Area Development Agreement

Sample Area Development Agreement

AREA DEVELOPMENT AGREEMENT

BIG BOY FRANCfflSE MANAGEMENT LLC

One Big Boy Drive

Warren, MI 48091

Telephone: (586) 759-6000

Fax: (586)757-4737

Area Developer

Legal Name of Area Developer
Street
City *( )*	State	Zip Code
Area Code ( )	Telephone
Area Code	Fax

E-Mail Address

_______________________________, 200.

Date of Area Development Agreement

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BIG BOY FRANCHISE MANAGEMENT LLC AREA DEVELOPMENT AGREEMENT

INDEX

ARTICLE 1 GRANT OF DEVELOPMENT RIGHTS: TERRITORY............................................................2

ARTICLE 2 TERM.............................................................................................................................................3

ARTICLE 3 FEES PAYABLE TO AREA DEVELOPER................................................................................4

ARTICLE 4 DEVELOPMENT SCHEDULE....................................................................................................4

ARTICLE 5 OTHER OBLIGATIONS OF AREA DEVELOPER...................................................................6

ARTICLE 6 ASSIGNMENT..............................................................................................................................7

ARTICLE 7 TERMINATION RIGHTS OF FRANCHISOR...........................................................................8

ARTICLE 8 OBLIGATIONS UPON TERMINATION OR EXPIRATION.................................................10

ARTICLE 9 AREA DEVELOPER'S COVENANTS NOT TO COMPETE.................................................11

ARTICLE 10 INDEPENDENT CONTRACTORS.........................................................................................12

ARTICLE 11 INDEMNIFICATION................................................................................................................13

ARTICLE 12 ARBITRATION.........................................................................................................................13

ARTICLE 13 ENFORCEMENT......................................................................................................................15

ARTICLE 14 NOTICES...................................................................................................................................17

ARTICLE 15 ACKNOWLEDGMENTS: DISCLAIMER..............................................................................18

ARTICLE 16 AREA DEVELOPER'S LEGAL COUNSEL..........................................................................19

ARTICLE 17 GOVERNING LAW: STATE MODIFICATIONS..................................................................19

ARTICLE 18 DEFINITIONS...........................................................................................................................20

GUARANTY...............................................................................................................................................23

EXHIBIT A.................................................................................................................................................25

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BIG BOY FRANCHISE MANAGEMENT LLC AREA DEVELOPMENT AGREEMENT

THIS AREA DEVELOPMENT AGREEMENT (this "Agreement") is made, entered into and effective

this___day of______________, 200___, by and between Big Boy Franchise Management LLC, a

Michigan limited liability company (the "Franchisor"), and__________________________________, a

___________________________________(the "Area Developer").

INTRODUCTION

Restaurant System. The Franchisor has developed a unique business system for operating and franchising unique family restaurants with table service that serve breakfast, lunch and dinner that feature sandwiches, including the Big Boy® Sandwich, the Super Big Boy® Sandwich, beverages and other food products (the "Big Boy System" or the "Restaurant System").

Licensing of Marks. The Franchisor has extensively publicized the name "Big Boy®" to the public as an organization of restaurant businesses operating under the Restaurant System. The Franchisor has the right and authority to license the use of the name "Big Boy®" and the other Marks for use in connection with the Big Boy System to selected persons, businesses or entities who will comply with the uniformity requirements and quality standards of the Franchisor. The Franchisor will continue to develop, use, and control the use of the name "Big Boy®" and the other Marks, in order to identify for the public the source of foods, foods items, food products, beverages and services marketed under the Restaurant System, and to represent to the public the Restaurant System's high standards of quality, appearance, cleanliness and service.

Development of Big Boy Restaurant. The Area Developer desires to enter into Franchise Agreements with the Franchisor to develop, own and operate Big Boy Restaurants (the "Big Boy Restaurants" or the "Restaurants") in the area set forth in Article 1 in conformity with the Restaurant System and the uniformity requirements and quality standards established and promulgated from time to time by the Franchisor.

Right to Use Marks and Restaurant System. The Area Developer acknowledges that it would take substantial capital and human resources to develop a restaurant concept that is similar to a Big Boy Restaurant and, for those reasons, the Area Developer desires to acquire the right to use the Marks and the Restaurant System and to own and operate a Big Boy Restaurant pursuant to the terms and conditions of this Agreement.

Pursuant to the above Recitals and in consideration of the mutual promises and covenants set forth in this Agreement, the parties agree as follows:

ARTICLE 1 GRANT OF DEVELOPMENT RIGHTS; TERRITORY

1.1 Territory.

The Franchisor hereby grants to the Area Developer, for the term of this Agreement, the right to enter into Franchise Agreements with the Franchisor for the development and operation of Big Boy Restaurants to be located within the "Territory" defined as the geographical area described and delineated as follows: __

The Territory may be further described in a map attached hereto as Exhibit A and signed by both the Franchisor and the Area Developer.

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1-2 Exclusivity.

The rights and privileges granted to the Area Developer in this Agreement are expressly limited to the Territory and are expressly subject to the terms and conditions of this Agreement. During the term of this Agreement, the Franchisor will not grant to any other person or entity a franchise to open or operate a Big Boy Restaurant utilizing the Restaurant System or the Marks within the Territory, and will not establish another franchised or company-owned Big Boy Restaurant within the Territory. Notwithstanding the foregoing, the Franchisor will have the absolute right to: (a) develop other restaurant business concepts under other brand names even if the locations for the concepts are within the Territory; (b) develop Big Boy Restaurants in the Territory if they are located at or within an international airport, a major theme or entertainment park, casinos, hospitals, mass merchandising outlets, government faci lities or a professional sports stadium; (c) market, distribute and sell, on a wholesale or retail basis, foods and other products under any of the Marks, by direct sale, the Internet, mail order, infomercials, telemarketing or by any other marketing or distribution methods, even if such sales are made to customers, distributors or retailers who are located in the Territory; and (d) advertise, promote and participate in special promotions in the Territory including, without limitation, cooking, recipe or restaurant competitions, sporting events, and fund-raising and charitable events.

1.3 Use of Marks.

The Area Developer will have the right to use the Marks only in the Territory and only in connection with the development of Big Boy Restaurants. The Area Developer will only use the Marks designated by the Franchisor in writing and only in the manner authorized and permitted by the Franchisor.

1.4 Conditions.

The Area Developer hereby undertakes the obligation to develop Big Boy Restaurants using the Restaurant System in the Territory in strict compliance with the terms and conditions of this Agreement for the entire term of this Agreement. The rights and privileges granted to the /\rea. Developer by the Franchisor under this Agreement are applicable only in the Territory, are personal in nature, and may not be used elsewhere or in any other area by the Area Developer.

1.5 Personal License.

The Area Developer will not have the right to franchise, subfranchise, license or sublicense its rights under this Agreement. The Area Developer will not have the right to Assign this Agreement or its rights under this Agreement, except as specifically provided for in this Agreement.

ARTICLE 2 TERM

This Agreement will be in effect for a term ending__________________(____) years after the date set

forth on Page D-1 of this Agreement, or on the date the Area Developer has completed development of the number of Big Boy Restaurants required under the Development Schedule sot forth in Article 4.1, whichever is earlier. This Agreement will not be enforceable until it has been signed by both the Franchisor and Area Developer, and until this Agreement has been delivered to the Area Developer. At the end of the term of this Agreement, the Area Developer's exclusive development rights with respect to the Territory will automatically terminate, and the Area Developer will not have the right to renew or extend the term of this Agreement.

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ARTICLE 3 FEES PAYABLE TO AREA DEVELOPER

3.1 Development Fee.

On the date this Agreement is executed by the Area Developer, the Area Developer will pay the Franchisor a nonrefundable Development Fee of an amount equal to $5,000 multiplied by the total number of Big Boy Restaurants that the Area Developer is required to open and operate in the Territory pursuant to the Development Schedule set forth in Article 4.1 of this Agreement (the "Development Fee"). The Development Fee is payment to the Franchisor for granting the Area Developer the exclusive rights, as set forth in this Agreement, to develop Big Boy Restaurants in the Territory. In no event will the Development Fee be refunded to the Area Developer.

3.2 Initial Fees.

In addition to the Development Fee, the Area Developer will pay the Franchisor an Initial Fee of $35,000 for each Big Boy Restaurant that the Area Developer is required to open and operate in the Territory pursuant to the Development Schedule set forth in Article 4.1 of this Agreement. The Area Developer will pay the Franchisor the Initial Fee set forth in this Article 3.2, even if the Initial Fee that is then charged to other area developers or franchisees by the Franchisor is different from the Initial Fee specified herein.

