Franchise Agreement
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample Franchise Agreement
CHURRO STA TION ®
FRANCHISE AGREEMENT
This Agreement is entered into in Corte Madera, California, on___________________,
20____, by CHURRO STATION FRANCHISES, LLC, a California limited liability company,
whose address is 2 Fifer Avenue, Suite 110, Corte Madera, California 94925, referred to in this
Agreement by words such as "we", "us", and "our", and_______________________________
__________________________________________, whose address is____________________
_____________________________________________________________, referred to in this
Agreement by words such as "you" and "your", and who are collectively referred to in this Agreement as "the parties".
This Agreement is made with reference to the following facts, representations, and purposes:
A. We have been licensed by CHURRO STATION, LLC, a California limited liability company ("our licensor"), to use the service mark "Churro Station" and certain trademarks, service marks, trade secrets, trade dress, recipes, practices, procedures, and other proprietary information and property and to grant to third parties the right to open and operate retail food shops that use that information and property. These shops must follow the Churro Station format and use the Churro Station recipes, practices, procedures, and other proprietary property licensed to you under this Agreement. Under our license, we are developing a chain of shops bearing the Churro Station name which are designed, built, and decorated in accordance with our requirements. These shops are intended to be run in accordance with, substantially uniform standards of operation in order to create and maintain a high quality image and appeal to the public. In order to maintain and increase the goodwill and public acceptance of Churro Station shops, Churro Station shops must maintain the standards, and follow the requirements, practices, and procedures, we establish from time to time. In this regard, we maintain control over the format, design, decor, equipping, fixturing, stocking, practices, procedures, recipes, services, products, advertising and promotion, and many other aspects of the operation of Churro Station shops.
B. All of the items we license to you under this Agreement, including the trademarks, trade names, service marks, logotypes, other commercial symbols, processes, procedures, trade dress, equipment specifications, trade secrets, recipes, trade practices, copyrights, patents, menus, manuals, forms, formats, advertising and promotional material and practices, bulletins, notices, communications, training material, goodwill, and all other items, tangible and intangible, used presently, or specified for use in the future in connection with this franchise, are referred to in this Agreement as "the licensed assets".
C. You have applied to us for a franchise to own and operate a Churro Station shop ("your shop") and to use the licensed assets in connection with it. You represent and warrant to us that you and everyone who will own an interest in this franchise has set forth fully and truthfully all of the information we have requested on our application and financial disclosure forms, and in all other written and oral communications between us. You further represent and
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warrant that all persons or entities who will have an ownership interest in this franchise and in any entity that will own any interest in this franchise have been disclosed to us in writing, have provided all information we have requested of them, and, at our request, have signed a guaranty of the performance of the franchisee under this Agreement.
D. You acknowledge and represent to us that you have investigated the region in which you plan to open your Churro Station shop and have found no use of the name "Churro Station", or any similar trade name or commercial identification, in that area.
E. We desire to grant to you a franchise to open a Churro Station shop on the terms and conditions of this Agreement, and based solely upon the representations and promises in it.
F. You acknowledge that neither we, nor anyone purporting to act for us, have made any promises or representations concerning Churro Station shops, the sales volumes which are likely to be experienced by your shop, the profits likely to be made in your shop, the likelihood of success of the franchised business, or any other matter in connection with the proposed franchise or the franchised business, other than those promises and representations which are set forth in this Agreement, any signed amendments or exhibits to this Agreement, or in the franchise offering circular that accompanied this Agreement. If any such promises or representations have been made, you are instructed to make sure that they are set forth in writing in this Agreement, or in an amendment or exhibit to this Agreement, and that any such amendment or exhibit is signed by both of us. In granting you this franchise, we are relying on you to see that all promises and representations on which you are relying are reduced to writing, are signed, and are made a part of, or are attached to, this Agreement. If they are not, you may not be able to rely on such promises or representations and we will not be bound by them.
G. As used in this Agreement the word "you", and similar words, refer to all of the people who sign this Agreement, to any entity that has any interest in this franchise, and to any other people or entities that own a material portion of the assets used in the operation of your shop.
