Sample Business Contracts

Development Agreement - Friendly Ice Cream Corp. and FriendCo Restaurants Inc.

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                              DEVELOPMENT   AGREEMENT
                           FRIENDLY ICE CREAM CORPORATION
                                  1855 Boston Road
                          Wilbraham, Massachusetts   01095
                             FRIENDCO RESTAURANTS, INC.
                              1657  Crofton Boulevard
                             Crofton, Maryland   21114
                                 July       , 1997


                                  TABLE OF CONTENTS

 Section                                        Page
    1.   Schedule  and Exclusivity ............   2
    2.   Term..................................   6
    3.   Fees..................................   6
    4.   Application of Development Fee .......   7
    5.   Application Procedures ...............   8
    6.   Restaurant Closing Procedure..........   9
    7.   Assignment...........................   11
    8.   Non-Competition......................   12
    9.   Default and Termination .............   14
    10.  Agency and Indemnity.................   17
    11.  Notices..............................   19
    12.  Miscellaneous .......................   20
    13.  Acknowledgement of Risk..............   21


    Exhibit A:    Territory and Time Schedule..  A-1
    Exhibit B:    Omitted
    Exhibit C:    Franchise Agreement .........  C-1
    Exhibit D:    Commitment Agreement.........  D-1


                                DEVELOPMENT AGREEMENT

    THIS AGREEMENT dated --------------, 19------, between FRIENDLY'S 
RESTAURANTS  FRANCHISE, INC., a Delaware corporation ("Friendly's"), and 
FRIENDCO RESTAURANTS, INC., a Maryland  corporation ("Developer").

    WHEREAS, Friendly's owns, operates and licenses others to operate 
distinctive high quality restaurants  ("Friendly's Restaurants") serving the 
public under the name Friendly's" (the "System"); and 

    WHEREAS, Friendly's desires to achieve market penetration in various 
areas of the United States in order to  more effectively expand, advertise 
and market the System, and  

    WHEREAS,  Friendly's has concluded that to further its goals, it desires 
to grant to experienced and  financially qualified persons or organizations 
the opportunity for exclusive development of Friendly's Restaurants  using 
the System within limited territories for specified periods of time; and 

    WHEREAS, Developer desires to obtain the right to acquire sites within a 
specific territory during a  specified period of time on which to construct 
Friendly's Restaurants using the System, to submit to Friendly's  
applications for franchise agreements to operate Friendly's Restaurants on 
such sites, and upon the approval of  each such application, to 


enter into a franchise agreement with Friendly's to operate a Friendly's 
Restaurant using the System upon  such sites; and

    WHEREAS, Developer represents that it has the organizational, operational 
and financial strength,  experience and resources necessary to carry out the 
multiple development of Friendly's Restaurants within the  Territory, as 
defined below, in the specified time set forth below. 

    NOW, THEREFORE, in consideration of the mutual covenants contained herein 
and pursuant to the terms  and conditions of this Agreement, the parties 
hereby agree as follows: 


    A.   Developer agrees to construct, equip and open seventy-four (74) 
Friendly's Restaurants using the System  within the time schedule and 
territory (the "Territory") set forth on Exhibit A attached hereto and made a 
part hereof, and to maintain the operation of an additional thirty-four (34) 
Friendly's Restaurants pursuant to a  franchise agreement, subject to 
Paragraph 1.G., infra.

    B.   Developer agrees that time is of the essence under this Agreement, 
and agrees to comply strictly with each  and every element of the time 
schedule set forth on Exhibit A.  Developer further agrees that Exhibit A 
sets  forth the minimum number of Friendly's Restaurants to be constructed, 
that Developer will be required to have  


the minimum number under contract and to demonstrate the number under 
contract in order to qualify for any  cure period for any default, and that 
it is the mutual goal of Friendly's and Developer that Developer  construct, 
equip and open a greater number in an extended time period (the "Target 
Number") of Friendly's Restaurants  as described on Exhibit A, but the 
failure to open the Target Number shall not be a default hereunder. 

