Franchisee Commitment - Burger King Corp., Bravokilo Inc. and Quality Dining Inc.
FRANCHISEE COMMITMENT
This Franchisee Commitment (the "Commitment") dated as of January 27, 2000, is
from the individual, individuals, entity and/or entities listed on Schedule I
hereto (collectively, the "Franchisees") to Burger King Corporation ("BKC").
INTRODUCTION
A. BKC and Franchisees are parties to Franchise Agreements for
the Burger King(R) restaurants listed on Schedule I attached
hereto (individually, a "Restaurant" and collectively, the
"Restaurants").
B. BKC and Coca-Cola have entered into the Coca-Cola Soft Drink
Agreement regarding the sale of certain Coca-Cola beverages to
and by Burger King restaurants located in the United States.
C. BKC and Dr Pepper have entered into the Dr Pepper Soft Drink
Agreement regarding the sale of certain Dr Pepper beverages to
and by Burger King restaurants located in the United States.
D. Pursuant to the Coca-Cola Soft Drink Agreement, Coca-Cola has
agreed, among other things, to make available to Burger King
franchisees an upfront transformation investment (the
"Coca-Cola Funds") to be used in connection with the
Transformation Initiatives.
E. Pursuant to the Dr Pepper Agreement, Dr Pepper has agreed,
among other things, to make available to Burger King
franchisees an upfront transformation investment (the "Dr
Pepper Funds") to be used in connection with the
Transformation Initiatives.
F. Pursuant to the Trust Agreement, Coca-Cola and Dr Pepper have
agreed to deposit the Coca-Cola and Dr Pepper Funds into a
Trust Account with the Trustee, to be used by Qualified
Franchisees for the Transformation Initiatives and for other
restaurant transformation purposes.
G. The Franchisees desire to become Beneficiaries under the Trust
Agreement. The Franchisees are therefore willing to execute
and deliver this document to evidence their commitment to the
purposes of the Soft Drink Agreements and the Transformation
Initiatives and to use the Payment Amount for the purposes
described herein.
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1. Definitions. The definitions set forth in this Section shall apply to
the following terms when used with initial capital letters in this
Commitment and any attachments, Exhibits, or amendments hereto.
1.1 ADI. Area of Dominant Influence.
1.2 Beneficiaries. Those Burger King franchisees who execute a
Franchisee Commitment.
1.3 BKC. Burger King Corporation, a Florida corporation.
1.4 Burger King System. The system of BKC-owned and franchised
Burger King restaurants in the U.S.
1.5 Class A Qualified Restaurants. Those Burger King restaurants
that were open for business in the U.S. under valid Franchise
Agreements as of the First Installment Qualifying Date and on
the date hereof. Class A Qualified Restaurants do not include
those Burger King restaurants with franchise agreements that
expire on or before June 30, 2002 if BKC has determined that
they are ineligible for successor. Class A Qualified
Restaurants include Limited Menu Restaurants.
1.6 Class B Qualified Restaurants. Those Burger King restaurants
that were open for business in the U.S. under valid Franchise
Agreements as of the Second Installment Qualifying Date. Class
B Qualified Restaurants do not include those Burger King
restaurants with franchise agreements that expire on or before
June 30, 2002 if BKC has determined that they are ineligible
for successor. Class B Qualified Restaurants exclude Limited
Menu Restaurants.
1.7 Coca-Cola. The Coca-Cola Company, a Delaware corporation.
1.8 Coca-Cola Soft Drink Agreement. The Soft Drink Agreement dated
as of October 20, 1999 by and between BKC and Coca-Cola.
1.9 Drive-Thru Approval Date. The date upon which BKC approves and
mandates the Drive-Thru 2000 Package.
1.10 Drive-Thru 2000 Package. One of the Transformation Initiatives
currently being considered by BKC for use in the Burger King
System. The Drive-Thru 2000 Package will consist of those
items of equipment and other components approved and mandated
by BKC.
1.11 Dr Pepper. Dr Pepper/Seven Up, Inc., a Delaware corporation.
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1.12 Dr Pepper Soft Drink Agreement. The Soft Drink Agreement dated
as of December 23, 1999 by and between BKC and Dr Pepper.
1.13 First Installment Qualifying Date. December 1, 1999.
1.14 Grantors. Collectively, Coca-Cola and Dr Pepper.
1.15 Have It Your Way Kitchen. One of the Transformation
Initiatives currently being considered by BKC for use in the
Burger King System. The "Have It Your Way Kitchen" is a new
kitchen operating system and includes a new flexible broiler.
