Franchise Agreement
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample Franchise Agreement
FRANCHISE AGREEMENT
BIG BOY FRANCHISE MANAGEMENT LLC
One Big Boy Drive
Warren, Michigan 48091
Telephone: (586) 759-6000
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BIG BOY FRANCHISE MANAGEMENT LLC FRANCHISE AGREEMENT INDEX
Article Page
ARTICLE 1 DEFINITIONS........................................................................................................................1
1.1 Abandon......................................................................................................................................1
1.2 Approved Suppliers.....................................................................................................................2
1.3 Assistant Manager.......................................................................................................................2
1.4
Business Assets.........................................................................................................................................2
1.5 Claims and Damages...................................................................................................................2
1.6 Computer Equipment..................................................................................................................2
1.7 Computer
Software....................................................................................................................................................2
1.8 Competitive Restaurant...............................................................................................................2
1.9 Costs and Expenses.....................................................................................................................3
1.10 Designated Supplier....................................................................................................................3
1.11 Dollars.........................................................................................................................................3
1.12 Entity............................................................................................................................................3
1.13 FF&E...........................................................................................................................................3
1.14 Financial Records........................................................................................................................3
1.15 Financial
Statements.................................................................................................................................................3
1.16 Franchise.....................................................................................................................................3
1.17 Franchised Location.....................................................................................................................3
1.18 General Manager.........................................................................................................................3
1.19 Gross Revenues...........................................................................................................................3
1.20 Home Page..................................................................................................................................4
1.21 Lease...........................................................................................................................................4
1.22 Major Brand Name Restaurant....................................................................................................4
1.23 Management Team......................................................................................................................4
1.24 Marks...........................................................................................................................................4
1.25
Opening Team..........................................................................................................................................4
1.26 Operations Manual......................................................................................................................4
1.27 Owner..........................................................................................................................................5
1.28
Ownership Interest....................................................................................................................................5
1.29 Personal Guarantors....................................................................................................................5
1.30 Products and Services.................................................................................................................5
1.31 Restaurant System.......................................................................................................................5
1.32 Salary or Salaries.........................................................................................................................5
1.33 Signs............................................................................................................................................5
1.34 Transfer or Transferred...............................................................................................................5
1.35 Travel Expenses...........................................................................................................................5
1.36 Week...........................................................................................................................................5
1.37 Weekly Report............................................................................................................................6
ARTICLE 2 GRANT OF LICENSE............................................................................................................6
2.1 Franchised Location....................................................................................................................6
2.2 Undetermined Franchised Location............................................................................................6
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2.3 Exclusive Area............................................................................................................................6
2.4 Lease or Purchase of Franchised Location..................................................................................6
2.5 Relocation...................................................................................................................................6
2.6 Conditions...................................................................................................................................7
2.7 Personal License..........................................................................................................................7
ARTICLE 3 TERM OF AGREEMENT.......................................................................................................7
ARTICLE 4 INITIAL FEE...........................................................................................................................7
ARTICLE 5 ROYALTY FEES; ADVERTISING FEES.............................................................................7
5.1 Amount of Royalty Fees.............................................................................................................7
5.2 Advertising Fees..........................................................................................................................7
5.3 Advertising Expenditures............................................................................................................8
5.4 Weekly Report............................................................................................................................8
5.5 Franchisee's Obligation to Pay...................................................................................................8
5.6 Pre-Authorized Bank Debits....................................................................:..................................9
ARTICLE 6 FINANCIAL STATEMENTS.................................................................................................9
6.1 Financial Statements...................................................................................................................9
6.2 Substantiation of Weekly Report and Financial Statements.......................................................9
6.3 Sales and Income Tax Returns....................................................................................................9
6.4 Audit Rights................................................................................................................................9
6.5 Payment of Audit Costs.............................................................................................................10
6.6 Refusal to Submit Records or Permit Audit..............................................................................10
6.7 Confidentiality of Financial Records.................................:......................................................10
ARTICLE 7 QUALITY CONTROL, UNIFORMITY AND STANDARDS REQUIRED OF FRANCHISEE............................................................................................................................................10
7.1 Quality and Service Standards..................................................................................................10
7.2 Big Boy Sandwich®; Super Big Boy Sandwich®....................................................................10
7.3 Compliance with Standards.......................................................................................................11
7.4 Identification of Restaurant.......................................................................................................11
7.5 Other Business..........................................................................................................................11
7.6 Franchisee's Name....................................................................................................................11
7.7 Approved Advertising...............................................................................................................11
7.8 Telephone Directory Listings....................................................................................................12
7.9 Television; Vending and Gaming Machines; Tickets...............................................................12
7.10 Standard Attire or Uniforms......................................................................................................12
7.11 Business Hours; Personnel........................................................................................................12
7.12 Reservations..............................................................................................................................12
7.13 Credit Cards..............................................................................................................................12
7.14 Gift Certificates and Coupons...................................................................................................12
7.15 Music and Music Selection.......................................................................................................13
7.16 Standards of Service...............:..................................................................................................13
7.17 Security and Safety...................................................................................................................13
7.18 Equipment and Supplies............................................................................................................13
7.19 Maintenance..............................................................................................................................13
7.20 Remodeling of Business Premises............................................................................................13
7.21 Alterations to Restaurant...........................................................................................................13
7.22 Inspection Rights.......................................................................................................................13
7.23 Management and Operation of Big Boy Restaurant.................................................................14
7.24 Operating Entity........................................................................................................................14
7.25 Compliance with Applicable Law.............................................................................................14
7.26 Payment of Taxes......................................................................................................................14
7.27 "Franchise" and Other Taxes....................................................................................................15
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7.28 Payments to Creditors...............................................................................................................15
7.29 Security Interest in Franchise Agreement.................................................................................15
7.30 Default Notices and Significant Correspondence.....................................................................15
7.31 Catastrophes..............................................................................................................................15
7.32 Health Classification and Maintenance of Standards................................................................15
7.33 Periodic Inspections..................................................................................................................16
7.34 Hiring Restrictions....................................................................................................................16
ARTICLE 8 PRODUCTS AND SERVICES.............................................................................................16
8.1 Products and Services...............................................................................................................16
