, or to any creditor of yours for any items purchased by the Plantation
Store during any period in which it is managed by us. In the event that the fund
maintained by us is insufficient to pay the expenses of the Plantation Store in
a reasonable business-like manner, we shall so notify you and you shall, within
five (5) business days, deposit in the fund such amounts as shall be required by
us to attain a reasonable balance in the fund. The provisions of this Paragraph
shall not restrict our right to terminate this Agreement as herein provided or
affect any of our indemnity or other rights.
54
<PAGE> 56
YOUR INITIALS: __________ / __________
16.8 OUR RIGHT TO DISCONTINUE PROVIDING PRODUCTS TO YOU AFTER ISSUANCE
OF NOTICE OF DEFAULT. if we issue a notice of default, and/or you fail to adhere
to our standard credit terms, or those of our affiliates, with respect to
payment for any goods and/or services, we and/or our affiliates may (1) require
you to pay C.O.D. (i.e., cash on delivery) by certified check until such time as
you correct all such problems or (2) cease providing items to you, in addition
to any other remedies we may have.
YOUR INITIALS: __________ / __________
16.9 OUR RIGHT TO TERMINATE THE FRANCHISE AND RETURN THE INITIAL
FRANCHISE FEE. At any time, and in our sole and absolute discretion, we may
elect to terminate all of your rights, and all of our obligations, under this
Agreement, any lease/sublease and/or otherwise and return to you the initial
franchise fee (or portion thereof) actually paid by you (without interest). In
such a case, you will perform thereafter each of your obligations under this
Agreement, any lease/sublease and/or otherwise with respect to termination
(including all post-term obligations of yours) wherever contained in this
Agreement, any lease/sublease and/or otherwise, including but not limited to
de-identification of your Plantation Store, and promptly deliver to us all
manuals and other material as provided in this Agreement or in the Manuals and
you (and each owner and/or affiliate of yours) will execute a general release,
in form prescribed by us, of any and all claims, liabilities and/or obligations,
of any nature whatsoever, however arising, known or unknown, against us and/or
any or all of the Franchisor-Related Persons/Entities. Your obligations
regarding indemnity and confidentiality and the provisions of this Agreement
relating to dispute avoidance and resolution (including but not limited to all
provisions of Article 19), and our rights with respect to receiving an
assignment of any lease and/or sublease, together with the provisions of Article
23, will survive any expiration, termination or cancellation of this Agreement
and we may take possession of the Premises; provided that in the event of
exercise of our rights under this sub-section, your post-term non-competition
obligations will be canceled and of no further force or effect.
YOUR INITIALS: __________ / __________
55
<PAGE> 57
16.10 EXECUTION OF RELEASE ON DEFAULT, ETC. In our sole and absolute
discretion, in any case where you have committed a default under this Agreement,
any lease/sublease and/or otherwise which would allow us to terminate your
rights, we may (but are not required to) waive our rights to collect any
royalties, advertising contributions and other amounts which would have become
due if you had continued in operation as a Coffee Plantation Franchisee and you
will, in consideration for such waiver, execute a general release, in form
prescribed by us, of any and all claims, liabilities and/or obligations, of any
nature whatsoever, however arising, known or unknown, against us and/or any or
all of the Franchisor-Related Persons/Entities. This option may be exercised by
us at any time, including before, at the same time as or after termination,
expiration or otherwise and whether or not you or we have made any claims, or
begun any proceedings, against the other or anyone else.
YOUR INITIALS: __________ / __________
17. RIGHTS AND OBLIGATIONS ON REPURCHASE, TERMINATION AND/OR EXPIRATION OF THE
FRANCHISE OR OTHERWISE.
17.1 TERMINATION OF RIGHTS AND OBLIGATIONS, PAYMENTS OF AMOUNTS OWED,
ETC. Repurchase, termination or expiration of this Agreement will constitute a
termination or expiration of all of your rights and all of our obligations.
You'll pay to us and each of our affiliates, within ten (10) days after the
effective date of any repurchase, termination or expiration of the Franchise, or
such later date that the amounts due are determined, such royalties, marketing
contributions, amounts owed for purchases or otherwise by you (or any affiliate)
from us and/or any affiliate, interest due on any of the foregoing, and all
other amounts owed to us (or any affiliate) which are then unpaid.
YOUR INITIALS: __________ / __________
17.2 MARKS, TRADE DRESS, PHONE LISTINGS, ETC. After any repurchase,
termination or expiration of the Franchise, you will: (1) not directly or
indirectly at any time or in any manner identify yourself or any business as a
current or former Plantation Store, or as a current or former franchisee of or
as otherwise associated with us, or use any Mark or any colorable imitation
thereof in any manner or for any purpose, or utilize for any purpose any trade
name, trademark or service mark or other commercial symbol that suggests or
indicates a connection or association with us; (2) remove all signs containing
any Mark
56
<PAGE> 58
and return to us or (at our option) destroy all forms and materials containing
any Mark or otherwise identifying or relating to a Plantation Store; (3) take
such actions as may be required to cancel all fictitious or assumed name or
equivalent registrations relating to your use of any Mark; (4) if you retain
possession of the Premises, you will, at your expense, make such modifications
and alterations, including removal of all distinctive signage, appearance,
physical and structural features associated with the Trade Dress of Plantation
Stores, as may be necessary or appropriate to distinguish the Premises clearly
from its former appearance and from other Plantation Stores as to prevent any
possibility that the public will associate the Premises with Plantation Stores
and any confusion created by such association, and (5) take all actions
necessary or appropriate to transfer any telephone number(s), and any telephone
directory listings, associated with the Marks and/or your Plantation Store to
us.
You acknowledge and agree that (1) we have the sole rights to, and
complete ownership of, all telephone or other service (including home page,
cellular and fax), numbers, directory listings, Internet or similar connections
(including all rights to any "home page" used by you) and/or advertising with
respect to, and/or used in connection with, your Plantation Store business
and/or associated with the Marks, (2) any direction by us is conclusive evidence
of our rights in and to any such service, numbers, directory listings and/or
advertising and (3) we shall have the sole and exclusive right and authority to
direct their amendments, transfers, call-forwarding, terminations or any matters
with respect thereto. You'll execute such documents, and do all other acts, as
may be required by us and/or any service provider to effect a transfer,
call-forwarding or otherwise to us [or such person(s) as we designates] of all
such service (including home page, cellular and fax), numbers, directory
listings and/or advertising; provided that we shall hold such documents until
the earlier of (a) we notify you that you (or any affiliate of yours) are in
default under this Agreement or any other agreement with us (or any affiliate of
ours), (b) this Agreement expires or is terminated, or (c) any repurchase.
You'll pay all amounts, whether due and payable or not, that any service
provider may require in connection with such transfer or otherwise and will sign
all releases and other documents (including those providing that you indemnify
and hold harmless any service provider and us) required by any service provider
and/or us in connection therewith. An Assignment of Phone Number form must be
executed prior to corporate training.
At our option, we may at any time require that any accounts covering any
telephone or other service, numbers, directory listings and/or advertising be in
our name rather than yours,
57
<PAGE> 59
with all billings to be sent to us [or such person(s) as we designate] but to be
paid by you within 10 days of submission to you. We may require that you
maintain a deposit with us [or such person(s) as we designate] sufficient to
cover 3 months of reasonably anticipated service, numbers, directory listings
and/or advertising, but in any event no less than $1500, subject to annual
adjustment for inflation as set forth in this Agreement.
We own the list of your customers and may use such list in any way we
wish, both before and after any termination, expiration, repurchase or
otherwise.
You authorize us, and hereby appoint us and any officer of ours, as your
attorney in fact, to direct the telephone company, other service providers and
all listing agencies to transfer the same to us or as we direct, should you fail
or refuse to do so, and such companies may accept this Agreement as conclusive
evidence of our exclusive rights in such telephone numbers, directory listings,
home pages and otherwise and its authority to direct their transfer.
You'll furnish to us, within thirty (30) days after the effective date
of termination or expiration, satisfactory evidence of your compliance with the
foregoing obligations.
YOUR INITIALS: __________ / __________
17.3 CONFIDENTIAL INFORMATION. You agree that on any repurchase,
termination or expiration of the Franchise (without award of a successor
franchise): (1) you will immediately cease to use any Confidential Information
of ours disclosed to or otherwise learned or acquired by you in any business or
otherwise; and (2) you will return to us all copies of the Manuals and any other
confidential materials which have been loaned or made available to you by us.
YOUR INITIALS: __________ / __________
17.4 COVENANT NOT TO COMPETE, CONTINUED CONFIDENTIALITY, ETC.
Notwithstanding any termination, transfer, expiration or repurchase, you'll
continue to observe the confidentiality, non-competition and other restrictions
of this Agreement, including (but not limited to) those of Section 8.11;
provided that if such non-competition restrictions are unenforceable or are
reduced to a level which we, in our sole and absolute discretion, find
unacceptable, we may, in the alternative, require you to pay a
58
<PAGE> 60
fee (either on a present value basis or over time, as we select) of one-half
(1/2) of the royalties which would be payable if the business in question was a
franchised Plantation Store, for the three (3) years after termination,
expiration or repurchase, such amount having been jointly selected by you and us
as fair and appropriate damages and in consideration of (1) the difficulty of
accurately predicting actual damages, (2) the fact you will inevitably benefit
in the operation of such business from your training and experience as a
Plantation Store Franchisee, (3) the possible impact on the expansion and
operation of our system, including the expense and difficulty of a sale of a
franchise in the area of operation of such a business and (4) you not having any
rights, nor we having any obligations, under this Agreement or otherwise during
such period.
YOUR INITIALS: __________ / __________
17.5 CONTINUING OBLIGATIONS. All obligations of yours and rights of
ours, including your obligation to pay royalties, advertising contributions and
other amounts, and the provisions of this Agreement with respect to dispute
avoidance and resolution (including, but not limited to, those of Article 19),
together with the provisions of Article 23, and all other obligations of yours
and rights of ours which expressly or by their nature survive the transfer,
repurchase, expiration or termination of this Agreement or the Franchise
(including, but not limited to, your indemnity, confidentiality and
non-competition obligations), will continue in full force and effect subsequent
to and notwithstanding its expiration or termination and until they are
satisfied in full or by their nature expire. All these obligations will apply
notwithstanding any rejection of this Agreement in a bankruptcy proceeding or
otherwise. In any event, our exercise of any rights of termination will not be
our sole remedy and where we have terminated our obligations and/or your rights
under this Agreement by reason of a default of yours, you will not be released
or discharged from, and will be required to pay, your obligations hereunder,
including your obligations to pay minimum and percentage royalties, advertising
contributions and other amounts which would have become due if you had continued
in operation as a Plantation Franchisee and our remedies will include (but are
not limited to) the right to collect the present value of such amounts as of the
date of such termination and to otherwise receive the benefit of our bargain
with you, as well as acceleration of the balances of all promissory notes and
other unpaid amounts owed to us or any affiliates of ours, you and we agreeing
that it would be unjust and damaging to the interests of all Plantation
operators and the integrity of the Coffee Plantation system if a Plantation
Franchisee could utilize a strategy under which he/she would
59
<PAGE> 61
default, have his/her rights to use the Names and Marks and System properly
terminated as a result of that default and then entirely escape any financial
consequences related to obligations accruing after the date of termination. If
you continue to operate your business, after termination or expiration, using
any of the Names and/or Marks or any aspect of the System, our remedies will
include (but will not be limited to) recovery of the greater of (a) all profits
or earned by you in the operation of your business after such termination or
expiration or (b) all royalties, advertising contributions and other amounts
which would have been due if such termination or expiration had not occurred. At
any time from the date of this Agreement through and including 120 days after
any termination, cancellation, recission, repurchase or expiration, for any
reason, of your and/or our rights under this Agreement, we may, at our option
and without further consideration, receive an assignment of your leasehold
interest under any lease/sublease of the Premises (and/or any other facilities
from which you operate your Plantation Store and in each case without the
lessor's or sublessor's consent), terminating your rights to the Premises and
assuming the balance of any lease or sublease.