1.16 Limited Menu Restaurant. A Burger King restaurant facility
without a drive-thru that serves a limited menu of Burger King
products.
1.17 NFA. The National Franchisee Association, Inc.
1.18 Payment Amount. The sum of up to $56,000 per Qualified
Restaurant.
1.19 Qualified Franchisee. A Burger King franchisee who (i) owns
one or more Qualified Restaurants, and (ii) executes and
delivers this Commitment with respect to all of its Qualified
Restaurants.
1.20 Qualified Restaurants. Collectively, the Class A Qualified
Restaurants and the Class B Qualified Restaurants.
1.21 RSI. Restaurant Services, Inc., the exclusive purchasing agent
for the Burger King System.
1.22 Second Installment Qualifying Date. A specific date which is
sixty (60) days after the Drive-Thru Approval Date.
1.23 Soft Drink Agreements. Collectively, the Coca-Cola Soft Drink
Agreement and the Dr Pepper Soft Drink Agreement.
1.24 Transformation Initiatives. The initiatives and associated
expenses which BKC has determined or may determine are
critical elements of BKC's transformation and marketing
strategy intended to increase Burger King restaurant sales,
including soft drink sales, which currently include, without
limitation, those initiatives currently referred to as the
"Drive-Thru 2000 Package," "Have It Your Way Kitchen" and/or
the "Integrated Supply Chain Management Initiative."
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1.25 Trust Account. The Trust Account established by the Grantors
for the benefit of the Beneficiaries pursuant to the Trust
Agreement.
1.26 Trust Agreement. The Trust Agreement dated as of December 23,
1999 by and among the Grantors, the Trustee and the
Beneficiaries.
1.27 Trustee. Citibank, N.A., a national banking association.
2. Representations and Warranties of Franchisees. The Franchisees, jointly
and severally, represent and warrant to BKC as follows:
2.1 All of the Restaurants listed on Schedule I are Class A
Qualified Restaurants.
2.2 The Franchisees serve COCA-COLA(R) products supplied under
supply agreements with BKC at all of their Class A Qualified
Restaurants.
2.3 The Franchisees either currently serve or will serve Dr
Pepper(R) at all of their Class A Qualified Restaurants by
December 31, 2000 under supply agreements with BKC.
2.4 This Commitment constitutes a valid and binding obligation of
the Franchisees enforceable in accordance with its terms to
the extent permitted under applicable law, subject as to
enforcement only to bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforceability of
creditors' rights generally.
3. Acknowledgements of Franchisees.
3.1 The Franchisees hereby acknowledge and agree that they are
obligated under their Franchise Agreements to install signage
bearing the new "Burger King Bun Halves and Crescent" logo at
all of their Burger King Restaurants in the U.S. at their sole
cost and expense by no later than December 31, 2001.
3.2 The Franchisees hereby acknowledge and agree that they are
obligated to maintain their Restaurants in good condition and
repair to the extent necessary to bring their Restaurants into
compliance with the Franchise Agreements, including, without
limitation, painting their restaurant buildings, resealing and
restriping restaurant parking lots, upgrading restaurant
landscaping, and that doing so is in the best interests of the
Franchisees and the Burger King System.
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3.3 For Restaurants with a Drive-Thru, the Franchisees hereby
acknowledge and agree that, once BKC mandates the Drive-Thru
2000 Package for use in the Burger King System, they will be
obligated under their Franchise Agreements to install the
Drive-Thru 2000 Package at the Restaurants by no later than
December 31, 2001 at their sole cost and expense. Any work in
connection with the Drive-Thru 2000 Package will be performed
in a good and workmanlike manner using only equipment approved
by BKC. If the Franchisees' Class B Qualified Restaurants
include Restaurants not listed on Schedule I, the Franchisees
will also install the Drive-Thru 2000 Package at those
additional Restaurants by no later than December 31, 2001.
3.4 The Franchisees agree that the purchase of all equipment for
the Drive-Thru 2000 Package will be arranged through RSI, and
that the Franchisees will be responsible for obtaining all
necessary approvals and consents from governmental agencies,
if any, to implement the Drive-Thru 2000 Package and for
payment of all costs, expenses and fees associated therewith,
including, but not limited to, contractors and materialmen.