3.3 Payment of Initial Fees.

The Area Developer will pay the Franchisor the Initial Fee set forth in Article 3.2 of this Agreement on or before the date the Area Developer executes the Franchise Agreement for each Big Boy Restaurant required to be opened and operated in the Territory pursuant to this Agreement. The Area Developer must execute a Franchise Agreement for its first Big Boy Restaurant and pay the first Initial Fee on the date the Area Developer executes this Agreement. The Area Developer will not purchase or lease the property for the proposed site for the Franchised Location until the Area Developer has signed a Franchise Agreement with the Franchisor and has complied with the applicable provisions of the Franchise Agreement relating to real estate and site selection.

3.4 Royalty Fees.

During the term of each Franchise Agreement signed by the Area Developer pursuant to this Agreement, the Area Developer will pay the Franchisor monthly Royalty Fees, as defined in the Franchise Agreement. The Area Developer will pay the Franchisor the monthly Royalty Fees for each of its Big Boy Restaurants at the rates set forth in the first Franchise Agreement signed by the Franchisor and the Area Developer pursuant to this Agreement, even if the Royalty Fee then charged to area developers or franchisees by the Franchisor at the time the Area Developer signs a subsequent Franchise Agreement is different. For each of its Big Boy Restaurants, the Area Developer will pay the monthly Royalty Fee on the day specified in, and in accordance with the other terms and conditions of, the Franchise Agreement for that Big Boy Restaurant.

ARTICLE 4 DEVELOPMENT SCHEDULE

4.1 Development Schedule.

The Area Developer acknowledges and agrees that the following Development Schedule is material provision of this Agreement:

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Big Boy Restaurant Number	Date by Which Franchise Agreement Must be Signed	Date by Which Big Boy Restaurant Must be Opened and Continuously Operating in Territory	Cumulative Number of Big Boy Restaurants Required to be Open and Continuously Operating in Territory as of Date in Preceding Column
1	Date of this Agreement		1
2			2

For purposes of determining compliance with the Development Schedule set forth in this Article, only the Big Boy Restaurants actually open and continuously operating in the Territory as of a given date will be counted toward the number of Big Boy Restaurants required to be open and continuously operating.

4.2 Reasonableness of Development Schedule.

The Area Developer represents that it has conducted its own independent investigation and analysis of the prospects for the establishment of Big Boy Restaurants within the Territory, and approves of the Development Schedule as being reasonable and viable.

4.3 Failure to Comply with Development Schedule.

The Area Developer's failure to comply with the Development Schedule will constitute a material breach of this Agreement by the Area Developer. However, the Area Developer will have the right to one 60-day extension of each deadline set forth in the Development Schedule upon giving written notice to Area Developer, before the expiration of the deadline, stating that the Area Developer will not be able to meet the deadline due to construction delays or similar circumstances beyond the reasonable control of the Area Developer. If the Area Developer at any time during the term of this Agreement is not in compliance with the Development Schedule (i.e., does not have the required number of Big Boy Restaurants open and operating in the Territory as of the dates specified in Article 4.1 and has not given Area Developer written notice of an extension in accordance with the preceding sentence), then the Franchisor will have the right to terminate this Agreement immediately upon notice to the Area Developer. Termination of this Agreement as a result of the Area Developer's failure to meet the Development Schedule will not affect the individual Franchise Agreements for the Big Boy Restaurants opened and operated in the Territory pursuant to this Agreement which were signed by the parties prior to termination of this Agreement; however, upon termination of this Agreement, all rights to open and operate additional Big Boy Restaurants in the Territory and all other rights granted to the Area Developer under this Agreement will immediately revert to the Franchisor, without affecting those obligations of the Area Developer that continue beyond the termination of this Agreement.

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4.4 Termination for Failure to Comply with Development Schedule.

If this Agreement is terminated by the Franchisor because of the Area Developer's failure to meet the Development Schedule, the rights and duties of Area Developer and the Franchisor will be as follows: (a) the Area Developer will have no rights to open additional Big Boy Restaurants within the Territory; (b) the Area Developer will pay all required fees and will continue to operate its Big Boy Restaurants opened in the Territory pursuant to the terms of the applicable Franchise Agreements signed by the Area Developer prior to the date of the termination of this Agreement, and will in all other respects continue to comply with such Franchise Agreements; (c) the Franchisor will have the absolute right to develop Big Boy Restaurants in the Territory or to contract with other persons for the development of additional Big Boy Restaurants in the Territory; and (d) the Area Developer will have no right to obtain a refund of any monies it paid to the Franchisor pursuant to this Agreement.

ARTICLE 5 OTHER OBLIGATIONS OF AREA DEVELOPER

5.1 Compliance with Applicable Laws.

The Area Developer will, at its expense, comply with all applicable federal, state, city, local and municipal laws, ordinances, rules and regulations pertaining to the operation of the Big Boy Restaurants in the Territory. The Area Developer will, at its expense, be absolutely and exclusively responsible for determining the licenses and permits required by law for the Big Boy Restaurants, for qualifying for, and obtaining and maintaining, all such licenses and permits, and for compliance with all applicable laws by its employees, agents and independent contractors.

5.2 Execution of Franchise Agreements.

For each Big Boy Restaurant that will be opened, owned and operated by the Area Developer in the Territory pursuant to this Agreement, the Area Developer or an entity in which (a) the Area Developer is the Owner of at least 51% of the Ownership Interests in the entity or (b) the Area Developer's Owners are the Owners of at least 51% of the Ownership Interests in the entity (the "Controlled Entity") must execute the applicable Franchise Agreement and must comply with the other requirements of this Agreement. The failure of the Area Developer or the Controlled Entity to provide the Franchisor with an executed Franchise Agreement within the time specified in Article 3.3 and Article 4.1 will constitute a material breach of this Agreement and the Franchisor will have the right to terminate this Agreement as provided for herein. If the Franchise Agreement required to be executed pursuant to this Article and the other provisions of this Agreement will be executed by the Controlled Entity, then: (i) the Area Developer (or the Area Developer's Owners) will, at all times during the term of the Franchise Agreement, be required to maintain at least a 51% Ownership Interest in the Controlled Entity, (ii) the Area Developer will not be relieved from complying with the terms, conditions and obligations under this Agreement, and (iii) the Area Developer will be required to guarantee the obligations and liabilities of the Controlled Entity under the Franchise Agreement and will execute a guaranty in the form approved by Area Developer. If the Area Developer elects to have a Controlled Entity execute the Franchise Agreement for any Big Boy Restaurant being developed under this Agreement, then all terms, conditions and obligations under this Agreement relating to the Franchise Agreement for that Big Boy Restaurant will be the absolute obligation of the Controlling Entity and for the purpose of this Agreement, the word Area Developer will also mean Controlled Entity.

5.3 Modifications to Franchise Agreement.

The Area Developer acknowledges that the terms, conditions and economics of the Franchise Agreement may be modified from time to time by the Franchisor and that reasonable modifications and amendments to the Franchise Agreement will not alter the Area Developer's obligations under this Agreement.

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5.4 Interests of Operating Company.

The Area Developer's operating company will be dedicated solely to the development and operation of the Big Boy Restaurants in the Territory and will not hold any interest in, operate, or manage any other business of any kind without the prior written approval of the Franchisor.

ARTICLE 6 ASSIGNMENT

6.1 Assignment by Franchisor.

This Agreement may be unilaterally Assigned by the Franchisor to a person or entity without the approval of the Area Developer and will inure to the benefit of the successors and assigns of the Franchisor. The Franchisor will provide the Area Developer with written notice of any such Assignment, and the assignee will be required to fully perform all obligations of the Franchisor under this Agreement.

6.2 Assignment by Individual Area Developer in Event of Death or Permanent Disability.

If the Area Developer is an individual, then in the event of his/her death or permanent disability, this Agreement may be Assigned by the Area Developer to any designated person or beneficiary (the "Beneficiary") without the payment of any Assignment Fee. However, the Assignment of this Agreement to the Developer's Beneficiary will be subject to the applicable provisions of Article 6.3, and will not be valid or effective until the Franchisor has received the properly executed legal documents which its attorneys deem necessary to document the Assignment of this Agreement. The Beneficiary must agree to be unconditionally bound by the terms and conditions of this Agreement and must personally guarantee this Agreement. There will be no charge to the Beneficiary for the initial training program; however, the Salary and Benefits and the Travel Expenses for all persons attending training will be paid by the Beneficiary. In addition, this Agreement may be Assigned to a new entity without the payment of an Assignment Fee and without complying with Article 9 if the Area Developer is an individual or is owned in a general partnership, provided that the Owner or Owners of the new entity are the same person or persons who signed this Agreement.