YOUR INITIALS: __________ / __________
17.6 OUR RIGHT TO PURCHASE ANY OR ALL OF THE ASSETS OF YOUR PLANTATION
STORE AT ANY TIME (INCLUDING ON EXPIRATION OR TERMINATION) AT FAIR MARKET VALUE.
At any time (including, but not limited to, on termination by us of our
obligations and/or your rights under this Agreement, or on expiration of this
Agreement), we will have the option (but no obligation), exercisable by giving
written notice thereof, to purchase from you any or all of the assets used in,
or in connection with, your Plantation Store. We may give this notice any time
through ninety (90) days after the effective date of any termination or
expiration. Assets available for purchase by us will include, without
limitation, real property, leasehold interests and/or improvements, equipment,
furniture, fixtures, signs, inventory and/or the lease or sublease for the
Premises. If the premises were not leased to you by us or our affiliates, the
right to an assignment of your lease or sublease for the premises of your
Plantation Store (or, if assignment is prohibited, a sublease for the full
remaining term and on the same terms and conditions as your lease) will be
included as part of the purchase. We'll have the unrestricted right to assign
any option to purchase and/or any related rights. We'll be entitled to all
customary representations, warranties and agreements given by the seller of the
assets of a business, including, without limitation, representations and
warranties as to ownership, condition and title to assets, liens and
encumbrances relating to assets,
60
<PAGE> 62
validity of contracts, and liabilities (contingent or otherwise) and including
typical non-competition covenants by the seller and each owner/executive of the
Franchisee. The purchase price will be fair market value, determined in a manner
consistent with reasonable depreciation of leasehold improvements owned by you
and the items purchased, provided that, in any event, the purchase price will
not contain any factor or increment for the Names and Marks or any trademark,
service mark or other commercial symbol used in connection with the operation of
your Plantation Store, any goodwill, going concern value or any franchise
rights, and further provided that we may exclude from the assets purchased any
equipment, furniture, fixtures, signs, inventory or otherwise that do not meet
quality standards for Plantation Stores. There shall be no provision for payment
for leasehold improvements, the title of which shall be governed by the terms of
your lease or sublease for your Plantation Store premises. The length of the
remaining term of the lease or sublease for the Premises of your Plantation
Store will also be considered in determining fair market value of any lease or
sublease to be acquired. If you and we are unable to agree on the fair market
value of any assets, fair market value will be determined by an independent
appraiser selected by you and us, and if you and we are unable to agree on an
appraiser, you and we will each select one appraiser, who together will select a
third appraiser, and the fair market value will be deemed to be the average of
the three (3) independent appraisals. All sales, transfer and/or similar taxes
are to be paid by you. In connection with such purchase, you (and each affiliate
of yours) will execute a general release, in form prescribed by us, of any and
all claims, liabilities and/or obligations, of any nature whatsoever, however
arising, known or unknown, against us and/or any or all of the
Franchisor-Related Persons/Entities.
The purchase price may be paid by us or our assignee in cash or
securities on closing or as follows, pursuant to an unsecured promissory note:
Twenty Percent (20%) of the purchase price will be paid on closing, the second
Twenty Percent (20%) will be paid no later than ninety (90) days after closing,
the third Twenty Percent (20%) no later than one hundred eighty (180) days after
closing, the fourth Twenty Percent (20%) no later than two hundred ten (210)
days after closing, and the final Twenty Percent (20%) no later than two hundred
fifty (250) days after closing (in all cases without interest), provided that if
we require non-competition covenants to be given, the final Forty Percent (40%)
of the purchase price may be paid out in 60 equal monthly installments,
beginning at 30 days after close with no interest. Closing will take place no
later than thirty (30) days after receipt by you of notice of exercise of this
option to purchase, at which time you will deliver instruments transferring to
us or our assignee: (1) good and merchantable title to the
61
<PAGE> 63
assets purchased, free and clear of all liens and encumbrances (other than liens
and security interests acceptable to us in our sole and absolute discretion),
and demonstrating that all sales, transfer and/or similar taxes are to be paid
by you through escrow if we so require; (2) all licenses and permits of your
Plantation Store which may be assigned or transferred; and (3) the lease or
sublease for the Premises, if acquired by us. If you cannot deliver clear title
to all of the purchased assets as aforesaid, or in the event there are other
unresolved issues, or we otherwise require in our sole and absolute discretion,
the closing of the sale will be accomplished through an escrow. You and we will,
prior to closing, comply with any applicable bulk sales and/or similar laws.
We'll have the right to set off against and reduce the purchase price by any and
all amounts owed by you (or any affiliate) to us or any affiliate of ours, and
the amount of any encumbrances or liens against the assets or any obligations
assumed by us or we may, in the alternative, require you to pay such amounts in
full at closing. If we exercise this option to purchase, pending the closing of
such purchase as hereinabove provided, we will have the right to appoint a
manager to maintain the operation of your Plantation Store. Alternatively, we
may require you to close your Plantation Store during such period without
removing any assets from the Premises. You'll maintain in force all insurance
policies required pursuant to this Agreement, until the date of closing. Our
rights under this or any other Section may be assigned by us, in our sole and
absolute discretion, to any person or entity we choose.
If such option is exercised, you will forever indemnify and hold us
harmless against, all obligations incurred in connection with the business.
You'll furnish us with a complete list of accounts unpaid by you within ten (10)
days of our notice of intent to exercise this option. We may (but are not
required to) pay these unpaid bills directly to the parties owed and deduct them
from the purchase price in lieu of paying such portion of the purchase price
directly to you.
YOUR INITIALS: __________ / __________
18. TRANSFER
18.1. BY US. This Agreement, and any and/or all of our rights and/or
obligations under it, are fully transferable by us in our sole and absolute
discretion and will inure to the benefit of any person or entity to whom we
transfer it, or to any other legal successor to our interest in this Agreement.
If we transfer this Agreement, or any and/or all of our rights and/or
obligations under it, all past, current and future obligations of us (and of any
of the Franchisor-Related Persons/Entities) to you
62
<PAGE> 64
will cease and be forever extinguished.
YOUR INITIALS: __________ / __________
18.2 BY YOU. The rights and duties created by this Agreement are
personal to you (or your owners if the Franchisee is a partnership or
corporation) and we have awarded the Franchise to you relying on the individual
or collective character, skill, aptitude, attitude, business ability and
financial capacity of you or such owners. Accordingly, neither this Agreement
nor the Franchise (nor any interest therein), nor any part or all of the
ownership of the Franchisee or your Plantation Store (or any interest in it or
assets associated with any of the foregoing), may be transferred without our
prior written approval. Any such transfer (or attempted transfer) without such
approval will constitute a breach hereof and convey no rights to, or interests
in, this Agreement, the Franchise, the Franchisee, your Plantation Store, such
assets or otherwise.
The term "transfer" includes (but is not limited to); any voluntary,
involuntary, direct or indirect assignment, sale, gift, pledge, mortgage of, or
any granting of any security or other interest (whether or not controlling) in;
(1) this Agreement; (2) the Franchise; (3) the ownership of the Franchisee; (4)
your Plantation Store; or (5) any assets associated with any of the foregoing. A
transfer also includes (but is not limited to) the following events: (1) any
transfer of ownership of capital stock or any partnership or similar interest;
(2) any merger or consolidation or issuance of additional securities
representing an ownership interest in the Franchisee; (3) any sale of voting
stock of the Franchisee or any security convertible to voting stock of the
Franchisee; (4) any transfer in a divorce, insolvency, corporate or partnership
dissolution proceeding or otherwise by operation of law; (5) any transfer of any
interest in any revenues, profits, rights or assets of your Plantation Store; or
(6) the creation or otherwise of any security or similar interest affecting any
of the foregoing. Any transfer by you (or any of your owners if the Franchisee
is a business entity) to a corporation and/or of any interest in the event of
your death or the death of an owner of the Franchisee, by will, declaration of
or transfer in trust, under the laws of intestate succession, or otherwise will
be governed by all of the provisions on transfer of this Agreement. We may, in
our sole and absolute discretion, deny approval to any transfer involving a
portion of your franchise or a portion of any of the foregoing items.
YOUR INITIALS: __________ / __________
63
<PAGE> 65
18.3 CONDITIONS FOR APPROVAL OF ANY TRANSFER BY FRANCHISEE, ETC. Any
transfer by or on behalf of you and/or any entity affiliated with and/or
controlled by you will be subject to all of the conditions specified below and
anywhere else in this Agreement (each of which you and we agree are reasonable),
together with such other terms and conditions as are reasonable in the specific
circumstances of the proposed transfer but, in any event, we may refuse consent
to any transfer if, in our sole and absolute discretion, the proposed transferee
is, has been or will be associated with a Similar Business or if they do not
meet our then-current financial, experience and other standards for issuance of
an Coffee Plantation(R) Franchise directly by us. A transfer of ownership,
possession or control of your Plantation Store or any of its assets may only be
made in conjunction with a transfer of the Franchise.