    C.   For the purposes of this Agreement, a restaurant will be considered 
open or under construction in such  calendar year as the construction permit 
is obtained and the building footings are poured.  The Developer will  have 
six (6) months for the date construction commences to have the restaurant 
open for business in order for  the restaurant to be included in the minimum 
number required to be open or under construction in any given  year.

    D.   During  the term of this Agreement, Friendly's shall not operate, or 
license or franchise others to operate  restaurants using the System within 
the Territory except as provided in this Agreement; provided however, that  
if the Target Number has not been achieved, Friendly's may operate, or 
license others to operate Friendly's  Restaurants within the Territory and, 
provided further, that during the term of this Agreement only, Friendly's  
shall not own, license or franchise any Friendly's Restaurant within the 
Trade Area (as defined in Paragraph 8)  of any Friendly's Restaurant operated 
by Developer.


    E.   Developer agrees that this Agreement does not grant it the right to 
use the System at any location, nor  does it grant Developer any rights with 
respect to the System or to use any of the trademarks or trade secrets of 
Friendly's, such rights being exclusively governed by a Franchise Agreement 
for each Friendly's Restaurant  opened hereunder.

    F.   Each Friendly's Restaurant as and when constructed, equipped and 
opened, and the relationship of  Developer and Friendly's with respect to 
each such restaurant, shall be governed by the terms of an individual  
Franchise Agreement on the form of such agreement attached hereto as Exhibit 
C  which will be granted to Developer  by Friendly's in the good faith 
exercise of its sole discretion; provided, however, that upon the earlier of 
the  expiration of this Agreement, the completion the Target number or the 
elapse of ten (10) years from December  31, 1997, Developer shall thereafter 
use the then current form of Franchise Agreement. 

    G.   Developer  agrees that all Friendly's Restaurants set forth on 
Exhibit A must be open and operating during  established business hours at 
all times (excepting casualty or condemnation or act of God) on and after 
their  scheduled opening date and in the event any such restaurant(s) is not 
at all times open and operating during  established business hours, it will 
constitute a default hereunder, except for such restaurant closings as are  
permitted in accordance with Paragraph 6 hereof.


    H.   Upon final expiration or termination of this Agreement for any 
reason, Developer's territorial rights and  rights to construct, equip, open 
and operate Friendly's Restaurants shall terminate and expire and Developer's 
 rights to use the System shall be limited to those Friendly's Restaurants 
operating pursuant to effective  Franchise Agreements which Friendly's and 
Developer may have entered into prior to the final expiration or  termination 
of this Agreement.

    I.   Developer shall have a right of first refusal on the operation of 
any Friendly's Restaurant located in the  Territory in an Institutional Site 
(such as a government office, theme park, hospital, airport, university or 
college, military base or similar setting serving essentially a captive 
audience or customer base).  The sole exceptions  to the exclusivity of 
territory granted hereunder shall be the fourteen (14) managed Restaurants, 
the two (2) restaurants operated by F.I.C.C. (which shall be closed and 
de-identified no later than four (4) months after the  Effective Date and the 
Maryland Science Center restaurant.  Any Friendly's Restaurant in the 
Territory which is   not managed or operated by Developer may only be managed 
and operated by employees of Friendly Ice  Cream Corporation during the term 
of this Agreement.  Such exclusivity shall not limit the rights reserved by  
Friendly's or F.I.C.C. under Paragraph 1.C. of the Franchise Agreement.      


2.   TERM.

    This Agreement shall commence upon the date first written above and shall 
terminate upon the earlier of  December 31, 2007, or the date of Developer's 
execution of a Termination Agreement following the opening of the 
seventy-fourth (74th) Friendly's Restaurant required to be constructed, 
equipped, opened and operating  pursuant to this Agreement, unless terminated 
earlier as provided for herein.  The feasibility of further development  in 
the Territory shall be assessed by Friendly's and Developer after the 
completion of the 74th restaurant and  again after the completion of the 
100th restaurant, and thereafter every five (5) years.  An agreement to 
continue  the development of additional restaurants hereunder shall operate 
to extend the Term of this Agreement.  In no  event shall the completion of 
the 74th restaurant cause this Agreement to terminate prior to December 31,  

    3.   FEES.

    In consideration of the rights granted Developer, Developer shall pay to 
Friendly's the sum of Nine Hundred  Thirty Thousand and 00/100 Dollars 
($930,000.00) (the "Development Fee") all of which is non-refundable  except  
as provided under Paragraph 9G and all or part of which has either heretofore 
been paid or is tendered  herewith.