6.3 Assignment by Area Developer.

The Area Developer will not Assign any interest in or any part of this Agreement to any person or entity without the prior written approval of the Franchisor. Except as provided for in Article 6.7 of this Agreement, the Franchisor will not withhold its written consent to any Assignment of this Agreement that does not violate any of the terms of this Agreement, if the Franchisor does not exercise its rights under Article 9 of this Agreement, and if the Area Developer and/or the transferee area developer are in full compliance with the following terms and conditions: (a) the Area Developer has provided written notice to the Franchisor of the proposed Assignment of this Agreement at least 90 days prior to the transaction; (b) all of the Area Developer's monetary obligations due to the Franchisor have been paid in full, and the Area Developer is not otherwise in default under this Agreement; (c) the Area Developer has agreed in writing to observe all applicable provisions of this Agreement, including the covenants not to compete contained in this Agreement; (d) the Franchisor and the Area Developer have executed a joint and mutual release, in a form satisfactory to the Franchisor, of any and all claims against the Franchisor and the Area Developer and their respective officers, directors, Owners, agents and employees, in their corporate and individual capacities, arising from, in connection with, or as a result of this Agreement including, without limitation, all claims arising under any federal or state franchising laws or any other federal, state or local law, rule or ordinance; provided, however, that the Franchisor and the Area Developer may specifically exclude from the coverage of the release any prior or concurrent written agreements or other franchise agreements between them for other Big Boy Restaurants owned by the Area Developer; (e) the assignee area developer has demonstrated to the satisfaction of the Franchisor that he, she or it meets the managerial, financial and business standards required by the Franchisor for new area developers, possesses a good business reputation and credit rating, and its management possesses the aptitude and

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ability to operate the Big Boy Restaurants in the Territory.in an economic and businesslike manner (as may be evidenced by prior related business experience or otherwise); (f) the assignee area developer and the assignee area developer's Owners and Personal Guarantors execute the legal agreements required by the Franchisor or its legal counsel to document the Assignment of this Agreement to the assignee area developer; and (g) the assignee area developer and the employees specified in the Franchise Agreement, have successfully completed the initial training program then prescribed by the Franchisor.

6.4 Sale by Owners.

No Owner will have the right to Assign an Ownership Interest in the Area Developer without the prior written approval of the Franchisor. The Franchisor will not withhold its written consent if the Assignment of the Ownership Interest by the Owner complies in all respects with the terms of this Agreement. If the Assignment is to (a) a relative of the Owner, or (b) one of the Owners of the Area Developer, then the provisions of Article 6.6 will not apply to the Assignment if it complies with the provisions of Article 6.3.

6.5 Acknowledgment of Restrictions.

The Area Developer and the Owners acknowledge and agree that the restrictions on Assignment imposed herein are reasonable and necessary to protect the Restaurant System and the Marks, as well as the reputation and image of the Franchisor, and are for the protection of the Franchisor, the Area Developer and all other area developers who own and operate Big Boy Restaurants. Any Assignment permitted by this Article will not be effective until the Franchisor receives a completely executed copy of all Assignment documents and the Franchisor consents to the Assignment in writing. Any attempted Assignment made without complying with the requirements of this Article will be void.

6.6 Assignment Fee.

If this Agreement is Assigned to another person or entity, or if any of the Owners transfer any Ownership Interest in the Area Developer to a third party, then except as provided for in Article 6.2, the Area Developer will pay the Franchisor, on or before the date of the Assignment, an Assignment Fee of $5,000. The Assignment Fee is to cover the costs incurred by the Franchisor in connection with the Assignment and the costs to provide the initial training program to the assignee area developer and its Management Team. The assignee area developer will be responsible for the Salaries and Benefits, Travel Expenses and other expenses incurred by all people attending the initial training program on behalf of the assignee area developer.

6.7 Assignment to Competitor Prohibited.

The Area Developer and the Owners will not Assign this Agreement or their Ownership Interests to any person, partnership, corporation or entity that owns, operates, franchises, develops, consults with, manages, is involved in, or controls any restaurant that competes with Big Boy Restaurants. If the Franchisor refuses to permit an Assignment of this Agreement under this provision, then the Area Developer's and the Owners' only remedy will be to have the Arbitrators determine whether the proposed assignee owns or operates a restaurant that competes with Big Boy Restaurants.

ARTICLE 7 TERMINATION RIGHTS OF FRANCHISOR

7.1 Conditions of Breach.

In addition to its other rights of termination contained in this Agreement, the Franchisor will have the right to terminate this Agreement if: (a) the Area Developer fails to comply with the Development Schedule set forth in Article 4.1; (b) the Area Developer voluntarily or otherwise abandons any of the Big Boy Restaurants; (c) the Area Developer violates any material provision, term or condition of this Agreement; (d) the Area Developer, or any of its directors, officers or majority Owners, is convicted of, or pleads guilty to a violation of any law that has a material adverse effect on the operations of the Big

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Boy Restaurants; (e) the Area Developer fails to timely pay any of its uncontested obligations or liabilities (where there is no reasonable commercial dispute) due and owing to the Franchisor, suppliers, banks, purveyors, other creditors or to any federal, state or municipal government; (f) the Area Developer is determined to be insolvent within the meaning of applicable state or federal law, any involuntary petition for bankruptcy is filed against the Area Developer, or the Area Developer files for bankruptcy or is adjudicated a bankrupt under applicable state or federal law; (g) the Area Developer makes an assignment for the benefit of creditors or enters into any similar arrangement for the disposition of its assets for the benefit of creditors; (h) any check issued by the Area Developer is dishonored because of insufficient funds (except where the check is dishonored because of bank error or an error in bookkeeping or accounting) or closed accounts; (i) the Area Developer is involved in any act or conduct which materially impairs the goodwill associated with the name "Big Boy®," any other of the Marks or the Restaurant System; or (j) any Franchise Agreement between the Franchisor and the Area Developer is terminated by either party for any reason.

7-2 Notice of Breach.

Except as provided in Article 7.5 and Article 7.6 of this Agreement, the Franchisor will not have the right to terminate this Agreement until: (a) written notice setting forth the alleged breach in detail has been delivered to the Area Developer by the Franchisor; and (b) after receiving the written notice, the Area Developer fails to correct the alleged breach within the period of time specified by applicable law. If applicable law does not specify a time period to correct an alleged breach, then the Area Developer will have 30 days after receipt of the written notice to correct the alleged breach, except where the written notice states that the Area Developer is delinquent in the payment of any fees to the Franchisor pursuant to this Agreement or any other agreement, in which case the Area Developer will have 10 days after receipt of written notice to correct the breach by making full payment (including interest) to the Franchisor. If the Area Developer fails to correct the alleged breach set forth in ihe written notice within the applicable period of time, then this Agreement may be terminated the Franchisor as provided for herein. For the purposes of this Agreement, an alleged breach of this Agreement by the Area Developer will be deemed to be "corrected" if both the Franchisor and the Area Developer agree in writing that the alleged breach has been corrected.

7.3 Arbitration.

If the Area Developer notices arbitration under this Agreement within the time period for correcting the alleged breach, then the Franchisor will not have the right to terminate this Agreement until the facts of the alleged breach have been submitted to arbitration, the Arbitrators determine that the Area Developer has breached this Agreement and the Area Developer fails to correct the breach within the applicable time period. If the Arbitrators determine that the Area Developer has violated or breached this Agreement as alleged by the Franchisor in the written notice given to the Area Developer, then unless applicable law specifies otherwise, the Area Developer will have 30 days after the date the Aibitrators issue a written determination on the matter to correct the specified breach or violation of this Agreement, except where the Area Developer's breach is for failure to pay any fees or other payments to ihe Franchisor, in which case the Area Developer will have 10 days to make full payment (including interest) to the Franchisor. If the Area Developer timely corrects the specified breach or violation of this Agreement, then this Agreement will remain in full force and effect. For the purpose of this Agreement, any controversy or dispute on the issue of whether the Area Developer has timely corrected the specified breach or violation of this Agreement will also be subject to arbitration as provided for herein. The lime limitations set forth in this Article within which the Area Developer may demand arbitration of a dispute or controversy relating to the right of the Franchisor to terminate this Agreement for an alleged breach are of the essence and mandatory. If the Area Developer fails to comply with the time limitations set forth in this Article, then the Franchisor may terminate this Agreement as provided for herein.