All of the following conditions must be met prior to, or concurrently
with, the effective date of any transfer unless we require you to meet them
earlier. We may waive any condition in our sole and absolute discretion:
(a) You must be in full compliance with this Agreement, all
leases/subleases and all other agreements between you (including any affiliate)
and us (including any affiliate);
(b) The transferee and its owners must have sufficient business
experience, aptitude and financial resources to operate your Plantation Store,
must be individuals of good moral character and must meet all financial and
other standards then-applied by us in evaluating prospects to whom we might
award a Plantation Store franchise in the then-current business and competitive
environment;
(c) All of your obligations (including all obligations of any
entity affiliated with and/or related to you) to us (including any entity
affiliated with and/or related to us) must be expressly assumed by the
transferee;
(d) You must pay all royalties, marketing contributions, and
other amounts owed by you (including any entity affiliated with and/or related
to you) to us (including any entity affiliated with and/or related to us) which
are then unpaid (the balances of all promissory notes and other unpaid amounts
owed to us and/or any affiliates of ours shall be accelerated and paid in full),
all obligations to third parties arising out of the operation of your Plantation
Store must be satisfied or assumed by the transferee and your Plantation Store
and its operations must have been brought into full compliance with the
specifications and standards then applicable for new
64
<PAGE> 66
and/or renewing Plantation Stores, including compliance with all then-current
standards for facility design, furniture, equipment, software, signage,
provision of goods and services, methods of operation and other Coffee
Plantation System Standards, plus such renovation and modernization of the
Plantation Store as we may require to reflect the then-current standards and
image of the System, all at your (or the transferee's) sole expense;
(e) You must submit all required reports, financial statements
and other documents due us up to the effective date of the transfer;
(f) You must have complied with all of the provisions of this
Agreement, any amendment or successor hereto, and all other agreements between
you and us, our subsidiaries, affiliates or divisions, and, at the time of
transfer, shall not be in default thereof;
(g) The transferee and its personnel must (at our option)
complete or agree to complete our training program to our satisfaction;
(h) The transferee must obtain, within the time limits set by us,
and maintain thereafter, all permits, licenses and insurance required for the
operation of the franchised business;
(i) You and the transferor(s) must remain liable for all
obligations to us, our subsidiaries, affiliates, and divisions, in connection
with the franchised business prior to, through and after the effective date of
the transfer and shall execute any and all instruments reasonably required by us
to evidence such liability;
(j) To the extent required by the terms of any leases or other
agreements, the lessors or other parties must have consented to the proposed
transfer;
(k) The transferee must assume all of your duties and obligations
to us (and any affiliate of ours) and, at our option, (a) agree to be bound by
all terms and conditions of this Agreement (and any lease/sublease) for the
remainder of its term or (b) execute our then-current form of franchise
agreement and ancillary documents (including lease/subleases and guarantees) as
are then customarily used by us in the award of franchises for Plantation Stores
(which may, among other things, provide for higher royalties, marketing
contributions and materially different rights and obligations than are provided
in this Agreement) provided, however, that the term thereof will not be greater
than the remaining term of this Agreement and no initial franchise fee will be
required;
65
<PAGE> 67
(l) You or the transferee must pay us a non-refundable transfer
fee of equal to ten percent (10%) of the total value paid or to be paid to you
or any affiliate in connection with the transfer (subject to a $10,000 minimum,
subject to adjustment for inflation as described in this Agreement), provided
that we may reduce, defer or waive such fee in individual cases in our sole and
absolute discretion. Such fee must be deposited with us on a non-refundable
basis on your notification to us of the proposed transfer and prior to our
undertaking any review, drafting of documents or other activities;
(m) You and each of your owners and/or affiliates [and the
transferee (and each owner and/or affiliate of the transferee) if the transferee
or such owner and/or affiliate is or has been a franchisee of, or had any other
relationship with, us or any of the Franchisor-Related Persons/Entities] must
execute a general release, in a form prescribed by us, of any and all claims,
liabilities and/or obligations, of any nature whatsoever, however arising, known
or unknown, against us and/or any or all of the Franchisor-Related
Persons/Entities;
(n) If you or your owners finance any part of the sale price of
the transferred interest or obtains any security interest in the Franchise, the
franchised business (or any of its assets) or otherwise, you and your owners
(and the transferee) must agree that all obligations of the transferee under or
pursuant to any promissory notes, agreements, security interests reserved and/or
held by you or your owners, or otherwise will be subordinate to the obligations
of the transferee to pay royalties, marketing contributions, and other amounts
due and/or to become due to us and/or any affiliate of ours and otherwise to
comply with this Agreement, the franchise agreement and all other agreements
executed or to be executed by the transferee; provided that, in our sole and
absolute discretion, we may refuse to allow you or anyone else to grant or
receive a pledge, mortgage, lien or any security or similar interest in and/or
to the Franchise, the franchised business (or any of its assets) or otherwise;
(o) Notwithstanding any transfer, your non-competition, indemnity
and confidentiality obligations, and the provisions relating to dispute
resolution (which include, but are not limited to, those of Article 19), as well
as those of Article 23, of this Agreement will survive any transfer;
(p) The transferee must obtain from you an agreement that, to the
maximum extent permitted by law, you will not, for a period of at least three
(3) years following the transfer, either directly or indirectly, or as owner,
partner, director, officer, employee, consultant, agent, manager or stockholder,
disclosed or
66
<PAGE> 68
undisclosed owner, officer, agent, employee or in any other capacity whatsoever,
participate or engage, actively or inactively, in any Similar Business or any
other business substantially similar to any business then engaged in by us or
any of our Franchisees, and we shall be named as a third-party beneficiary of
such agreement.
(q) The transfer must be made in compliance with any laws that
apply to the transfer, including state and federal laws governing the offer and
sale of franchises; and
(r) In any event, we may withhold or condition our consent to any
transfer as we deem appropriate based on the circumstances of the transfer or
otherwise.
If we believe, in our sole and absolute discretion, that the terms
and/or conditions of any transfer (including, but not limited to, the price
and/or terms of payment) or any surrounding circumstances would make the
transfer not in the best interests of us, the proposed transferee or the Coffee
Plantation(R) family of Franchisees (for example, if the price to be charged
and/or the terms of payment would be so burdensome as to, in our sole and
absolute discretion, possibly adversely affect the future operations of a
Plantation Store by the proposed transferee) we may (but are not required to)
refuse to consent to such transfer. If we refuse to grant consent for any
reason, your (and the proposed transferee's) sole remedy will be to have such
matter resolved through arbitration and for the arbitrator, if appropriate, to
order consent to be granted, no damages or other relief to be awarded. We may
(but are not required to) candidly discuss all matters related to any transfer
and/or proposed transfer (including our views of the price to be charged and/or
the terms of payment) with you, any proposed transferee and/or otherwise and
will have no liability to you or anyone else regarding such views, discussions
or otherwise. In no case will you or any transferee rely on us to review or
evaluate any proposed transaction (our examination and possible consent not
being an approval or recommendation) and neither we nor anyone else will have
any liability to you, any proposed or actual transferee or otherwise in
connection with our examination and/or possible consent or withholding of
consent, with respect to any transfer and/or proposed transfer or our exercise
of any right of ours (including the right to discuss our views with the proposed
transferee and/or withhold consent), you agreeing to indemnify and hold us
harmless from any liability to you, the proposed transferee or otherwise.
YOUR INITIALS: __________ / __________
67
<PAGE> 69
18.4 ADDITIONAL CONDITIONS FOR TRANSFER TO A WHOLLY-OWNED CORPORATION.
Subject to compliance with all other requirements of this Agreement relating to
transfer(including execution of a general release, in form prescribed by us, of
any and all claims, liabilities and/or obligations, of any nature whatsoever,
however arising, known or unknown, against us and/or any or all of the
Franchisor-Related Persons/Entities and satisfying all payment and transfer fee
requirements; provided that if such transfer is made within 90 days of the date
of this Agreement, all but $750 (subject to adjustment for inflation as
described in this Agreement) of the transfer fee will be waived), if you're in
full compliance with this Agreement, we won't withhold our consent to a transfer
of this Agreement, the Franchise and your Plantation Store to a corporation
which conducts no business other than your Plantation Store. Such a transfer
will not relieve you of your obligations hereunder, and you'll remain jointly
and severally liable to us for all of your, and such corporation's, past,
current and/or future obligations, under any other agreement(s) (whether past,
current and/or future) with us or any affiliate of ours and/or any franchise,
lease/sublease and/or other agreement(s) to be executed by such corporation.
In addition, any such transfer will be subject to reasonable
restrictions, including but not limited to the following (each of which are
agreed to be reasonable):
(a) The transferee corporation must be newly organized, the
articles of incorporation, bylaws and other organizational documents of such
corporation must recite that the issuance and transfer of any ownership interest
in the corporation are restricted by the terms of this Agreement and must
provide that its activities are confined solely to acting as a Plantation
Franchisee as franchised and in good standing under this Agreement;
(b) You must maintain (and continue to maintain) management
control of the corporation and ownership of at least fifty-one percent (51%) of
the equity and voting power of all issued and outstanding capital stock in the
transferee corporation and to personally manage the affairs of such corporation;
(c) The individual Franchisee (or, if the Franchisee is a
partnership, at least one of the partners) must be and remain the chief
executive officer of the corporation;
(d) The transferee corporation must enter into a written
assignment (in form satisfactory to us) in which such corporation assumes all of
the Franchisee's past,
68
<PAGE> 70
current and/or future obligations under this Agreement and any other past,
current and/or future agreement(s) with us and/or any affiliate of ours. At our
option we may, in addition to requiring such assumptions, require such
corporation to execute our then-current form of franchise agreement,
lease/sublease and ancillary documents (including guarantees by the owners of
such corporation) as are then customarily used by us in the award of franchises
for Plantation Stores;
(e) All current and future shareholders of the transferee
corporation must enter into a written agreement (in a form provided or approved
by us) agreeing to comply with this Agreement and any other past, current and/or
future agreement(s) with us and/or any affiliate of ours and jointly and
severally guaranteeing all of the transferee corporation's past, current and/or
future obligations under this Agreement, any lease/sublease and any other past,
current and/or future agreement(s) with us and/or any affiliate of ours;
(f) Each stock certificate of the transferee corporation must
bear a legend reciting or referring to the restrictions of this Agreement,
including those on the issuance and transfer of stock in the transferee
corporation;
(g) No shares of securities of any type in the transferee
corporation may be issued without obtaining our prior written consent, which may
be subject to the restrictions on transfer herein and other reasonable
conditions as we deem appropriate;
(h) All obligations of the Franchisee under this Agreement and/or
any other agreement(s) with us and/or any affiliate of ours (including all
financial and operational compliance matters) must be satisfied prior to the
transfer;
(i) No more than twenty percent (20%), in the aggregate, of the
voting rights of the transferee corporation may ever be owned beneficially or of
record by institutions or publicly held companies;
(j) There shall never be more than 12 owners ("Owners") with
ownership interests in the transferee corporation, or any Franchisee of ours
(married couples and family trusts to be considered together as one for these
purposes);
(k) There will be no public offerings of debt or equity ownership
in or by the transferee corporation;
(l) None of the Owners will, directly or indirectly, engage in,
or have any interest in, any Similar
69
<PAGE> 71
Business, except that any Owner may own up to three percent (3%) of the stock of
a publicly-traded Similar Business; and
(m) In any event, the we may withhold or condition our consent to
any transfer as we deem appropriate in our sole and absolute discretion based on
the circumstances of the transfer or otherwise.