8.2 Approved Suppliers...................................................................................................................16
8.3 Designated Suppliers.................................................................................................................17
8.4 Delivery and Catering...............................................................................................................17
8.5 Alcoholic Beverages.................................................................................................................17
8.6 Payments to Franchisor.............................................................................................................17
8.7 Branding of Products.................................................................................................................18
8.8 Independent Shopping Services................................................................................................18
ARTICLE 9 CONFIDENTIAL OPERATIONS MANUAL AND OTHER CONFIDENTIAL INFORMATION........................................................................................................................................18
9.1 Compliance with Operations Manual........................................................................................18
9.2 Revisions to Operations Manual...............................................................................................19
9.3 Confidentiality of Operations Manual.......................................................................................19
9.4 Confidentiality of Other Information........................................................................................19
ARTICLE 10 SITE SELECTION; CONSTRUCTION COSTS; BUSINESS PREMISES SPECIFICATIONS....................................................................................................................................19
10.1 Site Selection.............................................................................................................................19
10.2 Site Selection Criteria................................................................................................................19
10.3 Site Release...............................................................................................................................20
10.4 Floor Plans and Layout; Construction Plans.............................................................................20
10.5 Construction and Remodeling Costs......................................................................................... 20
10.6 Compliance with Specifications................................................................................................20
10.7 Inspection during Construction or Renovation..........................................................................21
ARTICLE 11 SIGNS..................................................................................................................................21
11.1 Approved Signs.........................................................................................................................21
11.2 Payment of Costs and Expenses.................................................................................................21
11.3 Modifications; Inspection...........................................................................................................21
11.4 Interior Signs.............................................................................................................................21
ARTICLE 12 OFFICE EQUIPMENT; COMPUTER HARDWARE AND SOFTWARE........................22
12.1 Office and Telecommunication Equipment; Telephone Lines..................................................22
12.2 Computer Equipment and Software..........................................................................................22
12.3 Other Equipment.......................................................................................................................22
12.4 Internet Provider.........................................................................................................................22
12.5 E-Mail Address.........................................................................................................................22
12.6 Internet Website........................................................................................................................22
ARTICLE 13 INSURANCE......................................................................................................................23
13.1 General Liability Insurance.......................................................................................................23
13.2 Liquor Liability Insurance.........................................................................................................23
13.3 Vehicle Insurance......................................................................................................................23
13.4 Business Property Insurance.....................................................................................................23
13.5 Business Interruption Insurance................................................................................................23
13.6 Building Insurance.....................................................................................................................24
13.7 Umbrella Liability.....................................................................................................................24
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13.8 Other Insurance.........................................................................................................................24
13.9 Insurance Companies; Evidence of Coverage...........................................................................24
13.10 Defense of Claims.....................................................................................................................24
13.11 Rights of Franchisor..................................................................................................................24
ARTICLE 14 LICENSING OF MARKS AND RESTAURANT SYSTEM.............................................25
14.1 Right to License Marks.............................................................................................................25
14.2 Conditions to License of Marks................................................................................................25
14.3 Franchisee's Authorized Use....................................................................................................25
14.4 Adverse Claims to Marks..........................................................................................................25
14.5 Defense or Enforcement of Rights to Marks.............................................................................26
14.6 Tender of Defense.....................................................................................................................26
14.7 Franchisee's Right to Participate in Litigation..........................................................................26
ARTICLE 15 TRAINING PROGRAM; OPENING ASSISTANCE.........................................................26
15.1 Training Program......................................................................................................................26
15.2 Training Schedule.....................................................................................................................27
15.3 Changes in Personnel................................................................................................................27
15.4 Training of New Personnel.......................................................................................................27
15.5 Payment of Salaries and Expenses............................................................................................27
15.6 New Store Opening Assistance.................................................................................................27
15.7 Hiring and Training of Employees by Franchisee.....................................................................28
15.8 Conventions...............................................................................................................................28
ARTICLE 16 OTHER OBLIGATIONS OF BIG BOY.............................................................................28
ARTICLE 17 ASSIGNMENT....................................................................................................................29
17.1 Assignment by Franchisor.........................................................................................................29
17.2 Assignment by Franchisee to Owned or Controlled Entity.......................................................29
17.3 Transfer by Individual Franchisee in Event of Death or Permanent Disability........................29
17.4 Sale of Ownership Interest to Public.........................................................................................29
17.5 Assignment by Franchisee........................................................................................................30
17.6 Documentation..........................................................................................................................31
17.7 Acknowledgment of Restrictions..............................................................................................31
17.8 Transfer Fee..............................................................................................................................31
17.9 Transfer to Competitor Prohibited............................................................................................31
ARTICLE 18 OPTION OF BIG BOY TO PURCHASE...........................................................................31
18.1 Notice of Proposed Sale............................................................................................................31
18.2 Compliance with Agreement.....................................................................................................32
18.3 Transfer of Ownership Interest.................................................................................................32
18.4 Acknowledgment of Restrictions..............................................................................................32
18.5 Owners Subject to Covenant Not to Compete...........................................................................33
18.6 Right to Purchase Business Assets............................................................................................33
18.7 Determination of Fair Market Value.........................................................................................33
ARTICLE 19 LEASE AS SECURITY; TERMINATION OF LEASE.....................................................34
19.1 Review of Lease........................................................................................................................34
19.2 Franchisee's Assignment of Lease............................................................................................34
19.3 Perfected Assignment; Notice...................................................................................................34
19.4 No Prior Assignments...............................................................................................................34
19.5 Enforcement of Franchisee's Rights.........................................................................................35
19.6 Rights and Remedies of Franchisor..........................................................................................35
19.7 Proration of Rents and Expenses...............................................................................................35
19.8 Possession; Obligations of Franchisor and Franchisee.............................................................35
19.9 Landlord's Consent...................................................................................................................35
19.10 Transfer by the Franchisor,.......................................................................................................35
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19.11 Effective Date.....................................................................................................:......................36
ARTICLE 20 TERMINATION RIGHTS OF FRANCHISOR..................................................................36
20.1 Termination within 120 Days.....................................................................................................36
20.2 Termination; Conditions of Breach...........................................................................................36
20.3 Notice of Breach.......................................................................................................................37
20.4 Arbitration.................................................................................................................................37
20.5 Notice of Termination...............................................................................................................37
20.6 Immediate Termination Rights of Franchisor...........................................................................38
20.7 Notice of Immediate Termination.............................................................................................38
20.8 Other Remedies.........................................................................................................................38
ARTICLE 21 FRANCHISEE'S TERMINATION RIGHTS.....................................................................38
21.1 Conditions of Breach.................................................................................................................38
21.2 Notice of Breach.......................................................................................................................39
21.3 Arbitration.................................................................................................................................39
21.4 Waiver.......................................................................................................................................39