    A.   Developer agrees that Friendly's is not obligated in any event, 
including the termination or expiration of  this Agreement, to return to 
Developer all or any part of the Development Fee, except as provided in 
Paragraph  9G of this Agreement.

    B.   Developer has no rights in the Development Fee except as are 
specifically set out in this Agreement. 

    C.   Friendly's agrees that, at such time as Developer and Friendly's 
execute a Commitment Agreement for the  issuance of a Franchise Agreement 
("Commitment Agreement") for any of the Friendly's Restaurants to be 
constructed, equipped and opened hereunder, Friendly's shall apply the 
Development Fee in an amount equal to one  half ( ) of the initial franchise 
fee required to be paid in connection with each such application and  
subsequent grant of a Franchise Agreement.  The Franchise Fee shall be Thirty 
Thousand Dollars ($30,000.00) for the  first two (2) restaurants constructed 
hereunder and Twenty-Five Thousand Dollars ($25,000.00) for each  additional 
restaurant set forth in Exhibit A, and thereafter shall be an amount equal to 
the then-current initial  franchise fee.

    D.   In  the event the Development Fee has been applied such that there 
is a balance owed against any initial  fee(s) which may become due, Developer 
shall pay


any balance of such initial fee due to Friendly's with Developer's 
application for a Franchise Agreement. 


    A.   Developer acknowledges and agrees that franchise agreements are 
granted by Friendly's only after  submission and approval of a formal 
application on Friendly's then-current application form supplying all 
information requested thereon and paying all required fees.  Developer 
further understands that a Commitment  Agreement is first executed and 
delivered following approval of such application and that if the terms and 
conditions of the Commitment Agreement are complied with, a Franchise 
Agreement granting a franchise to operate a  Friendly's Restaurant will be 
executed and delivered. Developer acknowledges and agrees that the Commitment 
 Agreement and the Franchise Agreement will be the forms of such agreements 
as are attached hereto as Exhibits C  and D for the restaurants developed in 
accordance with Exhibit A .

     B.   Developer shall comply in all respects with Friendly's franchise 
application policies and procedures when  Developer applies for a Franchise 
Agreement in order to fulfill its obligations under this Agreement.   
Developer understands that it should obtain a Commitment Agreement before 
making any unconditional binding  commitments to third parties, and 
understands and agrees


that  any activities undertaken in reliance on this Agreement prior to such 
time are at Developer's own risk  and expense.

    C.   Developer acknowledges and agrees that Friendly's may choose to 
grant or deny applications for franchise  agreements; however, Friendly's 
will exercise good faith in exercising its discretion. 

    D.   Developer shall be solely responsible for locating appropriate sites 
for the construction of Friendly's  Restaurants as contemplated hereunder and 
taking all other actions necessary to finance, build, and construct such 
restaurants.  Developer understands and agrees that all proposed sites are 
subject to Friendly's prior  approval, not to be unreasonably withheld.


    A.   Developer may discontinue operations at any Friendly's Restaurant 
opened or maintained pursuant to this  Development Agreement (other than 
through condemnation or casualty loss) only in accordance with the  procedure 
set forth in this Section 6.  Developer shall notify Friendly's that the 
restaurant to be discontinued  does not produce a profit at a restaurant 
operating level, and shall afford Friendly's not less than thirty (30) days  
to audit the operations of such restaurant, should Friendly's choose to do 
so.  Evidence of a restaurant's  failure to produce a profit shall be 
established through six (6) quarters of consecutive losses totaling  


Thousand  Dollars ($75,000.00) or if an aggregate loss of Seventy-Five 
Thousand Dollars ($75,000.00) is  achieved in such shorter period when 
measured on the basis of restaurant operating income. Thereafter,  Developer 
may proceed to discontinue operations at the restaurant so long as 
de-identification of the restaurant occurs  within fifteen (15) days of the 
cessation of restaurant operations. 