Throughout the term of this Agreement, the transferee corporation will
not do any act (including any transfer of assets or otherwise) which would
reduce its net worth to a level not reasonably acceptable to us and no transfer
will take place unless the Franchisee is current in all payments to us, the
Marketing Fund and each of the Franchisor-Related Persons/Entities. The
requirements of this Agreement with respect to a transfer shall similarly apply
to any transfer to a partnership or any other entity.
YOUR INITIALS: __________ / __________
18.5. DEATH OR DISABILITY OF FRANCHISEE. On your death or permanent
disability or, if the Franchisee is a corporation or partnership, on the death
or permanent disability of the owner of a controlling interest in the
Franchisee, the executor, administrator, conservator, guardian or other personal
representative of such person will transfer his or her interest in this
Agreement and the Franchise, or such interest in the Franchisee, to a third
party subject to our consent and all of the provisions of this Agreement with
respect to a transfer and possible exercise of our right-of-first-refusal. Such
disposition of this Agreement and the Franchise, or such interest in the
Franchisee (including, without limitation, transfer by bequest or inheritance),
will be completed within a reasonable time, not to exceed six (6) months from
the date of death or permanent disability and will be subject to all the terms
and conditions applicable to transfers contained in this Agreement. Failure to
so transfer the interest in this Agreement and the Franchise, or such interest
in the Franchisee, within said period of time will constitute a breach of this
Agreement. You shall be deemed to have a "permanent disability" if your
personal, active participation in management of your Plantation Store is for any
reason curtailed for a continuous period of six (6) months.
In the event of your death, disability, absence or otherwise, we can
(but are not required to) operate the franchised business on your behalf and at
your expense for such period of time (and under such terms and conditions) as we
determine, including paying out of the assets and/or revenues of the franchised
business any or all past, current and/or future
70
<PAGE> 72
obligations of the franchised business (including any amounts owed to us and/or
any affiliate) in such priorities as we determine from time-to-time in our sole
and absolute discretion. We can pay ourselves a reasonable amount to reimburse
us for our management services and other costs. We can obtain approval of a
court or arbitrator for any such arrangements, the attorney's fees and other
costs incurred in connection with obtaining such approval to be charged against
the assets and/or revenues of the franchised business. We'll be indemnified by
you (and/or your estate) against any costs and/or liabilities incurred by us in
connection with, or related in any way to, the operation (or otherwise) of the
franchised business.
YOUR INITIALS: __________ / __________
18.6 OUR RIGHT OF FIRST REFUSAL. If you or any of the Franchisee's
owners wish to engage in any transfer subject to this Agreement, (a) you or your
owners will obtain a bona fide, executed written offer and deposit [in the
amount of ten percent (10%) or more of the offering price and in the form of a
cashier's check] and (b) a true and complete copy of the offer (and any proposed
ancillary agreements) will immediately be submitted to us by you, the
Franchisee's owners or both, together with a non-refundable deposit of the
transfer fee. The offer must be unconditional (except for our consent) and apply
only to an interest in this Agreement, the Franchise, your Plantation Store or
the Franchisee and must not include the purchase of any other property or rights
of yours (or the Franchisee's owners); but if the offeror proposes to buy any
other property or rights from you (or the Franchisee's owners) under a related
offer, the price and terms of purchase offered to you (or the Franchisee's
owners) for the interest in this Agreement, the Franchise, your Plantation
Store, or the Franchisee will reflect the bona fide price offered therefor and
will not reflect any value for any other property or rights. We may exclude from
the assets purchased hereunder any items that are not approved as meeting
quality standards for Plantation Stores, as well as any portion of the price
attributable to goodwill. If any of the assets to be purchased do not meet the
standards we then apply to new Plantation Stores or you are in default, we can
require that such assets be replaced and/or brought into compliance with our
requirements before the sale is completed, and/or such defaults be cured, and
the time for us to give notice of intent to exercise our right-of-first-refusal
will not begin to run until all such assets have been brought up to such
standard and such defaults cured.
We'll have the right, exercisable by written notice delivered to you or
the Franchisee's owners within thirty (30)
71
<PAGE> 73
days from the date of delivery of an exact copy of such offer to us, together
with your deposit of any transfer fee and satisfaction of all other requirements
for our consent to such transfer, to notify you that we have elected to purchase
such interest for the price and on the terms and conditions contained in such
offer (less any portion of the price attributable to goodwill), provided that we
may substitute cash, a cash equivalent, or securities of equal value for any
form of payment proposed in such offer, our credit will be deemed equal to the
credit of any proposed purchaser, and we will have not less than sixty (60) days
from the date you receive our notice of intention to exercise such
right-of-first-refusal to prepare for closing. We'll be entitled to purchase any
interest subject to all customary representations, warranties and agreements
given by the seller of the assets of a business or voting stock of an
incorporated business, as applicable including, without limitation,
representations and warranties as to ownership, condition and title to stock
and/or assets, liens and encumbrances relating to the stock and/or assets,
validity of contracts, and liabilities, contingent or otherwise, of the
corporation whose stock is purchased and including typical non-competition
covenants by the seller and each owner of the Franchisee. In connection with
such purchase, you will sign a general release, in form prescribed by us, of any
and all claims, liabilities and/or obligations, of any nature whatsoever,
however arising, known or unknown, against us and/or any or all of the
Franchisor-Related Persons/Entities. If, for any reason, such transaction is not
consummated within one hundred and twenty (120) days after the date of delivery
of an exact copy of such offer to us, together with your deposit of any transfer
fee and satisfaction of all other requirements for our consent to such transfer,
or if you seek to effect a transaction on terms and conditions, or to any person
or entity, other than as set forth in the offer disclosed to us by you, then the
proposed transaction shall be deemed withdrawn, and all of the provisions of
this Section shall again become fully applicable, as if such transaction had not
been proposed.
If we do not exercise our right-of-first-refusal, you or your owner may
complete the sale to such purchaser pursuant to and on the exact terms of such
offer, subject to the conditions provided in this Agreement, provided that if
there is a material change in the terms of the sale, we will have an additional
right-of-first-refusal for thirty (30) days on the same terms and conditions as
are applicable to the initial right-of-first-refusal. Our rights under this or
any other Section may be assigned by us, in our sole and absolute discretion, to
any person or entity we choose.
72
<PAGE> 74
YOUR INITIALS: __________ / __________
18.7 RELEASE, EFFECT OF TRANSFER. In connection with ANY transfer, etc.
of any interest of or by Franchisee (including, but not limited to, an transfer
to a corporation) Franchisee and each of its owners and/or affiliates [and the
transferee (and each owner and/or affiliate of the transferee) if the transferee
or such owner and/or affiliate is or has been a franchisee of, or had any other
relationship with, Franchisor or any of the Franchisor-Related Person/Entities]
must execute a general release, in a form prescribed by Franchisor, of any and
all claims, liabilities and/or obligations, of any nature whatsoever, however
arising, known or unknown, against us and/or any or all of the
Franchisor-Related Persons/Entities.
Our consent to a transfer, or failure to exercise any
right-of-first-refusal, will not constitute a waiver of any claims we may have
against Franchisee (or its owners or affiliates), nor will it be deemed a waiver
of our right to demand exact compliance with any of the terms or conditions of
this Agreement or any other agreement by any transferor or transferee. Unless we
expressly in writing release Franchisee from its obligations under this
Agreement (which we have no obligation to do), Franchisee will remain and be
liable for all of the payment and other obligations under this Agreement (and
any other agreement with us and/or any affiliate) and any Franchise Agreement
and/or other agreement executed by any transferee, including any defaults by any
transferee. Any transfer (including any transfer consented to by us and even if
the transferee executes a new franchise agreement) will not act as a termination
of Franchisee`s confidentiality, indemnity, non-competition and other
obligations under this Agreement, including any obligations which by their
nature survive the term of this Agreement [Franchisee's non-competition
obligations to expressly continue for the full original term of this Agreement
notwithstanding any transfer], or affect Franchisee's and our obligations and
rights under the dispute avoidance and resolution provisions of this Agreement,
including Articles 19 and 23. Any dispute regarding any proposed or completed
transfer (including our alleged failure to consent to a proposed transfer) will
be resolved under the mediation/arbitration provisions of this Agreement and
Franchisee's sole remedy will be an order that we grant consent.
YOUR INITIALS: __________ / __________
19. DISPUTE AVOIDANCE AND RESOLUTION
73
<PAGE> 75
19.1 MEDIATION AND MANDATORY BINDING ARBITRATION, WAIVER OF RIGHT TO
TRIAL BY JURY, ETC. Realizing that in business relationships there's always a
possibility of differences of opinion or other disagreements and that what is
most important is to resolve any disputes amicably, quickly, inexpensively and
professionally and to return to business as soon as possible, it's with that
same spirit of cooperation that you and we pledge to resolve differences and to
use the procedures specified in this Agreement (and particularly this Article
19), believing that these procedures will reduce instances of possible disputes
and make the resolution of any disputes which do arise less expensive, quicker,
less subject to public notoriety and achievable in a less formal and
antagonistic means than litigation, as well as to increase the opportunities for
you and we to maintain a mutually beneficial business relationship
Therefore, you and we agree as follows:
(a) Any litigation, claim, dispute, suit, action, controversy,
proceeding or otherwise ("claim") between or involving you (and/or any owner
and/or affiliate of yours or which could be brought by, or on behalf of, you,
any owner and/or affiliate of yours) and us (and/or any claim against or
involving any or all of the Franchisor-Related Persons/Entities or otherwise),
except as expressly provided below at Section 19.1 (e) whether arising out of or
relating in any way to this and/or any other agreement and/or any other
document, any alleged breach of any duty or otherwise (including but not limited
to the underlying legality of the offer and/or sale of any franchise, any action
for rescission or other setting aside of such sale or any transaction, agreement
or document and any claim that this Agreement or any portion thereof is invalid,
illegal, void, unenforceable or otherwise and any claim of fraud, including
fraud in the inducement) and on whatever theory and/or facts based, will be:
(1) First, discussed in a face-to-face meeting between you
(or an individual authorized to make binding commitments on behalf of you) and a
corporate executive of ours authorized to make binding commitments on our
behalf. This meeting will be held at our then-current headquarters and within 30
days after either you or we give written notice to the other proposing such a
meeting.
(2) Second, if, in the opinion of either you or us, the
meeting has not successfully resolved such matters and if desired by any person
or entity involved in the claim, submitted to non-binding mediation for a
minimum of eight hours before (a) Franchise Arbitration and Mediation, Inc.
("FAM") (or an
74
<PAGE> 76
organization designated by FAM) or (b) any other mediation organization approved
by all such persons and/or entities or (c) by Judicial Arbitration and Mediation
Service (JAMS) if FAM cannot conduct such mediation and the parties cannot agree
on a mediation organization. On election by any party, arbitration and/or any
other remedy allowed by this Agreement may proceed forward at the same time as
mediation. In the mediation, you and we shall each be represented by an
individual authorized to make binding commitments on your and our respective
behalfs and may be represented by counsel. In addition, you and/or we may, with
permission of the mediator, bring such additional persons as are needed to
respond to questions, contribute information and/or participate in the
negotiations. The fees and expenses of the mediator and/or mediation
organization shall be shared equally by you and we. The mediator shall be
disqualified as a witness, consultant, expert or counsel for any party with
respect to the dispute and any related matters.