ARTICLE 22 FRANCHISEE'S OBLIGATIONS UPON TERMINATION OR EXPIRATION.............40
22.1 Termination of Use of Marks; Other Obligations.....................................................................40
22.2 Alteration of Franchised Location.............................................................................................40
22.3 Cancellation of Telephone Directory Listings..........................................................................40
22.4 Continuation of Obligations......................................................................................................41
ARTICLE 23 FRANCHISEE'S COVENANTS NOT TO COMPETE.....................................................41
23.1 Consideration............................................................................................................................41
23.2 In-Term Covenant Not to Compete...........................................................................................41
23.3 Post-Term Covenant Not to Compete.......................................................................................41
23.4 Injunctive Relief........................................................................................................................41
23.5 Severability...............................................................................................................................42
ARTICLE 24 INDEPENDENT CONTRACTORS...................................................................................42
ARTICLE 25 INDEMNIFICATION.........................................................................................................42
25.1 Indemnification.........................................................................................................................42
25.2 Payment of Costs and Expenses................................................................................................43
25.3 Interest on Unpaid Fees; Administrative Fee............................................................................43
25.4 Continuation of Obligations......................................................................................................43
ARTICLE 26 ARBITRATION..................................................................................................................43
26.1 Disputes Subject to Arbitration.................................................................................................43
26.2 Notice of Dispute......................................................................................................................43
26.3 Demand for Arbitration.............................................................................................................44
26.4 Venue and Jurisdiction..............................................................................................................44
26.5 Powers of Arbitrators)..............................................................................................................44
26.6 Disputes Not Subject to Arbitration..........................................................................................44
26.7 No Collateral Estoppel or Class Actions...................................................................................44
26.8 Confidentiality...........................................................................................................................45
26.9 Performance During Arbitration of Disputes............................................................................45
26.10 Federal Arbitration Act..............................................................................................................45
ARTICLE 27 ENFORCEMENT................................................................................................................45
27.1 Injunctive Relief........................................................................................................................45
27.2 Severability...............................................................................................................................45
27.3 Waiver.......................................................................................................................................46
27.4 Payments to Franchisor.............................................................................................................46
27.5 Effect of Wrongful Termination...............................................................................................46
27.6 Cumulative Rights.....................................................................................................................46
27.7 Binding Agreement...................................................................................................................46
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27.8 Joint and Several Liability.........................................................................................................47
27.9 No Oral Modification................................................................................................................47
27.10 Entire Agreement......................................................................................................................47
27.11 Headings; Terms.......................................................................................................................47
27.12 Venue and Jurisdiction..............................................................................................................47
27.13 Contractual Statute of Limitations............................................................................................47
ARTICLE 28 ACKNOWLEDGMENTS; DISCLAIMER.........................................................................48
28.1 Disclaimer.................................................................................................................................48
28.2 Acknowledgments by Franchisee..............................................................................................48
28.3 Representations of Entity Franchisee........................................................................................48
28.4 Other Franchisees......................................................................................................................48
28.5 Receipt of Agreement and Uniform Franchise Offering Circular.............................................49
ARTICLE 29 FRANCHISEE'S LEGAL COUNSEL................................................................................49
ARTICLE 30 NOTICES............................................................................................................................49
ARTICLE 31 GOVERNING LAW; STATE MODIFICATIONS.............................................................49
31.1 Governing Law..........................................................................................................................49
31.2 State Modifications...................................................................................................................50
31.3 Severability...............................................................................................................................51
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The following information will have to be completed by Big Boy and the Franchisee prior to the time that this Agreement is signed by the parties:
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Date of Franchise Agreement |
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Name of Franchisee |
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Business Structure of Franchisee |
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Franchised Location |
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Signature of Big Boy |
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Signature(s) of Franchisee |
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Signature(s) of Owners and Percentage of Ownership (if applicable) |
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Signature(s) of Personal Guarantors |
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BIG BOY FRANCHISE MANAGEMENT LLC FRANCHISE AGREEMENT
This Franchise Agreement (this "Agreement) 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 ____________________________________, a
________________________________________(the "Franchisee").
RECITALS
Big Boy 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 and 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 Restaurant 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.
Operation of Big Boy Restaurant. The Franchisee desires to develop, own and operate a Big Boy Restaurant (the "Big Boy Restaurant" or the "Restaurant") at the Franchised Location in conformity with the Restaurant System and the Franchisor's uniformity requirements and quality standards as established and promulgated from time to time by the Franchisor. The Franchisee understands and acknowledges the importance of complying with the high standards of quality, appearance, procedures, controls, cleanliness and service established by the Franchisor, and the necessity of operating the Restaurant in strict conformity with the standards and specifications established by the Franchisor.
Right to Use Marks and Restaurant System. The Franchisee 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 Franchisee 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 Franchisor and the Franchisee agree and contract as follows:
ARTICLE 1 DEFINITIONS
For purposes of this Agreement, the following words will have the following definitions:
1.1 Abandon.
"Abandon" will mean the conduct of the Franchisee indicating the willingness, desire or intent of the Franchisee to discontinue operating the Franchisee's Big Boy Restaurant m accordance with the quality standards, uniformity requirements and the Restaurant System as described in this Agreement, the
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Operations Manual or otherwise in writing including, but not limited to, the failure of the Franchisee to operate the Big Boy Restaurant for five or more consecutive days without the prior written approval of the Franchisor, or the failure of the Franchisee to remain open for business during the business hours designated by the Franchisor.
1.2 Approved Suppliers.
"Approved Suppliers" will mean the suppliers and distributors that have been approved in writing by the Franchisor to offer and sell the Products and Services specified in the Operations Manual or otherwise in writing by the Franchisor.
1.3 Assistant Manager.
"Assistant Manager" will mean an individual responsible for supervising an operational shift during the daily operation of the Franchisee's Big Boy Restaurant.
1.4 Business Assets.
"Business Assets" will mean: (a) the FF&E, Signs, supplies, food and liquor inventory, trucks, automobiles, Computer Equipment, equipment leases, contracts, and all other assets owned by the Franchisee and used in connection with Franchisee's Big Boy Restaurant, (b) ail assets listed on the Franchisee's Financial Statements and tax returns relating to or used in connection with Franchisee's Big Boy Restaurant; (c) the Lease for the Franchised Location; (d) the land and building for the Franchisee's Big Boy Restaurant, if the building and land are owned by the Franchisee or any affiliate of the Franchisee or entity under common control with the Franchisee; (e) this Agreement; (f) any Ownership Interest in the Franchisee; and (g) all other interests in the Franchisee or the Franchisee's Big Boy Restaurant.
1.5 Claims and Damages.
"Claims and Damages" will mean all losses, damages, judgments, liabilities, fines, penalties, assessments, and all related expenses, and will include, without limitation: (a) damages to real and personal property and damages for loss of use of real and personal property, (b) damages for lost profits, (c) special, consequential, exemplary and punitive damages, (d) personal injury damages, (e) damages resulting from the death of a person or persons, including wrongful death damages, (f) Costs and Expenses and all other expenses incurred in defending any claims or litigation, (g) Salaries and Travel Expenses and all related expenses incurred in defending any claims or litigation, (h) amounts paid in settlement of any disputed claims or litigation, (i) product liability damages, (i) amounts paid pursuant to any court judgment or court decree, resulting from any civil or criminal claims, demands, allegations, lawsuits, litigation, arbitration proceedings, administrative actions or other legal proceedings, and (k) damages assessed under any federal, state or local statutes, rules, regulations or ordinances.
1.6 Computer Equipment.
"Computer Equipment" will mean the computer hardware and peripherals used in the operation of the Restaurant, including printers, monitors, modems, and networking equipment, and other computer systems and electronic devices, specified in the Operations Manual or otherwise in writing by the Franchisor.
1.7 Computer Software.
"Computer Software" will include the computer software and operating system approved and specified in this Agreement, the Operations Manual, or otherwise in writing by the Franchisor for use in the operation of the Franchisee's Big Boy Restaurant.
1.8 Competitive Restaurant.
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"Competitive Restaurant" will mean any family-style restaurant with table service offering breakfast, lunch and dinner (including by way of illustration only Denny's, Bob Evans, Perkins, Shoney's, Eat-N-Park, CoCos, Carrows, Ram's Horn, Bill Knapps, and IHOP restaurants), any restaurant that sells double-deck hamburgers or deep fried French toast, or any restaurant that sells any food products under the name "Bob's," "Boy" or "Buddy Boy."
1.9 Costs and Expenses.
"Costs and Expenses" will mean all attorney's fees, deposition costs, expert witness fees, court costs, investigation costs, accounting fees, filing fees and Travel Expenses.
1.10 Designated Supplier.
"Designated Supplier" will mean the only and exclusive supplier or distributor that is authorized by the Franchisor to sell the Products and Services specified in the Operations Manual or otherwise in writing by the Franchisor.