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7.4 Notice of Termination.

Except as provided in Article 7.5 and Article 7.6, if the Franchisor has complied with the provisions of Article 7.2 and the Area Developer has not corrected the alleged breach set forth in the written notice within the applicable time period specified in this Agreement, then the Franchisor will have the absolute right to terminate this Agreement by giving the Area Developer written notice of termination and, in that event, the effective date of termination of this Agreement will be the day the written notice of termination is received by the Area Developer as provided for in Article 14.

7.5 Immediate Termination Rights of Franchisor.

Notwithstanding Article 7.2, the Franchisor will have the absolute right, unless precluded by applicable law, to immediately terminate this Agreement if the Area Developer: (a) fails to comply with the Development Schedule set forth in Article 4.1; (b) voluntarily or otherwise abandons any of its Big Boy Restaurants; (c) or any of its current directors, officers or majority Owners are convicted of, or plead guilty to or no contest to a charge of violating any law, and such conviction or plea could have a material adverse effect on the Area Developer's right or ability to operate the Big Boy Restaurants or could have a material adverse effect on the Marks; (d) is determined to be insolvent within the meaning of applicable state or federal law, any involuntary petition for bankruptcy is filed against the Area Developer, or the Area Developer files for bankruptcy or is adjudicated a bankrupt under applicable state or federal law; (e) makes an assignment for the benefit of creditors or enters into any similar arrangement for the disposition of its assets for the benefit of creditors; or (f) is involved in any act or conduct which materially impairs the goodwill associated with the name "Big Boy®," any other of the Marks or with the Restaurant System and the Area Developer fails to correct the breach within 24 hours after receipt of written notice of the breach from the Franchisor.

7.6 Notice of Immediate Termination.

Except as provided in Article 7.5(f), if this Agreement is terminated by the Franchisor pursuant to Article 7.5 above, then the Franchisor will give the Area Developer written notice that this Agreement is terminated and in that event, the effective date of termination of this Agreement will be the day the written notice of termination is received by the Area Developer. If this Agreement is terminated by the Franchisor pursuant to Article 7.5(f), then this Agreement will terminate on the first minute of the 25th hour after receipt of the written notice of termination if the Area Developer fails to correct the alleged breach within 24 hours after receiving the written notice of termination as provided for in Article 14.

7.7 Other Remedies.

Nothing in this Article will preclude the Franchisor from seeking other remedies or damages under state or federal laws, common law, or under this Agreement against the Area Developer including, but not limited to, attorneys' fees, and injunctive relief. If this Agreement is terminated by the Franchisor pursuant to this Article, or if the Area Developer breaches this Agreement by a wrongful termination, then the Franchisor will be entitled to seek recovery of all the damages that the Franchisor has sustained and will sustain in the future as a result of the Area Developer's breach of this Agreement.

ARTICLE 8 OBLIGATIONS UPON TERMINATION OR EXPIRATION

8.1 Obligations upon Termination; Reversion of Rights.

Upon termination of this Agreement for any reason, all rights to open and operate additional Big Boy Restaurants in the Territory and all other rights granted to the Area Developer pursuant to this Agreement will automatically revert to the Franchisor, and the Franchisor will have the right to develop the Territory or to contract with another area developer for the future development of the Territory. In addition, the Area Developer will comply with all other applicable provisions of this Agreement, including those provisions with obligations that continue beyond the termination of this Agreement.

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8.2 Franchise Agreements Not Affected.

The Area Developer will continue to operate the Big Boy Restaurants owned by the Area Developer in the Territory pursuant to the terms of the applicable Franchise Agreements signed by the Franchisor and Area Developer prior to the termination of this Agreement, and the rights and obligations of the Franchisor and the Area Developer with respect to the Big Boy Restaurants in the Territory will be governed by the terms of the applicable Franchise Agreements.

8.3 Continuation of Obligations.

The indemnities and covenants contained in this Agreement will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.

ARTICLE 9 AREA DEVELOPER'S COVENANTS NOT TO COMPETE

9.1 Consideration.

The Area Developer, the Owners and the Personal Guarantors acknowledge that the Area Developer, its Owners or officers and employees will receive specialized training, marketing and advertising plans, business strategies, confidential recipe, cooking and food preparation information, and trade secrets from the Franchisor pertaining to the Restaurant System and the operation of the Big Boy Restaurants. In consideration for this information, the Area Developer, the Owners and the Personal Guarantors will comply in all respects with the provisions of this Article. The Franchisor has advised the Area Developer that this provision is a material provision of this Agreement, and that the Franchisor will not enter into a development agreement with any person or entity that owns or intends to own, operate or be involved in any competing restaurant; however, Area Developer may, under certain circumstances, exclude from the coverage of Article 9.2 and Article 9.3 existing operational restaurant(s) owned and operated by the Area Developer on the date of this Agreement, and the Area Developer may, with the written consent of the Franchisor, continue to own and operate such restaurants during the term of this Agreement and thereafter. The Area Developer warrants and represents that it does not own, operate, or have any involvement with or interest in any restaurant that competes with a Big Boy Restaurant.

9.2 In-Term Covenant Not to Compete.

The Area Developer, the Owners and the Personal Guarantors will not, during the term of this Agreement, on their own account or as an employee, agent, consultant, affiliate, licensee, partner, officer, director, or shareholder of any other person, firm, entity, partnership or corporation, own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in, or assist any person or entity engaged in any full or quick service restaurant that competes with a Big Boy Restaurant, except with the prior written consent of the Franchisor.

9.3 Post-Term Covenant Not to Compete.

The Area Developer, the Owners and the Personal Guarantors will not, for a period of 12 months after the termination or expiration of this Agreement: (a) on their own account or as an employee, principal, agent, independent contractor, consultant, affiliate, licensee, partner, officer, director or shareholder of any other person, firm, entity, partnership or corporation, own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or entity engaged in any Competitive Restaurant which is located within five miles of the Territory, within five miles of any Big Boy Restaurant, or within any territory granted by the Franchisor or any affiliate of the Franchisor pursuant to a development agreement or other territorial agreement; or (b) convert any Restaurant developed by the Area Developer pursuant to this Agreement to a Major Brand Name Restaurant. The Area Developer, the Owners and the Personal Guarantors expressly agree that the time and geographical limitations set forth in this provision are reasonable and necessary to protect the Franchisor and its area developers if this Agreement expires or is terminated by either party for any reason, and that this covenant not to compete is necessary to permit

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the Franchisor the opportunity to resell and/or develop new Big Boy Restaurants within or near the Territory.

9.4 Injunctive Relief.

The Area Developer, the Owners and the Personal Guarantors agree that the provisions of this Article are necessary to protect the legitimate business interest of the Franchisor and its area developers including, without limitation, preventing the unauthorized dissemination of marketing, promotional and other confidential information to competitors of the Franchisor and its area developers, protecting recipes, cooking and food preparation techniques and other trade secrets, protecting the integrity of the Franchisor's franchise system, preventing duplication of the Restaurant System by unauthorized third parties, and preventing damage to and/or loss of goodwill associated with the Marks. The Area Developer, the Owners and the Personal Guarantors also agree that damages alone cannot adequately compensate the Franchisor if there is a violation of this Article by the Area Developer, the Owners or the Persona! Guarantors, and that injunctive relief against the Area Developer is essential for the protection of the Franchisor and its area developers. The Area Developer, the Owners and the Personal Guarantors agree therefore, that if the Franchisor alleges that the Area Developer, the Owners or the Personal Guarantors have breached or violated this Article, then the Franchisor will have the right to petition a court of competent jurisdiction for injunctive relief against the Area Developer, the Owners and the Personal Guarantors, in addition to all other remedies that may be available to the Franchisor. The Franchisor will not be required to post a bond or other security for any injunctive proceeding. If the Franchisor is granted ex parte injunctive relief against the Area Developer, the Owners or the Personal Guarantors, then the Area Developer, the Owners or the Personal Guarantors will have the right to petition the court for a hearing on the merits at the earliest time convenient to the court.

9.5 Severability.

It is the desire and intent of the parties to this Agreement, including the Owners and the Personal Guarantors, that the provisions of this Article be enforced to the fullest extent permissible under the laws and public policy applied in each jurisdiction in which enforcement is sought. Accordingly, if any part of this Article is adjudicated to be invalid or unenforceable, then this Article will be deemed to modify or delete that portion thus adjudicated to be invalid or unenforceable, such modification or deletion to apply only with respect to the operation of this Article in the particular jurisdiction in which the adjudication is made. Further, to the extent any provision of this Article is deemed unenforceable by virtue of its scope or limitation, the parties to this Agreement, including the Owners and the Personal Guarantors, agree that the scope and limitation provisions will nevertheless, be enforceable to the fullest extent permissible under the laws and public policies applied in such jurisdiction where enforcement is sought.