    B.   Developer shall replace any closed restaurant with (and shall 
transfer the Franchise Agreement for such  closed restaurant) to a newly 
constructed or remodeled restaurant within eighteen (18) months of the 
cessation of  restaurant operations, if the replacement restaurant does not 
have a drive-thru window, or within  twenty-four (24) months if the 
replacement restaurant does have a drive-thru window (collectively, such 
period shall be  considered the "Replacement Period").

    C.   Developer shall be entitled to a moratorium on royalties and     
marketing fees for the Replacement Period for  a total of four (4) closed 
restaurants; however, for each additional closed restaurant, Developer shall 
continue  to pay the average monthly royalty and marketing fee for such 
restaurant as was paid during the last twelve  (12) months of operation until 
each such additional restaurant is replaced pursuant to the terms of this 
Paragraph 6, and the Franchise Agreement for such closed restaurant is 
transferred to the replacement restaurant.


    D.   For each closed 
Restaurant to be replaced, Developer shall pay a Site Replacement Fee to 
Friendly's to  cover  Friendly's costs of reviewing and approving the 
proposed replacement site, such Fee to be in the amount of  the lesser of 
Friendly's actual costs or Two Thousand Five Hundred Dollars ($2,500.00). 

    7.   ASSIGNMENT.

    A.   Friendly's may assign all or any part of its rights or obligations 
hereunder to any person or entity,  provided, however, that such person or 
entity has no right or authority, at the time of such assignment, to license 
others to operate Friendly's Restaurants within the Territory, unless and 
until this Agreement has expired or  terminated.

    B.   The rights and obligations of Developer hereunder are not assignable 
without the prior written consent of  Friendly's which may be withheld in 
Friendly's sole discretion.  For the purposes of this clause, an  assignment 
includes an assignment, sale, or other transfer, directly or indirectly of 
any interest in Developer, but shall  not include a transfer by merger with 
the corporate parent or other affiliate  of Developer, provided that the net  
worth of the affiliate successor entity is the same or greater than the net 
worth of the Developer and its  corporate parent as of the Effective Date.


    C.   Developer shall not assign, sell or transfer any interest in 
Developer during the term hereof without the  prior written consent of 
Friendly's, not to be unreasonably withheld. 

    D.   Any  purported assignment contrary to the foregoing provisions shall 
be void and of no force and effect  and shall constitute a default hereunder.


    Developer acknowledges and agrees that Friendly's has invested a 
substantial amount of time and money in  developing the System and the 
confidential information associated therewith (the "Confidential 
Information") and that Friendly's would be unable to protect its System, the 
Confidential Information and trade secrets  against unauthorized use or 
disclosure and would be unable to encourage a free exchange of ideas and 
information  among Friendly's and its licensees if prospective licensees or 
licensees were permitted to hold interests in or  perform services for any 
competing business and that the following restrictions are reasonably 
required in  order to protect Friendly's information, marketing strategies, 
operating policies and other elements of the System  from unauthorized 
appropriation and to ensure that Developer is using its best efforts in 
employing its  financial and management resources effectively to meet and 
exceed the minimum and target development schedule set  forth in this 
Agreement.  Therefore, Developer agrees that, during the term of this 
Agreement, neither Developer  nor any of its corporate parent, subsidiaries 
or their affiliates will have any direct or indirect legal or beneficial 
interest or perform