1.11 Dollars.
"Dollars" will mean United States of America dollars.
1.12 Entity.
"Entity" will mean any corporation, limited liability company, general partnership, limited partnership limited liability partnership, or other legal entity formed in compliance with applicable law.
1.13 FF&E.
"FF&E" will mean the furniture, fixtures and equipment specified in the Operations Manual or otherwise in writing by the Franchisor used in the operations of the Franchisee's Big Boy Restaurant.
1.14 Financial Records.
"Financial Records" will mean the computerized and hand prepared records and ledgers, sales ledgers, work papers, books, bank statements, federal and state income tax returns, federal and state sales tax returns, daily cash register tapes, accounts, and other financial information relating to the Gross Revenues, food and beverage costs, and labor costs for the Franchisee's Restaurant.
1.15 Financial Statements.
"Financial Statements" will mean: (a) monthly and year-to-date balance sheet and profit and loss statement; and (b) annual balance sheet, profit and loss statement, statement of cash flows and explanatory footnotes for the Franchisee's Restaurant.
1.16 Franchise.
"Franchise" will mean the license rights granted by the Franchisor to the Franchisee authorizing the Franchisee to develop and operate a Big Boy Restaurant at the Franchised Location in conformity with the Restaurant System using the name "Big Boy®" and the other Marks.
1.17 Franchised Location.
"Franchised Location" will mean the single address set forth in Article 2.1 of this Agreement.
1.18 General Manager.
"General Manager" will mean the individual responsible for supervising the overall management and operation of the Franchisee's Big Boy Restaurant including, but not limited to, administration, basic operations, marketing, customer and community relations, record keeping, employee staffing and training, inventory control, hiring and firing, food preparation and maintenance of the Franchised Location.
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1.19 Gross Revenues.
"Gross Revenues" will mean the total dollar sales from all customers of the Franchisee's Big Boy Restaurant, and will include all cash and credit sales made by the Franchisee of every kind and nature made at, from, by or in connection with the Franchisee's Big Boy Restaurant including, but not limited to, all dollars and income received from: (a) the sale of all foods, food products, food items, and services, whether prepared in the Restaurant or pre-packaged; (b) the sale of all alcoholic and non-alcoholic beverages and drinks; (c) the sale of all goods, products or items sold by or at the Franchisee's Restaurant; (d) admission fees or cover charges; (e) vending machines, telephones, electronic or other games, and other amusement games; (f) slot machines and gaming machines; (g) the sale of lottery tickets and pull tabs; (h) the sale of hats, sweatshirts, T-shirts, jackets, clothing, music records, tapes and compact discs; (i) the sale of cigars, cigarettes, tobacco products, newspapers, magazines, candies and gum; (j) the sale of foods, food products, food items, and services at any banquet; (k) the sale of any catered foods, food products, food items, and services; (1) the sale of any foods, food products or food items that are carried out of the Restaurant; (m) the sale of any foods, food products, and food items that are delivered by the Franchisee or other delivery service; (n) the sales of foods, food products food items, and all other products and services offered in connection with the Franchisee's Big Boy Restaurant; (o) all sales, use or gross receipts tax rebates; and (p) all business interruption insurance payments made to the Franchisee under any insurance policy carried by the Franchisee, "Gross Revenues" will not include any coupons, discounts on employee meals or sales, use or gross receipts tax imposed by any federal, state, municipal or governmental authority directly upon sales, if the amount of the tax is added to the selling price and is charged to the customer, a specific record is made at the time of each sale of the amount of such tax, and the amount of such tax is paid to the appropriate taxing authority by the Franchisee.
1.20 Home Page.
"Home Page" will mean the website or home page on the Internet used to advertise, market or promote the Franchisee's Restaurant, to communicate with its customers, and/or to post employment opportunities at the Restaurant.
1.21 Lease.
"Lease" will mean the written or oral agreement between the Franchisee and the Landlord that grants the Franchisee the right to rent and occupy the Franchised Location, and will include any oral or written rental agreement between the Franchisee and the Franchisee's Owners.
1.22 Major Brand Name Restaurant.
"Major Brand Name Restaurant" will mean any restaurant which has at least 50 restaurant locations within the contiguous United States which operate under the same name.
1.23 Management Team.
"Management Team" will mean the Franchisee's General Manager and Assistant Managers.
1.24 Marks.
"Marks" will include the name "Big Boy®" and the specific trademarks, trade names, seivice 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.
1.25 Opening Team.
"Opening Team" will mean the District Leader and operations personnel specified in the Operations Manual, in this Agreement or otherwise in writing by the Franchisor who will, during the times specified in the Operations Manual, provide opening assistance to the Franchisee at the Franchised Location when the Franchisee's Restaurant is scheduled to open for business.
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1.26 Operations Manual.
"Operations Manual" will mean the confidential operations manuals, recipe manuals, and all other manuals and written materials developed by the Franchisor for the operation of a Big Boy Restaurant.
1.27 Owner.
"Owner" will mean any person or Entity that owns any Ownership Interest in the Franchisee.
1.28 Ownership Interest.
"Ownership Interest" will mean (a) capital stock if the Franchisee is a corporation, (b) membership interest if the Franchisee is a limited liability company, (c) partnership interest if the Franchisee is a partnership, (d) limited or general partnership interests if the Franchisee is a limited partnership, and (e) all other types and means of any ownership or interest in the Franchisee or in the land and building for the Franchisee's restaurant or in any entity which owns such land or building, if such entity is owned by Franchisee, or by an affiliate of Franchisee or any entity under common control with the Franchisee (an "Affiliated Owner").
1.29 Personal Guarantors.
"Personal Guarantors" will mean the owners and their spouses required to sign the Personal Guaranty attached to this Agreement, which will include the owners and their spouses, if applicable, and any Affiliated Owner that owns the land and/or building used for the Franchisee's restaurant.
1.30 Products and Services.
"Products and Services" will mean all of the foods, food products, food items, seasonings, gravies, sauces, salad dressings, alcoholic and non-alcoholic beverages and drinks, products, sundries, goods, supplies, merchandise and/or services specified in the Operations Manual or otherwise in writing by the Franchisor that have been approved by the Franchisor for use or sale under the Marks and the Restaurant System.
131 Restaurant System.
"Restaurant System" will mean the distinctive Products and Services associated with (a) the Big Boy Restaurant Business System, (b) the Franchisor's trademarks, trade names, service marks, and copyrights, (c) the Franchisor's distinctive interior and exterior building designs, decor, furnishings, menus, uniforms, slogans, Signs, logos, commercial symbols and color combinations, and (d) the uniformity requirements, standards of consistency and quality, procedures, cleanliness, sanitation, controls, specifications, training, advertising, and instructions promulgated by the Franchisor in connection with the operation of a Big Boy Restaurant.
1.32 Salary or Salaries.
"Salary" or "Salaries" will mean wages or hourly rate of pay, fringe benefits, federal and state withholding taxes and Social Security taxes.
1.33 Signs.
"Signs" will mean the interior and exterior signs used to advertise the Restaurant at the Franchised Location.
1.34 Transfer or Transferred.
"Transfer" or "Transferred" will mean to sell, assign, trade, transfer, lease, sublease or otherwise dispose of.
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135 Travel Expenses.