9.6 Effect on Other Agreements.

The covenants not to compete set forth in this Article will apply and be enforced independently of any covenant not to compete set forth in any other agreements between the Franchisor and any other party to this Agreement.

ARTICLE 10 INDEPENDENT CONTRACTORS

10.1 Independent Contractors.

The Franchisor and the Area Developer are each independent contractors and, as a consequence, there is no employer-employee or principal-agent relationship between the Franchisor and the Area Developer. The Area Developer will not have the right to and will not make any agreements, representations or warranties in the name of or on behalf of the Franchisor or represent that their relationship is other than that of licensor and licensee. Neither the Franchisor nor the Area Developer will be obligated by or have any liability to the other under any agreements or representations made by the other to any third parties.

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10.2 Operation of Big Boy Restaurants.

The Area Developer will be solely responsible for the development and daily management and operation of its Big Boy Restaurants in the Territory and will control, supervise and manage all the employees, agents and independent contractors who work for or with the Area Developer. The Area Developer will be responsible for the acts of its employees, agents and independent contractors, and will take all reasonable business actions necessary to ensure that its employees, agents and independent contractors comply with all federal, state and local laws, rules and regulations. The Franchisor will not have any right, obligation or responsibility to control, supervise or manage the Area Developer's employees, agents or independent contractors.

ARTICLE 11 INDEMNIFICATION

11.1 Indemnification.

The Franchisor will not be obligated to any person or entity for any damages arising out of, from, in connection with, or as a result of the Area Developer's negligence, the Area Developer's wrongdoing or the operation of the Area Developer's Big Boy Restaurants. Therefore, the Area Developer will indemnify and hold the Franchisor harmless against, and will reimburse the Franchisor for, all damages that the Franchisor is held liable and for all costs incurred by the Franchisor in the defense of any claim or action brought against the Franchisor arising from, in connection with, arising out of, or as a result of the Area Developer's negligence, the Area Developer's wrongdoing or the operation of its Big Boy Restaurants including, without limitation, attorneys' fees, investigation expenses, court costs, deposition expenses, and Travel Expenses. The Area Developer will indemnify the Franchisor, without limitation, for all claims and damages arising from, out of, in connection with, or as a result of: (a) any personal injury, property damage, commercial loss or environmental contamination resulting from any act or omission of the Area Developer or its employees, agents or representatives; (b) any failure on the part of the Area Developer to comply with any requirement of any laws or any governmental authority; (c) any failure of the Area Developer to pay any of its obligations to any person or entity; (d) any failure of the Area Developer to comply with any requirement or condition of this Agreement or any other agreement with the Franchisor; (e) any misfeasance or malfeasance by the Area Developer; and (f) any tort.

11.2 Payment of Costs and Expenses; Continuing Obligations.

The Area Developer will indemnify the Franchisor for costs and expenses incurred by the Franchisor in enforcing any term, condition or provision of this Agreement and/or in enjoining any violation of this Agreement by the Area Developer. The indemnification and other obligations of the Area Developer contained herein will continue in full force and effect subsequent to and notwithsfcinding the expiration or termination of this Agreement.

ARTICLE 12 ARBITRATION

12.1 Disputes Subject to Arbitration.

Except as expressly provided to the contrary in Article 12.6 of this Agreement, all disputes and controversies between the Franchisor and the Area Developer and their respective officers, directors, shareholders, members, governors, partners, employees, and agents, including (a) allegations of fraud, misrepresentation and violation of any state or federal laws, rules, or regulations; and (b) claims against any officer, director, shareholder, member, governor, partner employee or agent arising under, as a result of, or in connection with this Agreement, the Territory or the Big Boy Restaurants are subject to and will be resolved exclusively by arbitration conducted in accordance with the Code of Procedure of the National Arbitration Forum, Post Office Box 50191, Minneapolis, Minnesota 55405 (www.arb-forum.com).

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12.2 Notice of Dispute.

The party alleging the dispute must provide the other party with written notice setting forth the alleged dispute in detail. The party who receives written notice alleging the dispute will have 30 days after receipt of the written notice to correct, settle or compromise the dispute specified in the written notice. If the written notice alleges that the Area Developer is delinquent in the payment of any fees or other payments payable to the Franchisor, then the Area Developer will have 10 days to make full payment (including interest) to the Franchisor.

12.3 Demand for Arbitration.

If the dispute alleged by either party has not been corrected, settled or compromised within the time period provided for in Article 12.2, then either party may demand arbitration in accordance with the Code of Procedure of the National Arbitration Forum. Unless agreed otherwise by the parties, three Arbitrators will be selected to hear the matter, one of which must be a retired appellate or trail court judge.

12.4 Venue and Jurisdiction.

All arbitration hearings will take place exclusively in Warren, Michigan, and will be held no later than six months after the Arbitrators have been selected. The Franchisor and the Area Developer and its officers, directors, Owners, and the Personal Guarantors do hereby agree and submit to personal jurisdiction in the State of Michigan in connection with any arbitration hearings hereunder and any suits brought to enforce the decision of the Arbitrators, and do hereby waive any rights to contest venue and jurisdiction in the State of Michigan and any claims that venue and jurisdiction are invalid.

12.5 Powers of Arbitrators.

The authority of the Arbitrators will be limited to making a finding, judgment, decision and award relating to the interpretation of or adherence to the written provisions of this Agreement. The Federal Rules of Evidence (the "Rules") will apply to all arbitration hearings and the introduction of all evidence, testimony, records, affidavits, documents and memoranda in any arbitration hearing must comply in all respects with the Rules and legal precedents interpreting the Rules. Both parties will have the absolute right to cross-examine any person who has testified against them or in favor of the other party. Trie Arbitrators will have no authority to add to, delete or modify in any manner the terms and provisions of this Agreement. All findings, judgments, decisions and awards of the Arbitrators will be limited to the dispute set forth in the written demand for arbitration, and the Arbitrators will have no authority to decide any other issues. The Arbitrators will not have the right or authority to award punitive damages to either the Franchisor or the Area Developer or their respective officers, managers, directors, governors, shareholders, members, and partners, and each of them expressly waive their rights to plead or seek punitive damages. All findings, judgments, decisions and awards by the Arbitrators will be in writing, will be made within 60 days after the arbitration hearings have been completed, and will be final and binding on the Franchisor and the Area Developer. The written decision of the Arbitrators will be deemed to be an order, judgment and decree and may be entered as such in any court of competent jurisdiction by either party. If, during the course of Arbitration, either party fails to appear at a meeting or hearing duly scheduled in accordance with the Code of Procedure of the National Arbitration Forum, the Arbitrators will have the absolute right to enter a default judgment and to award attorneys' fees against the party failing to appear.

12.6 Disputes Not Subject to Arbitration.

The following disputes between the Franchisor and the Area Developer will not be subject to arbitration: (a) the Area Developer's improper use of the Marks or the Restaurant System; (b) the obligations of the Area Developer upon termination or expiration of this Agreement; and (c) the Area Developer's violation of the provisions of this Agreement relating to confidentiality and the covenants not to compete.

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12.7 No Collateral Estoppel or Class Actions.

All arbitration findings, conclusions, orders and awards made by the Arbitrators will be final and binding on the Franchisor and the Area Developer; however, such arbitration findings, conclusions, orders and awards may not be used to collaterally estoppel either the Franchisor or the Area Developer from raising any like or similar issue or defense in any subsequent arbitration, litigation, <x>urt hearing or other proceeding involving third parties, including other area developers. No person or entity except the Franchisor, the Area Developer, and their officers, managers, directors, governors, shareholders, members, and partners, and the Owners and Personal Guarantors will have the right to join in or participate in any arbitration proceeding arising under this Agreement, and therefore, the Arbitrators will not be authorized to permit class actions or to permit any other person or entity lo be involved in or be named as a party to any arbitration proceeding brought by either party under this Agreement. The Franchisor and the Area Developer agree that neither party will be entitled to allege or recover punitive damages. Thus, the Arbitrators will not have the right to award punitive damages to either party and both parties expressly waive their rights to allege or claim punitive damages.