4. Additional Covenants of Franchisees.
4.1 The Franchisees will be responsible for the costs associated
with the roll-out of the Drive-Thru 2000 Package to the
Restaurants, as determined by RSI. In addition, the
Franchisees will be responsible for the costs associated with
the training of employees, managers and crew in connection
with the Drive-Thru 2000 Package, and for roll-out and
training costs in connection with the Have It Your Way Kitchen
initiative, only if the Have It Your Way Kitchen is approved
and mandated by BKC at some future date. These obligations may
include attendance by the Franchisees and/or any in-restaurant
personnel at such training sessions as BKC may reasonably
require at such time and locations as may be reasonably
designated by BKC.
4.2 The Franchisees agree to use the First Installment of the
Payment Amount to (a) install new signage in accordance with
Section 3.1 above, (b) "spruce up" the Restaurants in
accordance with Section 3.2 above, and (c) reseal and restripe
restaurant parking lots in accordance with Section 3.2 above.
The Franchisees further agree that the work required under
Section 3.2 will be completed by September 30, 2000, unless
the Franchisees elect to "early successor" a Restaurant under
BKC's Early Successor Incentive Programs, in which case the
work will be completed within the time frames established
under such programs.
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5. Payment Procedures; Timing of Payments. The Payment Amount is payable
in two (2) installments as follows:
5.1 Upon execution and delivery to BKC of this Commitment, the
Franchisees will be eligible to receive $28,000 per Restaurant
(the "First Installment"). To receive the First Installment on
or about March 15, 2000, the Franchisees must return this
Commitment by no later than January 31, 2000. If the
Franchisees return this Commitment after January 31, 2000 (but
before July 31, 2000), the First Installment will be included
with the payment of the Second Installment (as defined below).
Upon receipt of this Commitment, BKC will verify that the
Restaurants listed in Schedule I are Class A Qualified
Restaurants. BKC will then advise the Trustee that the
Franchisees are eligible to receive the First Installment with
respect to their Class A Qualified Restaurants, and the
Trustee will disburse the First Installment to the Franchisees
in accordance with an established payment schedule. The
Franchisees are eligible to receive the First Installment for
any Limited Menu Restaurants included in Schedule I.
5.2 Following the Drive-Thru Approval Date (but prior to March 31,
2001), the Franchisees may seek payment in the amount of
$28,000 for each of their Class B Qualified Restaurants (the
"Second Installment") by executing and delivering to BKC a
Beneficiary's Certificate in the form to be provided by BKC.
The Beneficiary's Certificate should list all of the
Franchisees' Class B Qualified Restaurants.
5.3 On September 30, 2000 or the date upon which the NFA endorses
the Drive-Thru 2000 Package, whichever is earlier, BKC will
advise the Trustee that the Franchisees are eligible to
receive the Second Installment with respect to their Class B
Qualified Restaurants, provided that BKC has previously
received the executed Beneficiary's Certificate from the
Franchisees and verified that the Restaurants listed in the
Certificate are Class B Qualified Restaurants. Thereafter, the
Trustee will disburse the Second Installment to the
Franchisees in accordance with an established payment
schedule. The Franchisees acknowledge that they will not be
eligible to receive the Second Installment for any Limited
Menu Restaurants, as determined by BKC.
5.4 By no later than July 31, 2001, the Trustee will disburse any
residual funds remaining in the Trust Account based upon the
proportion that the number of Qualified Restaurants owned by
the Franchisees bears to the total number of Qualified
Restaurants
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owned by all Beneficiaries. For illustration purposes only, if
a Franchisee owns eight (8) Restaurants, and there are 8,000
Qualified Restaurants and the residual funds are $100,000,
then the Franchisee will receive 8/8000 (or 1/1000) of the
$100,000 residual, or a total of $100 from the residual funds.
5.5 The Trustee will disburse all of the installments to the
Franchisees on a "first come, first served" basis.
Accordingly, if there are insufficient funds in the Trust
Account to pay any installment, the Franchisees will have to
defer receipt of payment until the Grantors deposit additional
funds in the Trust Account in accordance with the funding
schedules set forth in the Trust Agreement.
6. Accounting Rights. BKC shall have the right to require the Franchisees
to provide an accounting of Franchisees' use of the Payment Amount to
the extent necessary under this Commitment.
7. Default.
7.1 The Franchisees acknowledge that the failure to install new
signage as mandated by BKC and to paint their restaurant
buildings, reseal and restripe parking lots and upgrade
restaurant landscaping to the extent necessary to bring their
Restaurants into compliance with the Franchise Agreements
shall constitute events of default under the Franchise
Agreements and this Commitment. The Franchisees further
acknowledge that once BKC has mandated the Drive-Thru 2000
Package for use in the Burger King System, the failure to
implement the Drive-Thru 2000 Package by December 31, 2001
shall constitute an event of default under the Franchise
Agreements and this Commitment. In such event, if any such
failure continues after notice of default and the expiration
of any applicable cure period, BKC may proceed to protect and
enforce its rights either by suit in equity and/or by action
at law pursuant to the terms of the Franchise Agreements. In
addition, the Trustee may seek to recover the Payment Amount
paid to the Franchisees with respect to the Restaurants.