services in any business which owns, operates, licenses, franchises or 
develops any restaurant concept  which  both (i) has sit down, table service, 
and (ii) is a mid-scale priced, family style restaurant, coffee shop or ice  
cream/frozen yogurt shoppe (as defined by CREST operators list as of June 1, 
1997) including but not limited to  Denny's Shoney's Big Boy, Country 
Kitchen, Bob Evans, Cracker Barrel, IHOP, Village Inn, Waffle House,  Dairy 
Queen, Swensen's, Carvel, Baskin Robbins, TCBY or similar.  Notwithstanding 
the above, a restaurant  concept which is a mid-scale priced family style 
restaurant will be deemed competitive if frozen deserts  comprise 5% or more 
of the sales mix as measured on any six (6) month basis.  Developer further 
agrees that for a period of two (2) years after the termination or expiration 
of this Agreement, Developer and all of such persons will  be subject to the 
same restriction on competing activities (i) within the Territory and (ii) 
within the trade area (as reasonably determined by Friendly's) of any 
Friendly's Restaurant currently operated by Friendly's or any  licensee, but 
in no event within a radius of three (3) miles from any such restaurant.  
Developer further  acknowledges that this paragraph confers no exclusivity on 
Developer with respect to Developer's further operation  of any Restaurant 
within the Territory after the expiration or termination of this Agreement. 

    The restrictions of this section shall not be applicable to the 
Friendly's Restaurants operated under franchise  agreements between Developer 
and Friendly's, 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 five 
percent (5%) or less of the numbers  of shares of that class of


securities issued and outstanding, or to any restaurants franchised by 
Wendy's International and operated  by the corporate parent or any affiliate 
of Developer.


    A.   This Agreement shall terminate without further notice at the time 
and date set forth in Paragraph 2 hereof,  unless extended or earlier 
terminated as set forth hereinbelow. 

    B.   This Agreement shall automatically terminate without notice in the 
event Developer becomes insolvent or  is unable to pay its debts as they may 
mature or make an assignment for the benefit of creditors or an  admission of 
inability to pay obligations as they become due or file a voluntary petition 
in bankruptcy or any  pleading seeking any reorganization, liquidation, 
dissolution or composition or other settlement with creditors  under any law, 
or admitting or failing to contest the material allegations of any such 
pleading filed against  Developer, or its adjudicated a bankrupt or insolvent 
or a receiver or other custodian is appointed for a substantial  part of 
Developer's assets or the assets of any Friendly's Restaurant owned by 
Developer or a final judgment remains unsatisfied or of record for ninety 
(90) days or longer (unless supersedeas bond is filed), or if execution  is 
levied against any substantial part of Developer's assets is made, or suit to 
foreclose any lien or mortgage against Developer or any Friendly's Restaurant 
owned by Developer is instituted and is not dismissed within  ninety (90) 
days, or if a substantial part of Developer's real or  


personal property is sold after levy of judgment thereupon by any sheriff, 
marshal or constable, or the claims  of Developer's creditors are abated or 
subject to a moratorium under any law; 

    C.   In  the event Developer materially fails to comply with any of the 
terms and conditions of this Agreement  (excepting only by reason of force 
majeure, such as, but not limited to:  civil strife or commotion, labor 
strike, lockout or Acts of God) or the terms and conditions of any Commitment 
Agreement, Franchise Agreement  orother agreement between Friendly's and 
Developer, it shall constitute a default of this Agreement, and if  Developer 
fails to cure such default(s) within one hundred eighty (180) days in the 
first year of this Agreement, or sixty  (60) days in the next four (4) 
subsequent years, of Friendly's giving written notice of said default(s) to  
Developer or the cure period provided in such other agreement, Friendly's, in 
its sole and absolute discretion, and  in addition to any other rights and 
remedies it may have at law or in equity, may terminate this Agreement and  
any Commitment Agreements in force at the time of the default without further 

    D.   In the event of termination of this Agreement, Friendly's shall 
retain all of the Development Fee, as a  liquidated damage except as provided 
for in Subparagraph G herein, and any unaccrued portion of the Development  
Fee shall be retained by Friendly's without the necessity of notice thereof.  


    E.   A default under this Agreement shall not constitute a default under 
any Franchise Agreement between  Friendly's and Developer.  However, the 
failure of Developer to complete the minimum development required  hereunder 
shall grant to Friendly's the option to purchase the assets and rights 
relating to the original thirty-four  (34) restaurants sold to Developer by 
Friendly Ice Cream Corporation at the same multiple of cash flow (i.e.  5.3  
times EBITDA on a trailing twelve (12) month basis) as in the original 
transaction by Friendly Ice Cream  Corporation and Developer, pursuant to the 
Purchase and Sale Agreement dated July 10, 1997. 