(3) Third, if neither you nor we desire mediation (or if
such mediation is not successful in resolving such claim), submitted to and
finally resolved by binding arbitration before and in accordance with the
arbitration rules of FAM (or any successor organization); provided that if such
arbitration is unable to be heard by FAM for any reason, the arbitration will be
conducted by Judicial Arbitration and Mediation Service (JAMS.) The fees and
expenses of the arbitrator(s) and/or arbitration organization shall be shared
equally by the disputants. In each case, the parties to any
mediation/arbitration will execute appropriate confidentiality agreements,
excepting only such public disclosures and filings as are required by law.
(b) Any mediation/arbitration (and any appeal of arbitration)
will be exclusively conducted at our then-current headquarters, to facilitate
participation of important individuals and availability of documents, etc. to
the resolution of the matter, and by a mediator/arbitrator experienced in
franchising. You and we acknowledge the critical importance of a single source
for decisions in arbitration (and in any court actions) to guide you and us, to
eliminate the possibility of inconsistent decisions and awards which could
adversely affect the uniform development and administration of the Coffee
Plantation System and group of companies and to maximize the opportunity for the
arbitrator to give due consideration to your and our ongoing practical business
needs in this regard. Except as expressly provided below, the parties to any
mediation or arbitration will bear their own costs, including attorney's fees.
Any claim, and any mediation/arbitration, will be conducted and resolved on an
individual basis only and not on a class-wide, multiple plaintiff or similar
basis. On request of any party to a claim, the arbitrator may be required to
issue a written award, specifying the facts found and the law applied, but the
party so
75
<PAGE> 77
requesting will bear the fees and charges incurred in connection therewith. The
arbitrator may award or otherwise provide for temporary restraining orders,
preliminary injunctions, injunctions, attachments, claim and delivery
proceedings, temporary protective orders, receiverships and other pre-judgment,
equitable and/or interim relief as appropriate pending final resolution by
binding arbitration of a claim, as well as in connection with any such final
resolution, and may issue summary orders disposing of all or part of a claim at
any point. Each party consents to the enforcement of such orders, injunctions,
etc. by any court having jurisdiction. In any arbitration, any and all pre-trial
discovery devices (including, but not limited to, depositions, written
interrogatories, requests for admission, and requests for production, inspection
and copying of documents) will be available to the disputants as if the subject
matter of the arbitration were pending in a civil action before a court of
general jurisdiction in the state whose law is to be applied under Section
19.14. The arbitrator shall have the power to order compliance with such
discovery procedures, as well as assess sanctions for non-compliance with any
order. The arbitrator (rather than a court) shall decide any questions relating
in any way to the parties' agreement (or claimed agreement) to arbitrate,
including but not limited to applicability, subject matter, timeliness, scope,
remedies and any alleged fraud in the inducement, or otherwise. Each participant
must submit or file any claim which would constitute a compulsory counterclaim
(as defined by the applicable rule under the Federal Rules of Civil Procedure)
within the same proceeding as the claim to which it relates. Any such claim
which is not submitted or filed in such proceeding will be forever barred. Any
offers, discussions, negotiations, mediations or otherwise in connection with
possible settlement or other resolution of any claim may not be introduced in
evidence (or for any other purpose) in any arbitration proceeding, court
proceeding or otherwise.
(c) If any party to an arbitration wishes to appeal any final
award by an arbitrator (there will be no appeal of interim awards or other
interim relief), that party can appeal, within thirty (30) days of such final
award, to a three (3) arbitrator panel to be appointed by the same organization
as conducted the arbitration, such panel to conduct all proceedings at the same
location as specified in subsection (b) above. The issues on appeal will be
limited to the proper application of the law to the facts found at the
arbitration and will not include any trial de novo or other fact-finding
function. The party requesting such appeal must pay all costs and fees charged
by such arbitration appeal panel and/or arbitration organization in connection
with such appeal, as well as posting any bond deemed appropriate by such
arbitration organization or arbitration
76
<PAGE> 78
appeal panel. In addition, a party requesting appeal, and who does not prevail
on appeal, will pay the other party's (or parties') attorneys' fees and other
costs of responding to such appeal.
(d) Judgment on any preliminary or final arbitration award
[subject to the opportunity for appeal as contemplated above] may be entered in
any court having jurisdiction and will be binding, final and non-appealable.
(e) The obligation herein to mediate and/or arbitrate will not be
binding on us with respect to claims or issues relating primarily to (i) the
validity of any trademarks, service marks or other intellectual property of our,
(ii) our rights to obtain possession of any real and/or personal property
(including any action in unlawful detainer, ejectment or otherwise) (iii) our
rights to obtain a writ of attachment and/or other pre-judgment remedies and/or
(iv) our rights to receive and enforce a temporary restraining order,
preliminary injunction, permanent injunction or other equitable relief, and our
exercise of any such rights and/or remedies will not be deemed a waiver of our
rights to require or use mediation and/or arbitration.
(f) Notwithstanding any provisions of this Agreement or otherwise
relating to which state or provincial laws this Agreement will be governed by
and construed under, all issues relating to arbitrability and/or the enforcement
of the agreement to arbitrate contained herein will be decided by the arbitrator
(including all claims that this Agreement in general, and/or the within
agreement to arbitrate, was procured by fraud in the inducement or otherwise)
and will be governed by the Federal Arbitration Act (9 U.S.C. Section 1 et seq.)
and the federal common law of arbitration. Notwithstanding any provisions of
state law to the contrary, Franchisor intends to fully enforce the provisions of
this franchise agreement and other documents, including all venue,
choice-of-laws and mediation/arbitration provisions, and to rely on federal
preemption under the Federal Arbitration Act (9 U.S.C. Section 1 et seq.)
(g) Franchisee and Franchisor each knowingly waive all rights to
trial by a court or jury, understanding that arbitration may be less formal than
a court or jury trial, may use different rules of procedure and evidence and
that appeal is generally less available, still strongly preferring (for the
reasons set forth in this section and the following one) mediation and/or
arbitration to resolve any disputes, except as provided in Section 19.1(e).
YOUR INITIALS: __________ / __________
77
<PAGE> 79
19.2 VENUE, WAIVER OF RIGHTS TO TRIAL BY JURY, LIMITATION OF DAMAGES,
ETC.
Without in any way limiting or otherwise affecting your and our
obligations regarding mediation/binding arbitration, you and we agree that any
litigation between you and us (and/or involving any owner and/or affiliate of
yours or which could be brought by you or on your behalf and including any
matters involving any of the Franchisor-Related Persons/Entities or otherwise),
whether to enforce an arbitration award or involving any litigation, dispute,
controversy, claim, proceeding or otherwise which is not subject to any
agreement regarding mediation/arbitration (or in the event that a court having
jurisdiction should hold that any agreement regarding mediation and/or
arbitration is not enforceable) or otherwise, and bearing in mind your and our
joint interest in having a single court determine issues in a consistent manner
for application throughout the Coffee Plantation System and not having us or our
Franchisees exposed to inconsistent decisions, will be held exclusively before a
court in the most immediate judicial district encompassing our then-current
headquarters and having subject matter jurisdiction or the United States
District Court encompassing our then-current headquarters (where a basis for
federal jurisdiction exists, all filings, proceedings and otherwise will be
exclusively in such Federal court, in preference to State court), you and we
consenting to the exclusive jurisdiction of such court(s) and WAIVING ALL RIGHTS
TO TRIAL BY JURY. Any claim, and any litigation, will be conducted and resolved
on an individual basis only and not on a class-wide, multiple plaintiff or
similar basis.
So as to achieve many of the advantages which would normally be
associated with arbitration (such as lower expense, more rapid resolution of
controversies, fewer protracted and complex proceedings, reduced instances of
costly and time-consuming appeal, use of a more sophisticated and experienced
trier of fact and law, etc.) and for your and our mutual benefit, you and we
agree that in any litigation, you (and each owner and affiliate of yours) and we
each knowingly waive all rights to trial by jury and, in any arbitration,
litigation or otherwise, you and we each waive any right to recover, and any
rights to make claims for (whether by claim, counter-claim, offset, way of
defense or otherwise), punitive, exemplary, multiple, pain-and-suffering, mental
distress, incidental, consequential, special, lost income and/or profits (except
as expressly provided below) and/or similar damages under any theory whatsoever,
you and we agreeing that such claims are inherently speculative and subject to
abuse, often serving as obstacles to the reasonable resolution or settlement of
a dispute and frequently operating to primarily
78
<PAGE> 80
benefit the attorneys involved in the claim, provided that, in any event, we may
recover the then-current value of any initial franchise fees, royalties,
marketing contributions, lease payments and/or other payments you are, or would
be, obligated to make, or would normally make, in the absence of a breach or
termination, to us or any affiliated company, whether under this Agreement or
otherwise, it being your and our intention that we receive the full benefit of
our bargain with you, as wells as any past due payments owed to us and/or any
affiliate. In any event, our maximum liability (combined with the maximum
liability of any of the Franchisor-Related Persons/Entities or any of them)
shall be (collectively) limited to the return to you of the initial franchise
fee actually paid by you and your maximum liability will be limited to the
present value of the royalties, advertising contributions and other amounts
which normally would have been paid by you if the franchise had continued in
existence for its full term and any renewals, together with any past due
payments owed to us and/or any affiliate, but, in any case, there shall be no
limitation on your indemnity and/or similar obligations, whether with respect to
trade accounts, other third-party claims or otherwise. You and we have agreed on
this limitation in recognition of the facts that the calculation of any actual
damages would be exceedingly difficult and subject to speculation and possible
abuse and that the foregoing compromises benefit both of us equally. You agree
that we will not be required to post a bond in order to obtain any injunctive or
other equitable relief or otherwise and that your only remedy if an injunction
or other equitable relief is entered against you will be to obtain dissolution
of such injunction, etc.
The dispute avoidance and resolution provisions of this Agreement
(including, but not limited to, this Article 19 and Article 23) shall apply to
any claims, arbitration, litigation or otherwise between you and us, and/or by
any owner and/or affiliate of yours, or which could be brought by you or on your
behalf, whether against us and/or any or all of the Franchisor-Related
Persons/Entities.
YOUR INITIALS: __________ / __________
19.3 PRIOR NOTICE OF CLAIMS BY YOU. Prior to you taking any legal or
other action against us and/or any of the Franchisor-Related Persons/Entities,
whether for arbitration, damages, injunctive, equitable or other relief
(including but not limited to recision) and whether by way of claim,
counterclaim, cross-complaint, raised as an affirmative defense, offset or
otherwise, you will first give us sixty (60) days prior written notice and
opportunity to cure such alleged act or omission [or, if such
79
<PAGE> 81
alleged act or omission cannot reasonably be cured within such sixty (60) day
period, and we are diligently continuing efforts to attempt to cure such alleged
act or omission, such additional time as we are continuing such efforts];
provided that any dispute regarding our withholding consent with respect to a
proposed transfer by you may be immediately submitted to face-to-face meeting,
mediation and arbitration as provided in Section 19.1.