12.8 Confidentiality.

All evidence, testimony, records, documents, findings, decisions, judgments and awards pertaining to any arbitration hearing between the Franchisor and the Area Developer will be secret and confidential in all respects. The Franchisor and the Area Developer will not disclose the decision or award of the Arbitrators and will not disclose any evidence, testimony, records, documents, findings, orders, or other matters from the arbitration hearing to any person or entity except as required by law. Nothing herein will prevent either party from disclosing or using any information presented in any arbitration proceeding in any subsequent court hearing brought by either party.

12.9 Performance During Arbitration of Disputes.

The Franchisor and the Area Developer will fully perform their obligations under this Agreement during the entire arbitration process.

ARTICLE 13 ENFORCEMENT

13.1 Injunctive Relief.

The Franchisor will have the right to petition a court of competent jurisdiction for the entry of temporary and permanent injunctions and orders of specific performance enforcing the provisions of this Agreement for any action relating to: (a) the Area Developer's improper use of the Marks or the Restaurant System; (b) the obligations of the Area Developer upon termination or expiration of this Agreement; and (c) the Area Developer's violation of the provisions of this Agreement relating to the covenants not to compete.

13.2 Severability.

All provisions of this Agreement are severable and this Agreement will be interpreted and enforced as if all completely invalid or unenforceable provisions were not contained herein iind partially valid and enforceable provisions will be enforced to the extent valid and enforceable. If an}' applicable law or rule of any jurisdiction requires a greater prior notice of the termination of this Agreement than is required hereunder or the taking of some other action not required hereunder, or if under any applicable law or rule of any jurisdiction, any provision of this Agreement is invalid or unenforceable under applicable law, then the prior notice or other action required by such law or rule will be substituted for the notice requirements hereof, or such invalid or unenforceable provision will be modified to the extent required to be valid and enforceable. Such modifications to this Agreement will be effective only in such jurisdiction.

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13.3 Waiver.

The Franchisor and the Area Developer may, by written instrument signed by the Franchisor and the Area Developer, waive any obligation of or restriction upon the other under this Agreement. Acceptance by the Franchisor of any payment by the Area Developer and the failure, refusal or neglect of the Franchisor to exercise any right under this Agreement or to insist upon full compliance by the Area Developer of its obligations hereunder will not constitute a waiver by the Franchisor of any provision of this Agreement. The Franchisor will have the right to waive obligations or restrictions for other area developers under their development agreements without waiving those obligations or restrictions for the Area Developer and, except to the extent provided by law, the Franchisor will have the right to negotiate terms and conditions, grant concessions and waive obligations for other area developers without granting those same rights to the Area Developer and without incurring any liability to the Franchisor whatsoever.

13.4 Payments to Franchisor.

The Area Developer will not, on grounds of the alleged nonperformance by the Franchisor of any of its obligations under this Agreement, any other contract between the Franchisor and the Area Developer, or for any other reason, withhold payment of payments due the Franchisor pursuant to this Agreement, any Franchise Agreement or any other contract with the Franchisor. The Area Developer will not have the right to "offset" or withhold any liquidated or unliquidated amounts, damages or other funds allegedly due to the Area Developer by the Franchisor against any payments due to the Franchisor by the Area Developer.

13.5 Effect of Wrongful Termination.

If either the Franchisor or the Area Developer take any action to terminate this Agreement except as provided for under the terms of this Agreement, then: (a) such actions will not relieve either party of, or release either party from, any of its obligations under this Agreement; (b) the terms and conditions of this Agreement will remain in full force and effect; and (c) the parties will be obligated to fully perform all terms and conditions of this Agreement until such time as this Agreement expires or is terminated in accordance with the provisions of this Agreement and applicable law.

13.6 Miscellaneous.

The rights of the Franchisor hereunder are cumulative and no exercise or enforcement by the Franchisor of any right or remedy hereunder will preclude the exercise or enforcement by the Franchisor of any other right or remedy hereunder or which the Franchisor is entitled by law to enforce. This Agreement is binding upon the parties hereto and their executors, administrators, heirs, assigns and successors in interest. If the Area Developer consists of more than one person or entity, their liability under this Agreement will be deemed to be joint and several.

13.7 No Oral Modification.

No modification, change, addition, rescission, release, amendment or waiver of this Agreement and no approval, consent or authorization required by any provision of this Agreement may be made by any person except by a written agreement signed by a duly authorized officer or partner of the Area Developer and the President or a Vice President of the Franchisor.

13.8 Entire Agreement.

This Agreement supersedes and terminates all prior agreements, either oral or in writing, between the parties involving the franchise relationship and therefore, representations, inducements, promises or agreements alleged by either the Franchisor or the Area Developer that are not contained in this Agreement will not be enforceable. The Introduction is part of this Agreement, which constitutes the entire agreement of the parties, and there are no other oral or written understandings or agreements between the Franchisor and the Area Developer relating to the subject matter of this Agreement. This Agreement will not supersede any written franchise agreements or contracts that are signed concurrently

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with this Agreement or any franchise agreements signed by the Franchisor and the Area Developer prior to the date of this Agreement.

13.9 Headings; Terms.

The headings of the Articles are for convenience only and do not in any way define, limit or construe the contents of such Articles. The term "Area Developer" as used herein is applicable to one or more individuals, a corporation, a limited liability company, a partnership, a limited partnership, or a Controlled Entity, as the case may be, and the singular usage includes the plural, the masculine usage includes the neuter and the feminine, and the neuter usage includes the masculine and the feminine. References to "Area Developer," "assignee" and "transferee" which are applicable to an individual or individuals will mean the Owner or Owners of the equity or operating control of the Area Developer or any such assignee or transferee if the Area Developer or such assignee or transferee is a corporation, a limited liability company, a partnership or a limited partnership.

13.10 Venue and Jurisdiction.

All litigation, court proceedings, arbitration proceedings, lawsuits, court hearings initiated by the Franchisor or the Area Developer, including any action to contest the arbitration provisions of this Agreement, must and will be venued exclusively in Macomb County, Michigan. The Area Developer, its officers, managers, directors, governors, shareholders, members, partners, Owners, and Personal Guarantors do hereby agree and submit to personal jurisdiction in Macomb County, Michigan for the purposes of any suit, proceeding or hearing brought to enforce or construe the teims of this Agreement or to resolve any dispute or controversy arising under, as a result of, or in connection with this Agreement or the Big Boy Restaurants operated by the Area Developer, and do hereby agree and stipulate that any such suits, proceedings and hearings will be exclusively venued and held in Macomb County, Michigan. The Area Developer, its officers, managers, directors, governors, shareholders, members, partners, Owners, and Personal Guarantors waive any rights to contest such venue and jurisdiction ;md any claims that such venue and jurisdiction are invalid.

13.11 Federal Arbitration Act.

Any issue regarding arbitration will be governed by the Federal Arbitration Act and the federal common law of arbitration.

13.12 Contractual Statute of Limitations.

Except as provided otherwise in this Agreement or unless precluded by applicable law, any and all claims and actions arising out of or relating to this Agreement, the relationship of the Franchisor and the Area Developer, or the operation of the Area Developer's Big Boy Restaurants brought by either party against the other, whether in arbitration or any other proceeding, must be commenced within 12 months after the occurrence of the facts giving rise to such claim or action, or such claim or action will be barred.

ARTICLE 14 NOTICES

All notices to the Franchisor will be in writing and will be sent to General Counsel, Big Boy Franchise Management LLC, 4199 Marcy, Warren, Ml 48091, or such other address as the Franchisor may subsequently designate in writing. Except as otherwise provided by applicable law, all notices under this Agreement will be in writing and delivered to the addressee by any of the following means: (a) by personal service, (b) by prepaid certified U. S. mail, (c) by facsimile, e-mail or other electronic transmission, or (d) by a recognized overnight delivery service (such as Federal Express, United States Express Mail, Airborne Express or UPS) which requires a written receipt or acknowledgement of delivery. All notices to the Area Developer sent by (a), (b) and (d), above, will be sent or delivered to the last known address of the Area Developer or such other address as the Area Developer may subsequently

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designate in writing. If the written notice is sent by either party by fax or electronic transmission, the notice will be sent to the last known fax number or the last known e-mail address provided to the sender by the person or entity receiving the written notice. For the purposes of this Agreement, written notice will be deemed received by the addressee (i) on the day received, if it is delivered by personal service, U.S. certified mail or by a recognized overnight delivery service, (ii) on the date of transmission, if it is sent by facsimile and the transmission has been confirmed by the sender, or (in) on the date of transmission, if sent by e-mail or other electronic transmission and the sender does not receive a notice of non-delivery.