"Travel Expenses" will include all transportation, lodging, food, entertainment, automobile rental, and related travel expenses.
136 Week.
"Week" will mean a period of seven consecutive days from Monday through Sunday.
1.37 Weekly Report.
"Weekly Report" will mean the written record in the form and format set forth in the Operations Manual of (a) the daily Gross Revenues, (b) the food costs and labor costs, and (c) such other information as may be required by the Franchisor, and submitted to the Franchisor for the Franchisee's Restaurant which will be provided to the Franchisor each Week during the Term of this Agreement.
ARTICLE 2 GRANT OF LICENSE
2.1 Franchised Location.
The Franchisor hereby grants the Franchisee the personal right to operate one Big Boy Restaurant in conformity with the Restaurant System using the name "Big Boy®" and the other Marks specified by the
Franchisor in writing at the following single location:_________________________________________
(the "Franchised Location).
2.2 Undetermined Franchised Location.
If the Franchised Location has not been determined as of the date of this Agreemenl, then the geographic area in which the Franchisee's Restaurant is to be located will be described or otherwise defined in an exhibit signed by the parties and attached to this Agreement. At such time as the address of the Franchised Location is determined, then the address will be inserted into this Agreement and initialed by the parties or will be described in an exhibit attached to this Agreement and signed by both parties.
2.3 Exclusive Area.
Except as provided to the contrary in this Article, the Franchisee will receive an "Exclusive Area" consisting of the area within a two mile radius from the Franchised Location. The Franchisee's Exclusive Area is exclusive only to the extent that the Franchisor will not have the right to franchise, license, develop, own or operate ("Develop") a Big Boy Restaurant in the Franchisee's Exclusive Area. Notwithstanding the foregoing, the Franchisor will have the absolute right to: (a) Develop other restaurant concepts under other brand names even if the locations for those restaurant concqrts are located within the Exclusive Area; (b) Develop Big Boy Restaurants in the Exclusive Area if they are located at or within international airports, major theme or entertainment parks, casinos, hospitals, mass merchandising outlets, government facilities or professional sports stadiums; (c) market, distribute and sell foods and other products on a wholesale or retail basis, under any of the Marks, by direct sale, the Internet, mail order, infomercials, telemarketing or by any and all other marketing and distribulion methods, even if such sales are made to customers or by distributors or retailers who are located in the Exclusive Area and (d) advertise, promote and participate in special promotions in the Exclusive Area, including, without limitation, cooking, recipe or restaurant competitions, sporting events, and fund-iaising and charitable events.
2.4 Lease or Purchase of Franchised Location.
The Franchisee will not sign any lease or purchase agreement or obtain any related rights to possession, occupancy or ownership of the Franchised Location prior to the effective date of tliis Agreement. If the Franchisee leases the Franchised Location, then the Franchisee will use its best efforts to negotiate a lease term that coincides with the Term of this Agreement.
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2.5 Relocation.
The Franchisee may, with the prior written approval of the Franchisor, relocate the Franchised Location if: (a) the proposed new location does not compete with any Big Boy Restaurant operated by the Franchisor or any other Big Boy franchisee or licensee; (b) the proposed new location is within the Franchisee's Exclusive Area; and (c) the proposed new location does not infringe upon and is not located within the exclusive area of another Big Boy franchisee, an area developer, a master franchisee or a subfranchisor. The new location of the Restaurant, including the real estate and the building, must comply with all applicable provisions of this Agreement and with the Franchisor's then-current image, decor and specifications. Within 10 days after receipt by the Franchisee of the Franchisor's written approval to relocate the Franchised Location, the Franchisee will pay to the Franchisor a Relocation Fee of $10,000.
2.6 Conditions.
The Franchisee hereby undertakes the obligation to operate a Big Boy Restaurant using the Restaurant System at the Franchised Location in strict compliance with the terms and conditions of this Agreement for the entire Term. The rights and privileges granted to the Franchisee by the Franchisor under this Agreement are applicable only to the single location designated as the Franchised Location, are personal in nature, and may not be used by the Franchisee at any other location, or in any other channel of distribution, other than the Franchised Location.
2.7 Personal License.
The Franchisee will not have the right to franchise, subfranchise, license or sublicense its rights under this Agreement. Neither the Franchisee or any of the owners have the right to transfer this Agreement or any rights under this Agreement, except as specifically provided for in this Agreement.
ARTICLE 3 TERM OF AGREEMENT
Unless terminated in accordance with the terms and conditions of this Agreement, the term of this Agreement will be for 20 years (the "Term") and the Term of this Agreement will commence on the date of this Agreement. This Agreement will not be enforceable until it has been signed by both the Franchisee and the Franchisor and a signed copy has been delivered to the Franchisee.
ARTICLE 4 INITIAL FEE
The Franchisee will pay the Franchisor an Initial Fee of $40,000, which is payable in full to the Franchisor on the date the Franchisee signs this Agreement. The Franchisee acknowledges that (a) the Initial Fee is consideration for the Franchise granted to the Franchisee under this Agreement, (b) the Initial Fee has been fully earned by the Franchisor, and (c) the Initial Fee will not be refundable to the Franchisee for any reason or under any circumstances,
ARTICLE 5 ROYALTY FEES: ADVERTISING FEES
5.1 Amount of Royalty Fees.
In addition to the Initial Fee, the Franchisee will, for the entire Term of this Agreement, pay the Franchisor royalty fees equal to four percent (4%) of the Franchisee's weekly Gross Revenues for the preceding Week ("Royalty Fees"). The weekly Royalty Fees payable to the Franchisor under this Article
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will be due and payable by the Franchisee on or before the eighth day after the end of each Week during the entire Term of this Agreement.
5.2 Advertising Fees.
The Franchisee will pay the Franchisor weekly advertising fees equal to two percent (2%) of the Franchisee's weekly Gross Revenues for the preceding Week ("Advertising Fees") and, in addition, the Franchisee will spend one percent (1%) of weekly Gross Revenues for local niiirket advertising. The Franchisor will have the right to increase the weekly Advertising Fees from two percent (2%) to three percent (3%) of the Franchisee's weekly Gross Revenues by giving the Franchisee six months written notice of the increase. In that event, beginning on the later of (i) the first day of the seventh month after the date the written notice is received by the Franchisee or (ii) the date specified in the written notice from the Franchisor, the Franchisee will, for the remaining Term of this Agreement, pay the Franchisor Advertising Fees equal to three percent (3%) of the Franchisee's weekly Gross Revenues and the Franchisee will no longer be required to spend one percent (1%) of its Gross Revenues for local marketing advertising. The weekly Advertising Fees payable to the Franchisor under this Article will be due and payable by the Franchisee on or before the eighth day after the end of each Week during the entire Term of this Agreement. The Advertising Fees will not be deposited in a separate account, will be under the exclusive control of the Franchisor and will be spent as provided for in Article 5.3.