Since you and we share a mutual interest in your possible success and
each believe that it is important that any possible business problems be
addressed as soon as possible, you and we agree that if you have any complaint
regarding our failing to perform any obligation to you (including, but not
limited to, training, marketing, operational support, representations by us or
otherwise) you will promptly advise us in writing of such problem within 90 days
of the problem arising, so that we can have an opportunity to correct the
problem. If you fail to so advise us, you will be forever precluded from taking
any legal or other action against us and/or any of the Franchisor-Related
Persons/Entities, whether for arbitration, damages, injunctive, equitable or
other relief (including but not limited to recision) and whether by way of
claim, counterclaim, cross-complaint, raised as an affirmative defense, offset
or otherwise with regard to the problem.
YOUR INITIALS: __________ / __________
19.4 PERIODS IN WHICH TO MAKE CLAIMS
(a) No arbitration, action or suit (whether by way of claim,
counterclaim, cross-complaint, raised as an affirmative defense, offset or
otherwise) by either you or us will lie or be permitted against the other (nor
by you against any of the Franchisor-Related Persons/Entities), whether for
damages, rescission, injunctive or any other legal and/or equitable relief, in
respect of any alleged breach of this Agreement, or any other claim of any type,
unless such party will have commenced such arbitration proceeding, action or
suit before the expiration of the earlier of:
(1) One (1) year after the date on which the state of facts
giving rise to the cause of action comes to the
attention of, or should reasonably have come to the
attention of, such party; or
(2) One (1) year after the initial occurrence of any act or
omission giving rise to the cause of
80
<PAGE> 82
action, whenever discovered.
(b) Notwithstanding the foregoing limitations, where any federal,
state or provincial law provides for a shorter limitation period than above
described, whether on notice or otherwise, such shorter period will govern.
(c) The foregoing limitations may, where brought into effect by
our failure to commence an action within the time periods specified, operate to
exclude our right to sue for damages but will in no case, even on expiration or
lapse of the periods specified or referenced above, operate to prevent us from
terminating your rights and our obligations under this Agreement as provided
herein and under applicable law nor prevent us from obtaining any appropriate
court judgment, order or otherwise which enforces and/or is otherwise consistent
with such termination.
(d) The limitations set forth in subsections (a) and (b) will not
apply to our claims arising from or related to: (1) indemnification by you; (2)
your confidentiality, non-competition or other exclusive relationship
obligations; and/or (3) your unauthorized use of the Name and/or Marks.
YOUR INITIALS: __________ / __________
19.5 WITHHOLDING CONSENT. In no event will you make any claim, whether
directly, by way of set-off, counter-claim, defense or otherwise, for money
damages or otherwise, by reason of any withholding or delaying of any consent or
approval by us. Your sole remedy for any such claim is to submit it to a
face-to-face meeting, mediation and arbitration as described in this Agreement
and, if the face-to-face meeting and mediation fail to resolve the matter, for
the arbitrator to order us to grant such consent. Unless expressly provided
otherwise in this Agreement, approvals and consents may be withheld by us in our
sole and absolute discretion.
YOUR INITIALS: __________ / __________
19.6 SURVIVAL AND CONSTRUCTION. Each provision of this Article 19,
together with the provisions of Article 23, will be deemed to be self-executing
and continue in full force and effect subsequent to and notwithstanding the
expiration, termination, setting aside, cancellation, recision, unenforceability
or otherwise of this Agreement (or any part of it) for any reason,
81
<PAGE> 83
and will survive and will govern any claim for recision or otherwise.
Each provision of this Agreement (including but not limited to those
relating to mandatory arbitration, waiver of jury trial, limitation of damages,
prior notice of claims, shortened periods in which to bring claims, costs and
attorney's fees, or otherwise) will be construed as independent of, and
severable from, every other provision and if any provisions are deemed to be
unenforceable in any way, such provisions will be modified or interpreted to the
minimum extent necessary to have them comply with the law (including making such
provision mutual in effect) and the remaining provisions of this Agreement will
remain in full force and effect, the parties agreeing that the unenforceability
of any provisions of this Article 19 (or otherwise) will not affect the
remainder of this Article 19 (or otherwise), notwithstanding any statutory or
decisional law to the contrary.
Each party reserves the right to challenge any law, rule or judicial or
other construction which would have the effect of varying or rendering
ineffective any provision of this Agreement. The benefits and protections of
this Agreement which apply to us (including, but not limited to, all provisions
relating to indemnification and/or releases) shall also apply to any past,
current and/or future Franchisor-Related Persons/Entities as if they were
expressly named beneficiaries of such provisions. In each case where we may
exercise any option or other right, we may do so in our sole and absolute
discretion, without liability or other obligation. So as to preserve the
flexibility to deal with practical business situations (which you and we agree
should benefit our businesses in the long term), we may, in our sole and
absolute discretion, elect to not enforce (or to selectively enforce) any
provision of this Agreement, or any other agreement, any policy or otherwise,
whether with respect to you and/or any other franchisee or otherwise, and we may
apply different policies to any franchisee, all without liability or other
obligation and any such acts or omissions will not limit or otherwise affect our
rights, whether to enforce this Agreement or otherwise.
YOUR INITIALS: __________ / __________
19.7 COSTS AND ATTORNEYS' FEES. Except as expressly provided otherwise
in this Agreement with respect to appeal of an arbitration award or otherwise,
and based on your and our judgment that attorney's fees provisions often operate
to primarily benefit the attorneys involved in any claim and/or to
82
<PAGE> 84
encourage specious claims to the detriment of everyone involved in a franchise
system, the parties will each bear their own costs of enforcement and/or defense
(including but not limited to attorney's fees) in any claim or dispute between
you and us (including you and/or our affiliates, related persons/entities, etc.)
and will make no claim with regard thereto.
YOUR INITIALS: __________ / __________
19.8 VALIDITY AND EXECUTION. This Agreement will become valid only when
executed and accepted by us at our headquarters.
YOUR INITIALS: __________ / __________
19.9 BINDING EFFECT, MODIFICATION AND REPRESENTATIONS. This Agreement is
binding on the parties hereto and their respective executors, administrators,
heirs, assigns, and successors in interest, and will not be modified or
supplemented except by means of a written agreement signed by both you and our
President or one of our Vice Presidents, provided that changes to the Manual may
be made by us at any time and will be fully binding on you notwithstanding any
provisions of this Section or otherwise. No other officer, field representative,
salesperson or other person has the right or authority to sign on our behalf, to
make oral or written modifications to this Agreement, or to make any
representations or agreements on behalf of us, and any such modifications,
representations and/or agreements shall not be binding on us. Similarly, other
than any of the individual Franchisee(s) (or any partner or corporate officer of
Franchisee, if Franchisee is a partnership or corporation), no person has the
right or authority to sign on behalf of Franchisee, to make oral or written
modifications to this Agreement on behalf of Franchisee, or to make any
representations or agreements on behalf of Franchisee, and any such
modifications, representations and/or agreements shall not be binding on
Franchisee. You expressly acknowledge that no oral promises, representations or
declarations were made to or relied on by you and that our obligations are
confined exclusively to the terms herein. You understand and assume the business
risks inherent in the franchised enterprise.
YOUR INITIALS: __________ / __________
83
<PAGE> 85
19.10 CONSTRUCTION, ETC. Except as expressly provided otherwise, nothing
in this Agreement is intended, nor will be deemed, to confer any rights or
remedies on any person or legal entity not a party hereto. Except where this
Agreement expressly provides otherwise, we have the right to condition, withhold
and/or refuse, in our sole and absolute discretion, any request by you and our
approval of, or consent to, any action or omission by you. The headings of the
several Articles and Sections hereof are for convenience only and do not define,
limit, or construe the contents of such Articles or Sections. The term
"attorneys' fees" will include, without limitation, legal fees, whether incurred
prior to, in preparation for or in contemplation of the filing of any written
demand or claim, action, hearing or proceeding to enforce the obligations of
this Agreement. References to a "controlling interest" in the Franchisee will
mean fifty percent (50%) or more of the voting control of the Franchisee if the
Franchisee is a corporation, and any general partnership interest if the
Franchisee is a partnership. The term "you" as used herein is applicable to one
or more persons, a corporation or a partnership, as the case may be. The
singular usage includes the plural and the masculine and neuter usages include
the other and the feminine. If two or more persons are at any time the
Franchisee hereunder, whether or not as partners or joint venturers, their
obligations and liabilities to us will be joint and several. This Agreement will
be executed in multiple copies, each of which will be deemed an original. Each
of the provisions of this Agreement (including Articles 19 and 23) apply to any
claim brought (or which could be brought) by any owner and/or affiliate of yours
or by or on your behalf. If any limitation on your rights (including, but not
limited to, any limitation on damages, waiver of jury trial, shortened period in
which to make any claim or otherwise) is held unenforceable with respect to you,
then such limitation will not apply to us. We shall have the sole right to
enforce the obligations of this (or any other) Franchise (or other) Agreement
and neither you nor any other franchisee of ours shall be deemed a third party
beneficiary with respect to this or any other agreement.
You and we, each believing that (1) having written documents as the only
basis for their legal relationship benefits each equally and reduces the risk of
uncertainty in what should be a long-term business relationship and (2) this
Agreement should be strictly interpreted according to its express terms, and
each having a concern with (among other things) an approach whereby a court or
arbitrator might impose (or limit or expand) duties on either that were not
expressly agreed to in writing by you and us, agree that you and we mutually
waive any "implied covenant of good faith and fair dealing" and that no such (or
similar) doctrine, rule of interpretation or otherwise will have any application
to your and our relationship, this Agreement or any
84
<PAGE> 86
other agreement between you and us (or any affiliate or Franchisor-Related
Persons/Entities) nor will affect our ability to make binding changes to the
Coffee Plantation System, the Manual(s) or otherwise. Neither you nor we have
any expectation that your or our rights and obligations will be otherwise than
as expressly set forth in this Agreement or that where any contractual provision
allows you or us any discretion in action or otherwise, the exercise of that
discretion will be limited in any way. You agree that we will not be liable for
any act or omission, whether with respect to the Marketing Fund or otherwise,
which is consistent with this Agreement or other information provided to you, or
which is done in subjective good faith. No course of dealing between you and us,
nor any course of dealing or agreement between us and anyone else, past, present
or future, will affect your or our rights under this Agreement or otherwise.
When we use the phrase "sole and absolute discretion" (or any similar phrase or
concept), whether in this Agreement or otherwise, you agree that there will be
absolutely no limitation (including, but not limited to, any "implied covenant
of good faith and fair dealing" or otherwise) on our completely unrestrained
ability and right to exercise that discretion in any way we choose.