ARTICLE 15 ACKNOWLEDGMENTS; DISCLAIMER

15.1 Disclaimer.

The Franchisor does not warrant or guarantee that the Area Developer will derive income or profit from its Big Boy Restaurants, or that the Franchisor will refund all or part of the Development Fee or Initial Fees paid by the Area Developer or repurchase any of the supplies, products, services, technology, furniture, fixtures or equipment supplied or sold by the Franchisor or by an approved or designated supplier if the Area Developer is in any way unsatisfied with its Big Boy Restaurants. The Franchisor expressly disclaims the making of any express or implied representations or warranties regarding the sales, earnings, income, profits, gross revenues, gross income, business or financial success, or value of the Big Boy Restaurants except as contained in the Big Boy® Uniform Franchise Offering Circular received by the Area Developer.

15.2 Acknowledgments by Area Developer.

The Area Developer acknowledges that it has conducted an independent investigation of the Big Boy Restaurants and recognizes that the business venture contemplated by this Agreement and the operation of the Big Boy Restaurants involve business and economic risks. The Area Developer acknowledges that the financial, business and economic success of the Big Boy Restaurants will be primarily dependent upon the personal efforts of the Area Developer, its management and employees, and on economic conditions in the area where the Big Boy Restaurants are located and economic conditions in general. The Area Developer acknowledges that it has not received any estimates, projections, representations, warranties or guaranties, expressed or implied, regarding potential sales, gross revenues, gross income, income, profits, earnings, expenses, financial or business success, value of the Big Boy Restaurants, or other economic matters pertaining to the Big Boy Restaurants from the Franchisor or any of its agents that were not expressly set forth in the Big Boy® Uniform Franchise Offering Circular received by the Area Developer ("Representations"). The Area Developer further acknowledges that if it had received any such Representations, it would not have executed this Agreement, promptly notified an officer of the Franchisor in writing of the person or persons making such Representations, and provided to the Franchisor a specific written statement detailing the Representations made.

15.3 Other Area Developers.

The Area Developer acknowledges that other area developers have or will be granted development agreements at different times, for different areas, under different economic conditions and in different situations, and further acknowledges that the economics, terms and conditions of such other development agreements may vary substantially in form and in substance from those contained in this Agreement.

15.4 Receipt of Agreement and Uniform Franchise Offering Circular.

. The Area Developer acknowledges that it received a copy of this Agreement with all material blanks fully completed at least five business days prior to the date that this Agreement was executed by the Area Developer. The Area Developer further acknowledges that it received a copy of the Big Boy® Uniform

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Franchise Offering Circular at least 10 business days (14 days if Illinois law is applicable) prior to the date on which this Agreement was executed.

ARTICLE 16 AREA DEVELOPER'S LEGAL COUNSEL

The Area Developer acknowledges that this Agreement constitutes a legal document which grants certain rights to and imposes certain obligations upon the Area Developer. The Area Developer has been advised by the Franchisor to retain an attorney or advisor prior to the execution of this Aj^eement to review the Big Boy® Uniform Franchise Offering Circular, to review this Agreement in detail, to review all legal documents, to review the economics, operations and other business aspects of the Elig Boy Restaurants, to determine compliance with franchising and other applicable laws, to advise the Area Developer on economic risks, liabilities, obligations and rights under this Agreement and to advise the Area Developer on tax issues, financing matters, applicable state and federal laws, liquor laws, health and safety laws, environmental laws, employee issues, insurance, structure of the restaurant business, and other legal and business matters. The name and telephone number of the Area Developer's attorney or other advisor is:

( ) '

ARTICLE 17 GOVERNING LAW; STATE MODIFICATIONS

17.1 Governing Law; Severability.

Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. §1051 et seq.\ this Agreement and the relationship between the Franchisor and the Area Developer will be governed by the laws of the state in which the Area Developer's primary place of business is located which is set forth on the cover page of this Agreement. The provisions of this Agreement which conflict with or are inconsistent with applicable governing law will be superseded and/or modified by such applicable law only to the extent such provisions are inconsistent. All other provisions of this Agreement will be enforceable as originally made and entered into upon the execution of this Agreement by the Franchisor and the Area Developer.

17.2 Applicable State Laws.

If applicable, the following states have statutes which may supersede the provisions of this Agreement in the Area Developer's relationship with the Franchisor in the areas of termination and renewal of the Franchise: Arkansas [Stat. Section 70-807], California [Bus. & Prof. Code Sections 20000-20043], Connecticut [Gen. Stat. Section 42-133e, et seq.], Delaware [Code Section 2552], Hawaii [Rev. Stat. Section 482E-1], Illinois [815 ILCS 705/19-20], Michigan [Stat. Section 19.854(27)], Minnesota [Stat. Section 80C.14], Mississippi [Code Section 75-24-51], Missouri [Stat. Section 407.400], Nebraska [Rev. Stat. Section 87-401], New Jersey [Stat. Section 56:10-1], and Wisconsin [Stat. Section 135.03]. These and other states may have court decisions which may supersede the provisions of this Agreement in the Area Developer's relationship with the Franchisor in the areas of termination and renewal of the Franchise.

173 State Law Modifications.

If the Area Developer's Big Boy Restaurants are located in any one of the states indicated below in this Article, or if the laws of any such state are otherwise applicable, then the designated provisions of this Agreement will be amended and revised as follows:

(a) California. If this Agreement is governed by the laws of the State of California, then:

(1) the covenant not to compete upon termination or expiration of this Agreement contained in

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Article 9.3 may be unenforceable, except in certain circumstances provided by law; and (2) provisions of this Agreement giving the Franchisor the right to terminate in the event of the Area Developer's bankruptcy may not be enforceable under federal bankruptcy laws (11 U.S.C. Sec. \0l_t etseq.).

(b) Illinois. If this Agreement is governed by the laws of the State of Illinois, then: (1) any provision of this Agreement that designates jurisdiction or venue in a forum outside the State of Illinois is void, provided that this Agreement may provide for mediation or arbitration in a forum outside Illinois; (2) this Agreement is hereby amended to provide that the periods of limitation in Section 27 of the Illinois Franchise Disclosure Act and applicable court decisions will be applicable to any action maintained by the Franchisor to enforce any liability created by the Act; and (3) any condition, stipulation or provision of this Agreement requiring the Area Developer to waive compliance with any provision of the Illinois Franchise Disclosure Act is void; therefore, the acknowledgments contained in Article 15.2 and Article 15.4 of this Agreement may be unenforceable against the Area Developer.

(c) Minnesota, If this Agreement is governed by the laws of the State of Minnesota, then: (1) Article 7.2 will be amended to require that, except as set forth in Article 7.5 and 7.6, in the event the Franchisor gives the Area Developer written notice that the Area Developer has breached this Agreement, such written notice will be given to the Area Developer at least 90 days prior to the date this Agreement is terminated by the Franchisor, and the Area Developer will have 60 days after such written notice within which to correct the breach specified in the written notice; (2) notwithstanding any provisions of this Agreement to the contrary, a court of competent jurisdiction will determine whether Area Developer will be required to post a bond or other security, and the amount of such bond or other security, in any injunctive proceeding commenced by the Franchisor against the Area Developer, the Area Developer's Owners or the Personal Guarantors; (3) Article 6.3(d) of this Agreement will be inapplicable to rights provided to the Area Developer or to any liability imposed by Minn. Stat. §§80C.Ol to 80C.22; (4) notwithstanding any provisions of this Agreement to the contrary, the Area Developer will have no more than three years after the cause of action accrues to bring an action against the Franchisor pursuant to Minn. Stat. §80C17; and (5) any provision of this Agreement which requires the Area Developer to waive its rights to jurisdiction or venue in the State of Minnesota will be inapplicable to the Area Developer.

(d) North Dakota. If this Agreement is governed by the laws of the State of North Dakota, then: (1) the covenant not to compete upon termination or expiration of this Agreement contained in Article 9.3 of this Agreement may be unenforceable, except in certain circumstances provided by law; (2) mediation or arbitration hearings will be conducted in North Dakota or at a mutually agreed upon location; and (3) the consent by the Franchisor to jurisdiction and venue in the State of Michigan contained in Article 13.10 may be inapplicable; provided, however, that such inapplicability will not be construed to mean that venue in the State of Michigan is improper, or that the Area Developer, its officers, managers, directors, governors, Owners and Personal Guarantors are not subject to jurisdiction in the State of Michigan or in any other state.