    Upon the exercise of the repurchase option, the leases and subleases 
between Friendly Ice Cream  Corporation and Developer, as well as any 
guarantee of such leases or subleases by DavCo Restaurants, Inc. will  
terminate, excepting only such leases or subleases which Developer shall have 
assigned or sublet to a third party  (the "Remaining Leases"). 

    The assignment or sublease between Developer and any third party on the 
Remaining Leases shall attorn to  Friendly Ice Cream Corporation, and any 
guarantee of the Remaining Leases by DavCo Restaurants, Inc. shall  remain in 
full force and effect throughout the remainder of the base term (and renewals 
at the sole discretion of  such third party) of such assignment or sublease.


    F.   Upon final expiration or termination of this Agreement for any 
reason, Developer's territorial rights and  rights to construct, equip, open 
and operate Friendly's Restaurants using the System shall automatically  
terminate and expire and Developer's rights to use the System shall be 
limited to those Friendly's Restaurants  pursuant to effective Franchise 
Agreements which Friendly's and Developer may have executed and delivered 
prior to  such expiration or termination.

    G.   Friendly's  failure to comply with the terms and conditions of this 
Agreement shall constitute a default  hereunder.  If Friendly's fails to cure 
such default(s) within thirty (30) days of its receipt of written notice 
thereof,  this Agreementshall terminate and any portion of the Development 
Fee not applied pursuant to Paragraph 4  hereunder shall be refunded to 


    A.   Developer and Friendly's agree that this Agreement does not create 
any fiduciary relationship between  them and nothing in this Agreement is 
intended to make either party an agent, legal representative, joint venturer, 
 partner, employee or servant of the other for any purpose whatsoever.  Each 
party to this Agreement is an  independent contractor and shall hold itself 
out to the public as an independent contractor.


     B.   Developer shall not make any contract, agreement, warranty or 
representation in the name of Friendly's,  and Friendly's assumes no 
liability for, nor shall it be deemed liable by reason of, any action or 
omission of Developer and its conduct of business pursuant to this Agreement 
or any claim or action arising therefrom. 

    C.   Developer shall indemnify and hold Friendly's harmless from and 
promptly reimburse it for any and all  claims, demands, taxes or penalties, 
actions and payment of money (including, but not limited to, fines, damages 
legal fees and expenses) by reason of any or all claims, demands, taxes, or 
penalties arising directly or indirectly  from,  as a result of, or in 
connection with Developer's actions oromissions hereunder or those of its 
agents or  employees, including those of its contractors and subcontractors.  
At the election of Friendly's, Developer  will also defend Friendly's against 
same at Developer's expense.  In any event, and regardless of Developer's  
payment of legal fees, Friendly's will have the right, through counsel of its 
choice, to control any claim, demand,  action or matter to the extent it 
could directly or indirectly affect Friendly's financially, and all such 
expenses  shall be subject to indemnity hereunder.  Developer's obligations 
under this paragraph shall survive the  termination or expiration of this 


    D.   Except as provided above, Friendly's and Developer shall indemnify, 
defend and hold each other harmless  from claims, demands and causes of 
action asserted against the indemnitee by any person for personal injury  or 
death or for loss of or damage to property and resulting from the 
indemnitor's active or passive negligence or  willful misconduct.  Where such 
injury, death, loss or damage is the result of joint active or passive  
negligence or willful misconduct, the duty of indemnification shall be in 
proportion to the allocable share of the joint  active or passive negligence 
or willful misconduct.