If any applicable and binding law or rule of any jurisdiction requires a
greater prior notice of the termination of, or refusal to renew, this Agreement
than is required hereunder, or the taking of some other action not required
hereunder, or if under any applicable and binding law or rule of any
jurisdiction, any provision of this Agreement or any specification, standard or
operating procedure prescribed by us is invalid or unenforceable, the prior
notice and/or other action required by such law or rule shall be substituted for
the comparable provisions hereof, and we will have the right, in our sole and
absolute discretion, to modify such invalid or unenforceable provision,
specification, standard, or operating procedure to the extent required to be
valid and enforceable. You agree to be bound by any promise or covenant imposing
the maximum duty permitted by law which is subsumed within the terms of any
provision hereof, as though it were separately articulated in and made a part of
this Agreement, that may result from striking from any of the provisions hereof,
or any specification, standard or operating procedure prescribed by us, any
portion or portions which a court may hold to be unenforceable in a final
decision to which you are a party, or from reducing the scope of any promise or
covenant to the extent required to comply with such a court order. Such
modifications to this Agreement shall be effective only in such jurisdiction,
unless we elect to give them greater applicability, and shall be enforced as
originally made and entered into in all other jurisdictions.
85
<PAGE> 87
You will have no right to enforce any obligation of our or any other
person/entity (including, but not limited to, any other Coffee Plantation(R)
Franchisee) under, and you will not be deemed a third party beneficiary of, any
other Franchise Agreement, other agreement or otherwise.
YOUR INITIALS: __________ / __________
19.11 NON-RETENTION OF FUNDS. You do not have the right to offset or
withhold payments owed to us (and/or any affiliate) for amounts purportedly due
you (or any affiliate of yours) from us, the Franchisor-Related Persons/Entities
and/or any affiliate as a result of any dispute of any nature or otherwise, but
will pay such amounts to us (or our affiliate) and only thereafter seek
reimbursement in accordance with the provisions of Article 19. If you believe
that we or any other person/entity has violated any legal duty to you, you will,
notwithstanding such dispute, pay as designated all sums specified under this
Agreement or any other agreement, whether to be paid to us or the
Franchisor-Related Persons/Entities (including royalties, any unpaid portion of
the initial franchise fee, any marketing contributions and/or amounts payable to
franchisee councils and/or cooperatives, rent or otherwise) and will not
withhold any payments until and unless such dispute has been finally determined
in your favor.
YOUR INITIALS: __________ / __________
19.12 SEVERABILITY; SUBSTITUTION OF VALID PROVISIONS. Except as
otherwise stated in this Agreement, each provision of this Agreement, and any
portion of any provision, is severable (including, but not limited to, any
provision affecting any rights to recovery for breach of any legal obligation,
including but not limited to waiver of statutory benefits such as rights to jury
trial, exemplary or punitive damages, recovery of attorney's fees and/or
shortening of statutes of limitations), and the remainder of this Agreement will
continue in full force and effect. To the extent that any provision restricting
your competitive activities is deemed unenforceable, you and we agree that such
provisions will be enforced to the fullest extent permissible under governing
law. This Agreement will be deemed automatically modified to comply with
governing law if such law requires: (a) a greater time period for notice of the
termination of, or refusal to renew, this Agreement; or (b) the taking of some
other action not described in this Agreement. We may modify
86
<PAGE> 88
any invalid or unenforceable provision to the extent required to be valid and
enforceable and you will be bound by the modified provisions.
YOUR INITIALS: __________ / __________
19.13 WAIVERS. Our waiver of any breach(es) under this or any other
agreement [whether by failure to exercise a power or right available to us,
failure to insist on strict compliance with the terms, obligations or conditions
of any agreement, development of a custom or practice between you and us (or
others) which is at variance with the terms of any agreement, acceptance of
partial or other payments or otherwise], whether with respect to you or others,
will not affect our rights with regard to any breach by you or anyone else or
constitute a waiver of our right to demand exact compliance by you with the
terms of this Agreement or otherwise. Subsequent or other acceptance by us of
any payments or performance by you will not be deemed a waiver of any preceding
or other breach by you of this Agreement or otherwise. The rights and remedies
provided in this Agreement are cumulative and we will not be prohibited from
exercising any rights or remedies provided under this Agreement or permitted
under law or equity.
YOUR INITIALS: __________ / __________
19.14 CHOICE OF LAWS. Except with respect to the applicability of the
Federal Arbitration Act, 9 U.S.C. Section 1 et seq. and the effect of federal
pre-emption of state law by such Act and except to the extent governed by the
United States Trademark Act and other federal laws, or as provided elsewhere in
this Agreement, you and we agree that this Agreement (including any claims,
counter-claims or otherwise by you) and all other matters concerning you and us
(and/or you and any of the Franchisor-Related Persons/Entities), including your
and our/their respective rights and obligations, will be governed by, and
construed and enforced in accordance with, the laws of the state where your
Plantation Store is, or will be, located, without regard to the laws of such
state relating to conflicts of laws or choice of law; except that the provisions
of any law of that state regarding franchises (including, without limitation,
registration, disclosure, or relationship, and the regulations thereunder) shall
not apply unless such state's jurisdictional, definitional and other
requirements are met independently of, and without reference to, this Section.
87
<PAGE> 89
YOUR INITIALS: __________ / __________
19.15 ADVICE OF LAWYERS, ALTERNATIVE INVESTMENT OPPORTUNITIES, ETC. You
acknowledge that you have had the opportunity (and we have strongly advised you)
to have this Agreement and all other documents reviewed by your own attorney and
that you have read, understood, had an opportunity to discuss with us, and
agreed to each provision of this Agreement. You agree that you have been under
no compulsion to sign this Agreement, that you have carefully reviewed and
thought about each provision of this Agreement, that you have considered other
franchise opportunities as well as the possibility of you entering our industry
as a non-franchised participant and that, therefore, this Agreement will be
deemed to have been drafted by you and we in equal parts and that no
presumptions or inferences concerning this Agreement's terms, interpretation or
otherwise will result by reason of the fact that we prepared this Agreement or
may be unwilling (in the interest of consistency of system administration) to
change its terms.
YOUR INITIALS: __________ / __________
20. INDEPENDENT CONTRACTORS AND INDEMNIFICATION
We and you are independent contractors. You shall conspicuously identify
the Franchisee, at the premises of your Plantation Store and in all dealings
with suppliers, as the owner of your Plantation Store. Neither we nor you shall
make any agreements or representations in the name of or on behalf of the other
or that our relationship is other than franchisor and franchisee and neither we
nor you shall be obligated by or have any liability under any agreements or
representations made by the other that are not expressly authorized hereunder,
nor shall we be obligated for any damages to any person or property directly or
indirectly arising out of the operation of your Plantation Store or your
business conducted pursuant to the Franchise. We shall have no liability for any
sales, use, excise, income, property or other taxes levied upon your Plantation
Store or its assets or in connection with the sales made or business conducted
by your Plantation Store.
You're the only one responsible for any damage, loss or other claims
arising out of, or related in any way to, any of your acts, errors or omissions,
whether related to you, your
88
<PAGE> 90
employees, agents or representatives, your operations or ownership of your
Plantation Store or otherwise arising. You will indemnify and hold harmless us,
all of Franchisor-Related Persons/Entities, all Coffee Plantation(R) Franchisees
or other operators and/or any of the foregoing, from all fines, suits,
proceedings, claims, demands, actions, loss, damages, costs, fees (including
attorney's fees and related expenses) and/or any other expense, obligation
and/or liability of any kind or nature, however arising, growing out of or
otherwise connected with and/or related to any act, error and/or omission of
yours (including, but not limited to, your ownership and/or operation of your
Plantation Store, any act or omission of your employees and/or agents, and/or
any transfer of any interest in this Agreement, your Plantation Store, the
Franchise, the Franchisee or otherwise.) We'll have the right to control all
litigation, and defend and/or settle any claim, against and/or including us
and/or the Franchisor-Related Persons/Entities or affecting our and/or their
interests, in such manner as we deem appropriate in our sole and absolute
discretion, in each case without affecting our rights under such indemnity.
YOUR INITIALS: __________ / __________
21. NOTICES
All written notices and reports permitted or required to be delivered by
the provisions of this Agreement or of the Manuals will be deemed so delivered
at the time delivered by hand, immediately on transmission by facsimile
transmission or other electronic system, including e-mail or any similar means,
one (1) business day after being placed in the hands of a commercial courier
service for overnight delivery, or three (3) business days after placement in
the United States Mail by Registered or Certified Mail, Return Receipt
Requested, postage prepaid and addressed to us at our then-current headquarters,
to the attention of the President, or at our most current principal business
address of which you have been notified in writing, and to you at your
Plantation Store. Until your Plantation Store has opened for business, we may
send you notices at any address appearing in your application for a franchise or
in our records. All payments and reports required by this Agreement will be
directed to us at our address as specified above. Any required payment or report
not actually received by us during regular business hours on the date due will
be deemed delinquent. Notice to any one owner of the Franchisee shall be deemed
effective as to all owners of the Franchisee.
22. EFFECTIVE DATE OF AGREEMENT
89
<PAGE> 91
This Agreement shall take effect upon the date of our execution and
delivery of this Agreement to you.
23. ACKNOWLEDGMENTS AND REPRESENTATIONS, ENTIRE AGREEMENT, NO FIDUCIARY
RELATIONSHIP, ETC.
MAKE SURE YOU READ THE FOLLOWING SECTIONS CAREFULLY! THEY'RE IMPORTANT AND ARE
IN THIS AGREEMENT TO BE CERTAIN THAT NEITHER YOU NOR WE HAVE ANY
MISUNDERSTANDINGS OR INAPPROPRIATE EXPECTATIONS.
You and we agree that there does not exist any fiduciary, trust or
similar special relationship between you and us, that the relationship between
you and us is an ordinary commercial relationship between independent
businesspeople intended for mutual but independent economic benefit and is not
in any sense, nor is intended to be, a fiduciary, trust or similar special
relationship, that each party has dealt with each other at arm's length and as
businesspersons with equivalent bargaining power, notwithstanding the
relationship of Franchisor and Franchisee, and that you have alternative
commercial opportunities (some of which are franchised) which you have
investigated and in which you can invest.
YOUR INITIALS: __________ / __________
You acknowledge that you [and each of your owners (if you are a
corporation or partnership) and investors] has read this Agreement and our
Uniform Franchise Offering Circular and all exhibits and that you and they
understand and accept the terms, conditions, and covenants contained in this
Agreement as being necessary to maintain our high standards of quality and
service and the uniformity of those standards at all Plantation Stores and to
protect and preserve the goodwill of the Marks and the System.