(e) Wisconsin. If this Agreement is governed by the laws of the State of Wisconsin, then the provisions of the Wisconsin Fair Dealership Law, Wis. Stat. Chapter 135, will supersede any conflicting terms of this Agreement.

ARTICLE 18 DEFINITIONS

For purposes of this Agreement, the following words will have the following definitions:

18.1 Abandon.

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"Abandon" will mean the conduct of the Area Developer indicating the willingness, desire or intent of the Area Developer to discontinue operating any of the Big Boy Restaurants in accordance with the quality standards, uniformity requirements and the Restaurant System as described in this Agreement and the Operations Manual including, but not limited to, the failure of the Area Developer to operate any of the Big Boy Restaurants for five or more consecutive days without the prior written approval of the Franchisor or the failure to remain open for business during specified business hours.

18.2 Assign or Assignment.

"Assign" or "Assignment" will mean sale, assignment, pledge, bequeath, trade, transfer, lease or sublease.

183 Dollars.

"Dollars" will mean United States of America dollars.

18.4 Franchise Agreement.

"Franchise Agreement" will mean the then-current standard Big Boy® Franchise Agreement.

18.5 Marks.

Marks" will include the name "Big Boy®" and the specific trademarks, trade names, service marks, logos and commercial symbols, phrases, slogans, and tag lines created and developed by the Franchisor for use in connection with the operation of Big Boy Restaurants that are specified in this Agreement, the Operations Manual, or otherwise in writing by the Franchisor.

18.6 Owner.

"Owner" will mean any person or entity who owns shares of capital stock in the Area Developer if the Area Developer is a corporation, a membership interest in the Area Developer if the Area Developer is a limited liability company, a partnership interest in the Area Developer if the Area Developer is a partnership, a limited or general partnership interest if the Area Developer is a limited partnership and will include all other persons or entities owning any other type of Ownership Interest.

18.7 Ownership Interests.

"Ownership Interests" will mean capital stock if the Area Developer is a corporation, membership interest if the Area Developer is a limited liability company, partnership interest if the Area Developer is a partnership, limited or general partnership interests if the Area Developer is a limited partnership and will include all other types and means of ownership of the Area Developer.

18.8 Personal Guarantors.

"Personal Guarantors)" will mean the individual(s) who sign the Personal Guaranty attached to this Agreement.

18.9 Restaurant System.

"Restaurant System" will mean the distinctive foods, beverages, food products, and other products and services which are associated with the Marks, copyrights, distinctive interior and exterior building designs, decor, furnishings, menus, uniforms, signs, color combinations, uniformity requirements, standards of consistency and quality, procedures, cleanliness, sanitation, controls, specifications, training, advertising and instructions promulgated by the Franchisor.

18.10 Salaries and Benefits.

"Salaries and Benefits" will mean the salaries, fringe benefits, including life insurance, medical insurance and retirement plans, payroll taxes, unemployment compensation, workers' compensation insurance, and all other expenses related to employment.

( FLDRSMJFOC BigBoy\UFOC\UFOC.06\Area Development Agreement DOC)

18.11 Travel Expenses.

"Travel Expenses" will mean all costs incurred for travel, transportation, food, lodging, telephone, automobile rental and all related travel expenses.

18.12 Terms Defined in Franchise Agreement.

Capitalized terms used but not defined in this Agreement will, if defined in the Franchise Agreement, have the meanings ascribed to such terms in the Franchise Agreement.

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IN WITNESS WHEREOF, the Franchisor, the Area Developer and the Area Developer's Owners have respectively signed this Agreement effective as of the day and year first above written.

In the Presence of: Big Boy Franchise Management LLC

By______________

Its____________

(Office Held)

"Developer"

Legal Name

By_______________________________________

Its_____________________________________

(Office Held)

and

_____________:_________________________ By_______________________________________

Its_____________________________________

(Office Held)

The undersigned Owners hereby agree to be bound by the terms and conditions of this Agreement applicable to the Owners, including without limitation, Articles 6.4, 6.5, 6.6, 6.7, 12.4, 12.5, 13.9 and 13.10, which in no event will limit any of the obligations undertaken by the Ownen; in any other capacity or under any other agreement or guaranty.

In the Presence of: Names of Owners Percentage of

Ownership

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PERSONAL GUARANTY

THIS PERSONAL GUARANTY (this "Personal Guaranty") is made and entered into this____day of

____________, 200__, by and between Big Boy Franchise Management LLC, a Michigan limited

liability company (the "Franchisor"), and the undersigned personal guarantors (the "Personal Guarantors").

WHEREAS, the Franchisor and__________________________J_________________________(a/an)

________________________________(the "Area Developer") have entered into an Area Development

Agreement, dated the same date as set forth above, for the operation of franchised Big Boy Restaurants in a defined Territory (the "Area Development Agreement").

WHEREAS, it is the desire of the undersigned Personal Guarantors to personally guaranty the obligations of the Area Developer under the Area Development Agreement and to be individually, jointly and severally bound by the terms and conditions of the Area Development Agreement.

NOW, THEREFORE, in consideration of the execution of the Area Development Agreement by the Franchisor, and for other good and valuable consideration, the undersigned, for themselves, their heirs, successors, and assigns, do individually, jointly and severally hereby become surety and guaranty for the payment of all amounts and the performance of the covenants, terms and conditions of the Area Development Agreement, including the covenants not to compete, to be paid, kept and performed by the Area Developer.

Obligations under Agreement The undersigned, individually and jointly, hereby agree to be personally bound by each and every condition and term contained in the Area Development Agreement, including the covenants not to compete, and agree that this Personal Guaranty should be construed as though the undersigned and each of them executed a development agreement containing the identical terms and conditions of the Area Development Agreement. The Personal Guarantors acknowledge having received a copy of the Area Development Agreement which is incorporated herein by reference.

Default of Area Developer. If any default should at any time be made therein by the Area Developer, then the undersigned, their heirs, successors and assigns, do hereby, individually, jointly and severally, promise and agree to pay to the Franchisor the Initial Fees, the Development Fee, and all other monies due and payable to the Franchisor under the terms and conditions of the Area Development Agreement.

Non-Compliance by Area Developer. If the Area Developer fails to comply with any other terms and conditions of the Area Development Agreement, then the undersigned, their heirs, successors and assigns, do hereby, individually, jointly and severally, promise and agree to comply with the terms and conditions of the Area Development Agreement for and on behalf of the Franchisor.

Obligations of Area Developer. If the Area Developer is at any time in default on any obligation to pay monies to the Franchisor or any subsidiary or affiliate of the Franchisor, whether for the Development Fees, Initial Fees, merchandise, products, supplies, furniture, fixtures, equipment or other products purchased by the Area Developer from the Franchisor or any subsidiary or affiliate of the Franchisor, or for any other indebtedness of the Area Developer to the Franchisor or any subsidiary or affiliate of the Franchisor, then the undersigned, their heirs, successors and assigns, do hereby, individually, jointly and severally, promise and agree to pay all such monies due and payable by the Area Developer to the Franchisor or any subsidiary or affiliate of the Franchisor upon default by the Area Developer.

Maximum Liability. The maximum individual liability that each Personal Guarantor will incur under this Personal Guaranty is $250,000.

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Binding Agreement. The Personal Guarantors warrant and represent that they have the capacity to execute this Personal Guaranty and that they will be bound by all of the terms find conditions of this Personal Guaranty. The provisions, covenants and conditions of this Personal Guaranty will inure to the benefit of the successors and assigns of the Franchisor.

Jurisdiction and Venue. Except as precluded by applicable law, all litigation, actions or proceedings pertaining to this Personal Guaranty will be brought and venued in accordance with Articles 12.4 and 13.10 of the Area Development Agreement.

PERSONAL GUARANTORS

Individually
Address
City	State	Zip Code
Telephone
Individually
Address
City	State	Zip Code

Individually
Address
City	State	Zip Code
Telephone
Individually
Address
City	State	Zip Code

Telephone

Individually

Address

City

State

Zip Code

City

State

Zip Code

Telephone

( FLDRS\UFOC BigBoy\UFOC\UFOC.06\Area Development Agreement. DOC)

EXHIBIT A

BIG BOY FRANCHISE MANAGEMENT LLC

AREA DEVELOPMENT AGREEMENT

DESCRIPTION OF TERRITORY:

BIG BOY FRANCHISE MANAGEMENT LLC

By_

Its

(Office Held) AREA DEVELOPER

By.

Its

(Office Held)

( FLDRSVUFOC BigBoy\UFOC\UFOC.06\Area Development Agreement_DOC)

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Area Development Agreement

Sample Area Development Agreement