5.3 Advertising Expenditures.
The Franchisor will have the absolute and unilateral right to determine when, how and where the Advertising Fees will be spent or committed including, but not limited to, the right of the Franchisor to purchase and pay for (a) product research and development, development of logotypes and slogans, production materials and costs, point of sales promotional materials, ad slicks, banners, signs, brochures, radio, television, cable, newspaper, magazine and other print advertising, services provided by advertising agencies, market research, customer retention and incentive programs, direct mail advertising, telemarketing, media time and space advertising, Internet advertising, promotions, marketing, public relations, national, regional and local advertising, and all other forms and methods of advertising, promotion, marketing, and public relations that the Franchisor deems, in its sole judgment, appropriate and in the best interests of all Big Boy franchisees and the Restaurant System, and (b) all long distance telephone charges, office rental, computers and computer software, furniture, fixtures and equipment, leasehold improvements, personnel salaries and benefits, travel costs, office supplies, collection costs (including attorneys' fees) paid in attempting to collect past due Advertising Fees from franchisees and all other costs and expenses associated with and incurred in connection with administering the Advertising Fees and the Advertising expenditures. The Franchisor will not be required to spend the Advertising Fees in any particular market and will not be required to spend the Advertising Fees in ihe Franchisee's market area in proportion to the Advertising Fees paid by the Franchisee. The Franchisor will have the right, but not the obligation, to spend all or part of the Advertising Fees paid by any franchisee in that franchisee's market area. The Franchisor will not be required to pay any Advertising Fees. A summary showing the amount of the Advertising Fees received and the amount of the advertising expenditures for the calendar year will be prepared by the Franchisor on or before March 31 of each year for the preceding year and will, upon written request, be provided to the Franchisee.
5.4 Weekly Report.
On or before 12:00 noon on the eighth day after the end of each Week, the Franchisee will e-mail, electronically submit, or fax the Weekly Report for the Franchisee's Big Boy Restaurant to the Franchisor for that Week.
5.5 Franchisee's Obligation to Pay.
The Royalty Fees and Advertising Fees payable to the Franchisor under this Article will be calculated and paid to the Franchisor by the Franchisee each Week during the entire Term of this Agreement. The
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Franchisee's obligation to pay the Franchisor the Royalty Fees and Advertising Fees pursuant to the terms of this Agreement will be absolute and unconditional, and will remain in full force and effect until the Term of this Agreement has expired or until this Agreement has been terminated in accordance with the terms and conditions set forth in this Agreement and applicable law. The Franchisee will not have the "right of offset" for any payments due to the Franchisor and, as a consequence, the Franchisee will timely pay all Royalty Fees and Advertising Fees due and payable to the Franchisor under this Agreement regardless of any claims or allegations the Franchisee may allege against the Franchisor. The Franchisor's acceptance of any payments of Royalty Fees and Advertising Fees will be without prejudice and will not constitute a waiver of the Franchisor's rights to claim a payment deficiency or to audit the Franchisee's Financial Records.
5.6 Pre-Authorized Bank Debits.
The Franchisee will, from time to time during the Term of this Agreement, execute such documents as the Franchisor may request to provide the Franchisee's unconditional and irrevocable authority authorizing and directing the Franchisee's bank to pay and deposit directly to the account of the Franchisor, and to charge to the account of the Franchisee, the amount of the Royalty Fees and the Advertising Fees payable by the Franchisee pursuant to this Agreement. The authorization will be in the form attached to this Agreement and will permit the Franchisor to designate the amount to be debited or drafted from the Franchisee's account and to adjust the payments to the amount of the Royalty Fees and Advertising Fees payable to the Franchisor by the Franchisee. If the Franchisee fails at any time to provide the required Weekly Reports, then the Franchisor will have the absolute right to debit the Franchisee's bank account for the same amount of the Royalty Fees and Advertising Fees that were payable by the Franchisee according to the last Weekly Report received from the Franchisee. The Franchisee will, at all times during the Term of this Agreement, maintain a balance in its bank account sufficient to allow the appropriate amount to be debited from the Franchisee's bank account for the Royalty Fees and Advertising Fees payable by the Franchisee.
ARTICLE 6 FINANCIAL STATEMENTS
6.1 Financial Statements.
The Franchisee will, at its expense, prepare Financial Statements for the Franchisee's Restaurant. All Financial Statements will be in the form prescribed by the Franchisor in writing, will conform to the standard chart of accounts prescribed by the Franchisor and will be prepared in accordance with generally accepted accounting principles applied on a consistent basis. The monthly Financial Statements for the Franchisee's Restaurant will be due within 15 days after the end of each month and the yearly Financial Statements will be due within 90 days after the Franchisee's fiscal year end. The Franchisee's Financial Statements must be verified by the Franchisee's Chief Financial Officer.
6.2 Substantiation of Weekly Report and Financial Statements.
Within three business days after receiving a written request from the Franchisor, the Franchisee will provide the Franchisor with originals or exact copies of the Financial Records requested by the Franchisor to substantiate the information provided in the Weekly Report and Financial Statements submitted by the Franchisee pursuant to this Article.
6.3 Sales and Income Tax Returns.
Within 90 days after the Franchisee's fiscal year end, the Franchisee will furnish the Franchisor with copies of the Franchisee's yearly federal income tax returns filed by the Franchisee's Restaurant. Within three business days after receipt of a written request from the Franchisor, the Franchisee will furnish the Franchisor with copies of all state sales tax returns filed by the Franchisee's Restaurant for each month of the current calendar year.
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6.4 Audit Rights.
Within three business days after receiving written notice from the Franchisor, the Franchisee and the Franchisee's accountants will make all of the Franchisee's computer and hand prepared Financial Records available to the Franchisor during business hours for review and audit by the Franchisor or its designee. If the Financial Records are computerized, then the Franchisee will grant the Franchisor or its designees the absolute right to access the Franchisee's computer and software programs containing the Financial Records and the absolute right to copy the Financial Records to a computer disk or to any portable or other computer owned or controlled by the Franchisor. The Financial Records for each fiscal year will be kept in a secure place by the Franchisee and will be available for audit by the Franchisor for at least five years from the date they are created. The Franchisee will provide the Franchisor with adequate facilities to conduct the audit.
6.5 Payment of Audit Costs.
If an audit of the Franchisee's Financial Records reveals any deficiencies in the Royalty Fees, Advertising Fees or other amounts payable to the Franchisor under this Agreement, then the Franchisee will, within five days after receipt of an invoice from the Franchisor indicating the amounts owed, pay the deficiency owed to the Franchisor, together with interest as provided for herein. If an audit by the Franchisor results in a determination that the Franchisee's Gross Revenues were understated by more than two percent (2%) or more in any month, quarter or year, then the Franchisee will, within five days after receipt of an invoice from the Franchisor, reimburse the Franchisor for all costs and expenses (including employee Salaries, Travel Expenses and audit fees) incurred by the Franchisor for the audit.
6.6 Refusal to Submit Records or Permit Audit.
The Franchisee's failure or refusal to provide the Financial Records requested by the Franchisor to substantiate the Weekly Report and Financial Statements in accordance with Article 6.2 or to produce the Financial Records in accordance with Article 6.4 will be grounds for the immediate termination of this Agreement by the Franchisor.
6.7 Confidentiality of Financial Records.
The Franchisor will maintain the confidentiality of all Financial Statements and Financial Records submitted by the Franchisee to the Franchisor pursuant to this Article. However, any Financial Statements or Financial Records that are relevant to any issue in any arbitration or court proceeding between the Franchisor and the Franchisee may be disclosed or introduced into evidence in any such proceedings.