YOUR INITIALS: __________ / __________
You and we, each agreeing on the critical practical business importance
of our relationship being governed solely by written documents signed by you and
us (including any concurrently executed written personal guarantees, Statement
of Prospective Franchisee and/or exhibits - schedules - addenda - promissory
90
<PAGE> 92
note(s) security agreement(s) or other written documents signed by the party to
be bound thereby, all of which will be deemed to be part of this Agreement for
the purposes of this Section 23) and not wishing to create misunderstandings,
confusion and possible conflict through reference to any alleged prior and/or
contemporaneous oral and/or written representations, understandings, agreements
or otherwise, or any legal doctrines such as "good faith and fair dealing" or
otherwise which might introduce an element of uncertainty into our relationship,
jointly intend, represent, warrant and agree that:
(1) this Agreement contains the final, complete and exclusive expression
of the terms of your and our agreement, and the final, complete and exclusive
expression of your and our intent, and entirely supersedes and replaces any and
all prior and/or concurrent understandings, agreements, inducements, prior
course(s) of dealing, representations (financial or otherwise), promises,
options, rights-of-first refusal, guarantees, warranties (express or implied) or
otherwise (whether oral or written) between you and us,
(2) there are no prior and/or concurrent understandings, agreements,
inducements, course(s) of dealing, representations (financial or otherwise),
promises, options, rights-of-first refusal, guarantees, warranties (express or
implied) or otherwise (whether oral or written) which are not fully expressed in
this Agreement, and
(3) no prior and/or concurrent understandings, agreements, inducements,
course(s) of dealing, representations (financial or otherwise), promises,
options, rights-of-first refusal, guarantees, warranties (express or implied) or
otherwise (whether oral or written) of any kind or nature whatsoever have been
made by us or anyone else, nor have been relied on by you nor will have any
force or effect; excepting only the written representations made by you in
connection with your application for this franchise.
You and we each expressly disclaim any understandings, agreements,
inducements, course(s) of dealing, representations (financial or otherwise),
promises, options, rights-of-first refusal, guarantees, warranties (express or
implied) or otherwise (whether oral or written) which are not fully expressed in
writing in this Agreement. This is equally important to you, as well as us,
since, just as we do not wish to deal with allegations that we may have made or
entered into understandings, representations, etc. not fully expressed in
writing in this Agreement (such as alleged earnings claims), you do not wish to
deal with allegations that you made or entered into understandings,
representations, etc. (such as promises to
91
<PAGE> 93
achieve particular sales or royalty payment levels, would open a particular
number of units, etc.) which are not fully expressed in writing in this
Agreement.
YOUR INITIALS: __________ / __________
In particular, you have not been promised, nor have we or anyone else
made any promises, representations and/or warranties, nor have you received or
relied on any promises, representations or warranties, that
(1) any payments by you are refundable at your option,
(2) we will repurchase any rights granted hereunder (or any associated
business) or will be able to assist you in any resale,
(3) you will succeed in the franchised business,
(4) you will achieve any particular sales, income or other levels of
performance,
(5) you will have any exclusive rights of any type other than as
expressly set forth herein,
(6) you will receive any level of advertising (television or otherwise),
marketing assistance, site location, development or other services, operational
assistance or otherwise other than as expressly set forth in this Agreement,
(7) you will not be required to obtain any licenses in order to operate
your Plantation Store,
(8) any location will be successful,
(9) it will be anyone's responsibility other than yours to obtain all
licenses necessary in order to establish and operate your Plantation Store or
(10) that you will be awarded additional or further franchises or other
rights, except as expressly set forth in a written document signed by a
corporate officer of Franchisor.
No contingency, condition, prerequisite, prior requirement, or otherwise
(including but not limited to obtaining financing, obtaining a site or
otherwise) exists with respect to you fully performing any or all of your
obligations under this Agreement.
YOUR INITIALS: __________ / __________
92
<PAGE> 94
You have not received or relied on (nor have we or anyone else provided)
any oral or written: sales, income or other projections of any kind or nature or
any statements, representations, data, charts, tables, spreadsheets or
mathematical calculations or otherwise which stated or suggested any level or
range of actual or potential sales, costs, income, expenses, profits, cash flow,
tax effects or otherwise and neither we nor anyone else has made, nor have you
relied on, any promises, representations or warranties as to any profits or
otherwise you may realize in the operation of a Plantation Store, nor have you
received or relied on any representations regarding any working capital or other
funds necessary to reach any "breakeven" or any other financial level. We are
unable, and do not attempt, to predict, forecast or project future performance,
revenues, profits or otherwise of any Plantation Store. If any such information,
promises, representations and/or warranties has been provided to you, it should
not be relied on, we will not be bound by it, and, if you do rely on such
information, promises, representations and/or warranties, you do so at your own
risk.
YOUR INITIALS: __________ / __________
You acknowledge and agree that the success of the business venture
contemplated to be undertaken by you is speculative, is and will be dependent on
your personal efforts, that while we can provide you with systems, methods,
procedures, techniques and other "tools," including the Coffee Plantation System
and otherwise, your success ultimately depends on your efforts, including your
proactive, diligent and thorough knowledge and application of the Coffee
Plantation System, that entry into any business enterprise is always associated
with risk and that no assurance of success has been or can be given to you. You
acknowledge and represent that you have entered into this Agreement and made an
investment only after (1) making an independent investigation of the
opportunity, including having received a list, in connection with the
presentation of our Uniform Franchise Offering Circular, of (and having spoken
with) other franchisees currently operating or who have operated Plantation
Stores, (2) having had an opportunity to have this transaction and all related
documents reviewed by an attorney and a financial advisor of your choosing, such
review having been strongly recommended by us and (3) having independently
researched all applicable licensing and other requirements related to the
operation of your Plantation Store. You
93
<PAGE> 95
acknowledge that you and each person signing as Franchisee (and/or having any
investment and/or interest in your Plantation Store) has received, reviewed,
understood and fully read, and all questions have been answered regarding, (1) a
copy of our Uniform Franchise Offering Circular with all exhibits at least ten
(10) business days prior to the earlier of your and/or any such person (a)
signing any binding documents or (b) paying any sums and (2) a copy of this
Agreement and all other agreements complete and in form ready to sign at least
five (5) business days prior to the earlier of you and/or any such person (a)
signing any binding documents or (b) paying any sums. You acknowledge that you
have been given an opportunity to clarify any provision you did not understand
and that the terms, conditions and covenants contained in this Agreement are
reasonable and necessary to maintain our high standards of quality and service
and the uniformity of those standards at all Plantation Stores and thereby to
protect and preserve the goodwill of the Names and Marks and Trade Dress.
YOUR INITIALS: __________ / __________
You understand that we are relying on you to bring forward in writing at
this time any matters inconsistent with any of the matters set forth in this
Section 23 or otherwise so that we can correct any misunderstandings or
inappropriate expectations and you agree that if any of the statements or
matters set forth in this Section 23 or otherwise are not true, correct and
complete you will make a written statement regarding such next to your signature
below so that we may address and resolve any such issue(s) at this time and
before either you or we go forward.
YOUR INITIALS: __________ / __________
You acknowledge and agree that in all of your dealings with the
Franchisor, the officers, directors, employees, and agents of the Franchisor act
only in a representative capacity and not in an individual capacity. You further
acknowledge that this Agreement, and all business dealings between you and such
Individuals as a result of this Agreement, are solely between you and Coffee
People, Inc. and that no other persons or entities, including any of the
Franchisor-Related Persons/Entities, have or will have any duties or obligations
to you. You further represent to us, as an inducement to our entry into this
Agreement, that you have made no misrepresentations in obtaining the Franchise.
94
<PAGE> 96
YOUR INITIALS: __________ / __________
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date stated below.
FRANCHISOR: COFFEE PEOPLE, INC.
By: _________________________________
President
FRANCHISEE(S) (INDIVIDUAL):
____________________________________
Name
____________________________________
Signature
____________________________________
Name
____________________________________
Signature
95
<PAGE> 97
FRANCHISEE (CORP., LLC OR PARTNERSHIP)
___________________________________
Legal Name of Franchisee Entity
a _______________________ _____________________________________
Jurisdiction of Formation Corporation, LLC or Partnership
By: _________________________________
Name
_________________________________
Signature
Title: _______________________________
Date: _______________________________
96
<PAGE> 98
GUARANTY AND ASSUMPTION OF OBLIGATIONS
In consideration of, and as an inducement to, the execution of the above
Franchise Agreement and any Addenda thereto (individually or collectively the
"Agreement") by Coffee People, Inc. ("Franchisor"), each of the undersigned
("Guarantors") hereby personally and unconditionally (1) guarantees to us and
its successors and assigns, for the term of the Agreement and thereafter as
provided in the Agreement, that __________________________________________
("Franchisee") shall punctually pay and perform each and every undertaking,
agreement and covenant set forth in the Agreement and (2) agrees to be
personally bound by, and personally liable for the breach of, each and every
provision in the Agreement. Each of the undersigned waives:
1. acceptance and notice of acceptance by us of the foregoing undertakings;
2. notice of demand for payment of any indebtedness or nonperformance of
any obligations hereby guaranteed;
3. protest and notice of default to any party with respect to the
indebtedness or nonperformance of any obligations hereby guaranteed;
4. any right he may have to require that an action be brought against you
or any other person as a condition of liability; and
5. all rights to payments and claims for reimbursement or subrogation which
any of the Guarantors may have against you arising as a result of the
Guarantors' execution of and performance under this guaranty.
6. Each of the undersigned consents and agrees that:
7. his direct and immediate liability under this guaranty shall be joint
and several;
8. he shall render any payment or performance required under the Agreement
upon demand if you fails or refuses punctually to do so;
9. such liability shall not be contingent upon or conditioned upon pursuit
by us of any remedies against you or any other person; and
10. such liability shall not be diminished, relieved or otherwise affected
by any extension of time, credit or the indulgence
97
<PAGE> 99
which We may from time to time grant to you or to any other person,
including, without limitation, the acceptance of any partial payment or
performance, or the compromise or release of any claims, none of which
shall in any way modify or amend this guaranty, which shall be
continuing and irrevocable during the term of the Agreement.
If Franchisor is required to enforce this Guaranty and Assumption of
Obligations in any judicial or arbitration proceeding or appeal thereof, the
Guarantors shall reimburse Franchisor for its costs and expenses, including but
not limited to, reasonable accountants', attorneys', attorney assistants',
arbitrators' and expert witness fees, costs of investigation and proof of facts,
court costs, other litigation expenses and travel and living expenses, whether
incurred prior to, in preparation for or in contemplation of the filing of any
written demand, claim, action, hearing or proceeding to enforce this Guaranty
and Assumption of Obligations.
98
<PAGE> 100
IN WITNESS WHEREOF, each of the undersigned has hereunto affixed his
signature on the same day and year as the Agreement was executed.
GUARANTORS
_________________________________
Name
_________________________________
Signature
_________________________________
Name
_________________________________
Signature
WITNESS
_________________________________
Name
_________________________________
Signature
Date: _______________________________
99