7.2 Franchisees hereby acknowledge that their compliance with the
terms of this Commitment is critical to BKC's transformation
and marketing strategy intended to increase Burger King
restaurant sales due to the fact that the signage and the
Drive-Thru 2000 Package must be installed in at least 67% of
the Burger King Restaurants in an ADI in order to advertise
the initiative to consumers. The Franchisees further
acknowledge that the remedy at law for any breach or
threatened breach of this Commitment is inadequate.
Accordingly, Franchisees hereby waive any right to
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object to specific performance or other equitable relief as a
remedy for any such breach. The Franchisees further agree to
waive any requirement for the securing or posting of any bond
in connection with such remedy. Such remedy shall not be
deemed to be the exclusive remedy for such breach, but shall
be in addition to other remedies available at law or in equity
to BKC.
7.3 In any litigation to enforce the terms of this Commitment, the
prevailing party shall recover and the losing party shall pay
the reasonable attorneys' fees and costs incurred by the
prevailing party.
8. Amendments to Franchise Agreements. To the extent that any provisions
of this Commitment impose additional obligations on the Franchisees or
confer additional rights or remedies on BKC than the obligations,
rights and remedies set forth in the Franchise Agreements, the
Franchise Agreements are hereby amended accordingly.
9. Limited Release Relating to Administration of Trust Account. In
consideration for all amounts paid to the Franchisees hereunder in
accordance with the provisions hereof, the Franchisees, jointly and for
themselves, their respective officers, directors, partners,
shareholders, successors, assigns, personal representatives and
affiliates (collectively, the "Releasing Parties"), release, acquit,
satisfy and forever discharge, BKC, Coca-Cola, Dr Pepper and the
Trustee, and their respective successors, predecessors, counsel,
insurers, assigns, officers, directors, employees, affiliates and
agents, past and present (collectively, the "Released Parties"), from
and against all claims, actions, causes of action, demands, damages,
costs, suits, debts, covenants, controversies and any other liabilities
whatsoever, whether known or unknown, liquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal or equitable, which the
Releasing Parties ever had, now have, can, shall or may have, against
the Released Parties relating to (a) the establishment and funding of
the Trust, (b) the distribution of the Coca-Cola Funds and Dr Pepper
Funds in accordance with the provisions of the Trust Agreement, (c) the
eligibility requirements described herein, and (d) any determination of
eligibility with respect to the Franchisees' Restaurants.
10. Termination of Commitment. Once the Franchisees have discharged all of
their duties and obligations under this Commitment, as determined by
BKC in its reasonable discretion, this Commitment shall terminate in
its entirety and be of no further force and effect, and to the extent
that this Commitment constitutes an amendment to the Franchise
Agreements, such amendment shall terminate in its entirety and be of no
further force and effect.
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11. Governing Law; Jurisdiction and Venue. This Commitment shall be
governed by the laws of the State of Florida, without reference to
principles of conflicts of laws. The Franchisees hereby agree that the
U.S. District Court for the Southern District of Florida, or only if
such court lacks jurisdiction, the 11th Judicial Circuit (or its
successor) in and for Miami-Dade County, Florida, shall be the venue
and exclusive proper forum in which to adjudicate any case or
controversy under or in connection with this Commitment.
FRANCHISEES
NAME OF OPERATING COMPANY
OR ENTITY
BRAVOKILO, INC.
By: /s/ Daniel B. Fitzpatrick
----------------------------------------
Daniel B. Fitzpatrick
Its: President
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QUALITY DINING, INC.
By: /s/ Daniel B. Fitzpatrick
----------------------------------------
Daniel B. Fitzpatrick
Its: President
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SCHEDULE I
TO
FRANCHISEE COMMITMENT
List of Class A Qualified Restaurants
NAME OF FRANCHISE GROUP:
FRANCHISE GROUP NUMBER:
PERSON OR ENTITY TO WHOM PAYMENT
SHOULD BE MADE (PAYEE):
PAYEE'S TAX IDENTIFICATION NUMBER:
RESTAURANT # ADDRESS CITY, STATE, ZIP CODE
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(SEE ATTACHED PRINTOUT)