ARTICLE 7
QUALITY CONTROL, UNIFORMITY AND
STANDARDS REQUIRED OF FRANCHISEE
7.1 Quality and Service Standards.
The Franchisor will develop, from time to time, uniform standards of quality, cleanliness and service regarding the business operations of the Franchisee's Big Boy Restaurant to protect and maintain (for the benefit of the Franchisor and all of its franchisees) the distinction, valuable goodwill and uniformity represented and symbolized by the Marks and the Restaurant System. Accordingly, to ensure that all Big Boy franchisees maintain and adhere to the uniformity requirements and quality standards for the Products and Services associated with the Marks and the Restaurant System, the Franchisee agrees to maintain the uniformity and quality standards required by the Franchisor for all Products and Services associated with the Marks and the Restaurant System and agrees to the terms and conditions contained in
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this Article to assure the public that all Big Boy Restaurants will be uniform in nature and will sell and dispense quality Products and Services.
7.2 Big Boy Sandwich®; Super Big Boy Sandwich®
The Franchisor has developed, advertised and marketed the "Big Boy Sandwich®" and the "Super Big Boy Sandwich®" as the signature products associated with the Restaurant System and the Marks. As a consequence, the Franchisee will offer the Big Boy Sandwich and Super Big Boy Sandwich for sale at all times at the Franchisee's Big Boy Restaurant. The menus for the Franchisee's Big Boy Restaurant will prominently feature and describe the Big Boy® Sandwich and Super Big Boy® Sandwich in the manner approved by the Franchisor. The Franchisee's employees will be trained to emphasize to customers that the Big Boy® Sandwich and the Super Big Boy® Sandwich are the signature products of the Restaurant and the Franchisee will not refer to any other sandwiches, hamburgers or other food items as a "Big Boy Sandwich®" or a "Super Big Boy Sandwich®."
7.3 Compliance with Standards.
The Franchisee will use the Marks and the Restaurant System in strict compliance with the moral and ethical standards, quality standards, health standards, operating procedures, specifications, requirements and instructions required by the Franchisor, which may be amended and supplemented by the Franchisor from time to time.
7.4 Identification of Restaurant.
The Franchisee will operate the Restaurant so that it is clearly identified and advertised as a Big Boy Restaurant. The style and form of the words "Big Boy®" and the other Marks used in any advertising, marketing, public relations or promotional program must have the prior written approval of the Franchisor. The Franchisee will use the name "Big Boy®," the approved logos and all graphics commonly associated with the Restaurant System and the Marks which now or hereafter may form a part of the Restaurant System, on all paper supplies, furnishings, advertising, public relations and promotional materials, Signs, stationery, business cards, linens, towels, napkins, aprons, menus, menu boards, food and beverage containers, placemats, uniforms, clothing and other materials in the identical combination and manner as may be prescribed by the Franchisor in writing. The Franchisee will, at its expense, comply with all legal notices of registration required by the Franchisor or its attorneys and will, at its expense, comply with all trademark, trade name, service mark, copyright, patent or other notice markings that are required by the Franchisor or by applicable law.
7.5 Other Business.
The Franchisee will use the Franchised Location solely for the operation of a Big Boy Restaurant and will not directly or indirectly operate or engage in any other business or activity from the Franchised Location without the prior written consent of the Franchisor. The Franchisee will not participate in any dual branding program, or in any other program, promotion or business pursuant to which a trademark, service mark, trade name, logo, slogan, or commercial symbol owned by any person or Entity other than the Franchisor is displayed, featured or used in connection with the Franchisee's Big Boy Restaurant without the prior written consent of the Franchisor.
7.6 Franchisee's Name.
The Franchisee will not use the name "Big Boy®" or any derivative thereof as the legal name of its Entity or sole proprietorship name. The Franchisee will hold itself out to the public as an independent contractor that is operating its Restaurant as a franchised Big Boy Restaurant. The Franchisee will file for a certificate of assumed name in the manner required by applicable state law to notify the public that the Franchisee is operating its Restaurant as an independent contractor pursuant to this Agreement.
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7.7 Approved Advertising.
The Franchisee will not conduct any advertising or promotion for its Restaurant unless and until the Franchisor has given the Franchisee prior written approval for all concepts, content, materials and media proposed for any such advertising and/or promotion. The Franchisee will not permit any triird party to advertise its business, services or products on the premises of or in connection with the Franchisee's Big Boy Restaurant. The Franchisor will at all times have the right to remove any unauthorized advertising or promotional materials from the Franchisee's Restaurant at the Franchisee's expense. All advertising and other materials provided to the Franchisee by the Franchisor or contained in ihe current Operations Manual will be deemed to be approved.
7.8 Telephone Directory Listings.
The Franchisee will, at its expense, continually list and advertise in the "Yellow Pages" in the Franchisee's market area under the heading of "Restaurants" and under other headings or listings designated by the Franchisor in writing. The format, size and content of the listings and advertising copy will conform in all respects to the standards established by the Franchisor in the Operations Manual. The Franchisee will, at its cost, also list in the "White Pages" of the Franchisee's market area under the name "Big Boy®".
7.9 Television; Vending and Gaming Machines: Tickets.
Except with the prior written approval of the Franchisor, which may be withheld at the sole and absolute discretion of the Franchisor, the Franchisee will not (a) permit any television, jukebox, video and electronic games, vending machines (including cigarette, gum and candy machines), newspaper racks, rides or other mechanical or electronic entertainment devices, coin or token operated machines (including pinball), or gambling machines or other gambling devices to be used on the premises of the Franchised Location, or (b) offer for sale or allow employees to offer for sale at or near the Franchised location any tickets, subscriptions, pools, chances, raffles, lottery tickets or pull tabs.
7.10 Standard Attire or Uniforms.
The Franchisee will require its employees to wear the standard attire or uniforms described in the Operations Manual. All employees of the Franchisee will wear clean and neat attire or uniforms and will practice good personal hygiene.
7.11 Business Hours; Personnel.
The Franchisee's Big Boy Restaurant will be open during the times and hours specified by the Franchisor in the Operations Manual, unless the Franchisor has agreed to different hours and times in writing. The Franchisee will at all times during business hours have management personnel on duty who are responsible for supervising the employees and the business operations of the Franchisee's Restaurant. The Franchisee will have a sufficient number of adequately trained and competent service, kitchen and other personnel on duty to guarantee efficient service to the Franchisee's customers. The Franchisee will take such steps as are necessary to ensure that its employees develop and pjeserve good customer relations, render competent, prompt, courteous and knowledgeable service and meet the quality and service standards established by the Franchisor.
7.12 Reservations.
The Franchisee's Big Boy Restaurant will not take dining reservations or permit leserved seating, except as may be authorized in the Operations Manual.
7-13 Credit Cards.
The Franchisee will honor all credit, charge, courtesy or cash cards or other credit devices required or approved by the Franchisor in writing. The Franchisee must obtain the written approval of the Franchisor prior to honoring any unapproved credit, charge, courtesy or cash cards, or other credit devices.
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7.14 Gift Certificates and Coupons.
The Franchisee will not create, sell or issue gift certificates and will not issue coupons or discounts of any type except as may be approved in advance in writing by the Franchisor. The Franchisee will participate in all electronic and written gift certificate, gift card, coupon and customer loyalty programs approved by the Franchisor and will purchase or acquire all equipment necessary to accept electronic and written gift certificates, gift cards, coupons, and customer loyalty rewards and cards in the manner prescribed in the Operations Manual.