    11.  NOTICES.

    All notices required under this Agreement shall be in writing and shall 
be personally delivered, sent by  facsimile or overnight courier or mailed by 
United States Mail, Return Receipt Requested, to the respective  parties  at 
the following addresses unless and until a different address has been 
designated by written notice to the  other party:

                   1855 Boston Road
                   Wilbraham, Massachusetts 01095
                   Attention: General Counsel

                   1657 Crofton Boulevard
                   Crofton, Maryland 21114
                   Attention: President


    Notices sent (i) by personal delivery or facsimile shall be effective 
when received; (ii) by mail on the third  business day after mailing; and 
(iii) by overnight courier on the second business day after delivery to the  


    A.   No  failure or delay of Friendly's or Developer to exercise any 
rights reserved to it in this Agreement or to  insist upon compliance by 
either party of any obligation or condition in this Agreement, and no custom 
or  practice of the parties at variance with the terms hereof, shall 
constitute a waiver of either party's right to demand  strict compliance with 
the terms of this Agreement.  Waiver by either party of any particular 
default will not  affect or impair the rights of Friendly's or Developer with 
respect to any subsequent default of the same or a  different nature.

    B.   This Agreement is solely for the benefit of the parties hereto and 
their permitted assignees and is not  intended to and shall not be construed 
to benefit any other person, firm or entity. 

    C.   The title headings of the respective paragraphs of this Agreement 
are for reference purposes only and shall  not effect the meaning or 
interpretation of this Agreement in any way.


     D.   This Agreement and any rights or liabilities arising from or in 
connection with this Agreement shall be  governed by the laws of the State of 
Delaware.  Any action brought to enforce any provision of this Agreement  
shall be brought and maintained only in a state or federal court of competent 
jurisdiction in Wilmington,  Delaware.

    E.   This  is the entire agreement between the parties concerning the 
development of Friendly's Restaurants  within the Territory and any 
modifications must be in writing and signed by both parties, or said 
modifications  will be void and of no force and effect.

    F.   If any term or provision of this Agreement or the application 
thereof to any person or circumstances shall,  to any extent, be invalid or 
unenforceable, the remainder of this Agreement, or the application of such 
term or  provision to persons whose circumstances other than those as to 
which it is held invalid or unenforceable, shall  not be affected thereby.


    A.   Developer acknowledges the success of the business ventures 
contemplated by this Agreement involves  substantial business risks and is 
dependent upon the Developer's ability.  Friendly's expressly disclaims the 
making of, and Developer acknowledges that it has not received and is not 
relying upon, any  


warranty or guarantee, express or implied, as to the potential volume, 
profits, or success of the business  venture contemplated by this Agreement.

    B.   Developer represents that it has independently investigated the 
risks of the business venture  contemplated by this Agreement and has read 
the disclosure documents prepared by Friendly's in accordance with the  state 
 and federal franchise laws and agrees that Friendly's has made no 
representation that is not fully set forth  therein or herein.

    C.   Developer acknowledges that it has not and agrees that it will not 
rely upon any representations not  contained herein or in the disclosure 
documents prepared by Friendly's in accordance with state and federal  
franchise laws.


    WITNESS WHEREOF, the parties hereto have executed and delivered this 
Agreement as of the date and year  first above written.

ATTEST:                           FRIENDLY'S RESTAURANTS
                                  FRANCHISE, INC.

_____________________________     By: ____________________________

                                  Print  Name:    



____________________________      By: ____________________________

         Print Name:        




                                  E X H I B I T     A


                                DEVELOPMENT AGREEMENT

                         Dated: ---------------------- , 199       






States of Delaware, Maryland, the District of Columbia and following Virginia 
counties:  Alexandria,  Arlington, Caroline, Clarke, Culpeper, Essex, 
Fairfax, Fauquier, Frederick, King George, Lancaster, Loudoun, North  
Umberland, Prince William, Rappahanock, Richmond, Shenandoah, Spotsylvania, 
Stafford, Warren and Westmoreland.

The boundaries of the Territory defined above shall, throughout the term of 
this Development Agreement, be those boundaries as they exist as of the date 

                                    TIME SCHEDULE:


No later than (Date)       Minimum number of new           Target number of Friendly's
                           Friendly's Restaurants to be    Restaurants to be opened or
                           opened or under construction    under construction
                          (permits obtained, footings 
                           poured - six (6) months to to 
                           complete construction)

December 31, 1998  11
December 31, 1999  26
December 31, 2000  41
December 31, 2001  52
December 31, 2002  63
December 31, 2003  74


December 31, 2004  81
December 31, 2005  88
December 31, 2006  94
December 31, 2007  100