7.15 Music and Music Selection.
In order to maintain the image and ambiance associated with the Restaurant System, the Franchisee will only play the music and music selections that have been approved by the Franchisor in the Operations Manual or otherwise in writing.
7.16 Standards of Service.
The Franchisee will at all times give prompt, courteous and efficient service to its customers. The Franchisee will, in all dealings with its customers, suppliers and the public, adhere to the highest standards of honesty, integrity, fair dealing and ethical conduct.
7.17 Security and Safety.
The Franchisee will be responsible for implementing, obtaining, installing and maintaining the security and safety procedures, measures, devices and systems necessary to adequately protect the employees, public, guests and customers of the Franchisee's Big Boy Restaurant during and after business hours.
7.18 Equipment and Supplies.
The Franchisee will, at its sole expense, obtain and maintain at all times during the Term of this Agreement, the FF&E, inventory and supplies required by the Franchisor for use in the operation of the Franchisee's Big Boy Restaurant which must meet the then-current standards and specifications established by the Franchisor.
7.19 Maintenance.
The Franchisee will, at its expense, repair, paint and keep in a clean and sanitary condition the interior, the exterior, the parking lot, signage, exterior lighting, and the grounds of the Franchised Location and the Franchisee's Restaurant, and will replace all floor coverings, wall coverings, light fixtures, curtains, blinds, shades, furniture, room furnishings, wall hangings, Signs, fixtures and other decor items as they become worn-out, soiled or in disrepair. All mechanical equipment, including ventilation, heating and air conditioning, must be kept in good working order by the Franchisee at all times. All replacement FF&E, Signs, decor items, supplies and other items used in the Restaurant by the Franchisee must comply with the Franchisor's then-current standards and specifications.
7.20 Remodeling of Business Premises.
The Franchisee will make the reasonable capital expenditures necessary to extensively remodel, modernize, redecorate and renovate ("remodel" or "remodeling") the Franchisee's Restaurant and to replace and modernize the supplies and FF&E so that the Franchisee's Restaurant and the premises will reflect the then-current image of Big Boy Restaurants. All remodeling and all replacements for the FF&E must conform to the Franchisor's then-current plans and specifications. The Franchisee will commence remodeling the Franchised Location within four months after the date the Franchisee receives written notice from the Franchisor specifying the required remodeling, and will diligently complete such remodeling within six months after its commencement. Except as provided for in Article 7.19 of this Agreement, the Franchisee will not be required to remodel the Restaurant, or to replace and modernize its FF&E more than once every five years during the Term of this Agreement.
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7.21 Alterations to Restaurant.
The Franchisee will not install or permit to be installed on or above the Restauiant, without the prior written consent of the Franchisor, any FF&E, Signs, decor or other items not previously approved by the Franchisor.
7.22 Inspection Rights.
The Franchisee will permit the Franchisor or its representatives to enter, remain on, and inspect the Franchised Location whenever the Franchisor reasonably deems it appropriate and without prior notice to interview the Franchisee's employees and customers, to take photographs and videotapes of and examine the interior and exterior of the Franchised Location, to examine or review representative samples of the Products and Services sold or used at the Franchisee's Restaurant, and to evaluate the quality of the Products and Services provided by the Franchisee to its customers. The Franchisor will also have the right to send a representative of the Franchisor to dine at the Franchisee's Big Boy Restaurant to evaluate the operations of the Franchisee's Big Boy Restaurant and the quality of the Products and Services provided by the Franchisee to its customers. The Franchisor will have the righl to use all interviews, photographs and videotapes of the Franchisee's Big Boy Restaurant for such purposes as the Franchisor deems appropriate including, but not limited to, use in advertising, marketing and promotional materials. The Franchisee will not be entitled to, and hereby expressly waives, any right that it may have to be compensated by the Franchisor, its advertising agencies, and other franchisees of Big Boy Restaurants for the use of such photographs or videotapes for advertising, marketing and promotional purposes. The Franchisor will not use any photographs of the Franchisee's employees or customers unless written releases have been obtained by the Franchisor.
7.23 Management and Operation of Big Boy Restaurant.
The Franchisor strongly recommends that the Franchisee (if an individual) actively participate in the operation of the Franchisee's Big Boy Restaurant, either as the General Manager oi in another capacity. The Franchisee will be totally and solely responsible for the operation of its Big Boy Restaurant, and will control, supervise and manage all the employees, agents and independent contractors who work for or with the Franchisee. The Franchisee 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 applicable federal, state, city, local and municipal laws, statutes, ordinances, rules and regulations. The Franchisor will not have any right, obligation or responsibility to control, supervise or manage the Franchisee's employees, agents or independent contractors.
7.24 Operating Entity.
The Entity that becomes the Franchisee under this Agreement must be responsible for operating and managing the Restaurant and will not hold or have any Ownership Interest in, operate, or manage any other business of any kind without the prior written approval of the Franchisor.
7.25 Compliance with Applicable Law.
The Franchisee will, at its expense, comply with all applicable federal, state, city, local and municipal laws, statutes, ordinances, rules and regulations pertaining to the construction or remodeling of the Franchised Location and the operation of the Franchisee's Big Boy Restaurant including, but not limited to, all health, food service and liquor licensing laws, all health and safety regulations, all environmental laws, all laws relating to employees, including all wage and hour laws, employment laws, workers' compensation laws, discrimination laws, sexual harassment laws, and disability discrimination laws. The Franchisee will, at its expense, be solely and exclusively responsible for determining the licenses and permits required by law for the Franchisee's Big Boy Restaurant, for obtaining and qualifying for all such licenses and permits, and for complying with all applicable laws.
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FLDRS\UFQC BigBoy\UFOC\UFOC.06\Franchise Agreement-06.doc
7.26 Payment of Taxes.
The Franchisee will be absolutely and exclusively responsible and liable for filing all required tax returns and for the prompt payment of all federal, state, city and local taxes including, but not limited to, individual and corporate income taxes, sales and use taxes, franchise taxes, gross receipts taxes, employee withholding taxes, F.I.C.A. taxes, inventory taxes, liquor taxes, personal property taxes and real estate taxes ("Taxes") payable in connection with the Franchisee's Big Boy Restaurant. The Franchisor will have no liability for any Taxes which arise or result from the Franchisee's Restaurant and the Franchisee will indemnify the Franchisor for all Taxes that may be assessed or levied against the Franchisor which arise out of or result from the Franchisee's Restaurant.
7.27 "Franchise" and Other Taxes.
If any "franchise" or other tax which is based upon the Gross Revenues, receipts, sales, business activities or operation of the Franchisee's Big Boy Restaurant is imposed upon the Franchisor by any taxing authority, then the Franchisee will reimburse the Franchisor in an amount equal to the amount of such taxes and related costs imposed upon and paid by the Franchisor. The Franchisee will be notified in writing when the Franchisor is entitled to reimbursement for the payment of such taxes and, in that event, the Franchisee will pay the Franchisor the amount specified in the written notice within 10 days after receipt of the written notice.
7.28 Payments to Creditors.
The Franchisee will timely pay all of its obligations and liabilities due and payable to all suppliers, landlords, lessors, vendo