H. The terms "this franchise" and "your shop" refer to the business operated pursuant to this Agreement as well as a significant portion of the property used in the operation of your shop. The words "this Agreement" refer to this Franchise Agreement, the rights granted by this Agreement, and any amendments, alterations, additions, exhibits, and addenda to this Agreement, but only those that are signed by all of the parties to this Agreement. If, for any reason, we change the name of our shops from Churro Station as allowed by this Agreement, the terms of this Agreement will apply equally to operations under the changed name.
I. As used in this Agreement, references to our "manual" means any manual or
manuals, whatever named, that describe the manner of operating your Churro Station shop, the forms and formats to be used in your shop, our operating, reporting, advertising, and business requirements, the use of our names, marks, trade dress, and other proprietary property, the licensed assets, and so forth.
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J. The person or people signing this Agreement warrant that they have full power
and authority to enter into this Agreement, and, if they have signed on behalf of a partnership, limited liability company, corporation, or other entity, that it has been duly organized, is validly existing, is qualified, and is in good standing in the jurisdiction in which it was formed and, if necessary as a condition of doing business where your shop is located, in the jurisdiction where your Churro Station shop will be situated.
WHEREFORE, in consideration for the mutual promises set forth herein, and based on the above recitals, facts, representations, and purposes, as well as for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, and with the intent to be legally bound, the parties to this Agreement agree as follows:
1. Incorporation of Recitals.
1.01 The representations, facts, promises, warranties, recitals, and statements set forth above are true and are incorporated into this Agreement by reference.
2. Grant of Franchise.
2.01 We hereby grant you a franchise to own and operate the number of Churro Station shops specified below in accordance with the provisions, and for the term, set forth in this Agreement. You agree to use the licensed assets only as allowed by this Agreement.
2.02 You acknowledge that, other than as set forth in this Agreement, we and our licensor have the sole right to use, and to permit others to use, the licensed assets. You agree that you do not now have, nor in the future will you have, any rights in or to any of the licensed assets other than the rights granted to you by this Agreement.
2.03 You agree not to use the name "Churro Station", or any names similar to it, in the name of any partnership, corporation, limited liability company, or other entity, that you own or form, whether to own and operate your shop or in connection with any other activity or entity in which you may now have, or in the future may have, any direct or indirect interest.
2.04 No goodwill associated with the Churro Station system now or in the future, or with any of the licensed assets, will belong to you or to any person who, or entity which, owns or is otherwise involved with this franchise whether because of your, or their, use of the assets, or otherwise. You agree that all goodwill connected in any way with the licensed assets, our names and marks, and the Churro Station system, belongs exclusively to us and to our licensor, and will so in the future.
2.05 You acknowledge that we have advised you to obtain the advice of competent legal counsel when reviewing this Agreement, and any other contracts you propose to enter, so that you will understand fully your rights and obligations under this Agreement and such other contracts.
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3. Franchise Fee.
3.01 Initial Franchise Fee
(a) If this Agreement covers a single Churro Station shop, you agree to pay us the sum of $25,000.00 in consideration for the rights granted to you under this Agreement. If this Agreement grants you the right to open more than one Churro Station shop, the initial fee you must pay is determined as follows:
Number of
Shops________Total Initial Franchise Fee
2 $45,000.00
3 $63,000.00
4 $78,000.00
Each additional shop $ 15,000.00 per shop
(b) The franchise fee is payable in full upon the signing of this Agreement.
(c) Once you are an existing Churro Station franchisee and desire to purchase a franchise for a second, or subsequent, shop, the initial franchise fee for each will be equal to 80% of the single-shop franchise fee being charged at the time you sign your Franchise Agreement covering the additional shop or shops.
3.02 Finding a Location for a Sinsle-Shop Franchise
(a) If this Agreement covers a single Churro Station shop, upon signing this Agreement and paying the appropriate franchise fee, you will have the right to locate a Churro Station shop in the following area, called "your designated area":
(b) You will have the exclusive right for 30 days to find a location for your Churro Station shop within your designated area that meets our approval. During the 30-day period, we will not grant another person the right to seek a location for a Churro Station shop in that area nor will we take a location in that area ourselves for a company-owned Churro Station shop. See Section 5 below for how to apply for approval of a site.
(c) If you do not find a location acceptable to us within the concerned area within 30 days from the date of this Agreement, you will have another 60 days within which to find a location that we approve in that area on a nonexclusive basis. During the nonexclusive 60-day period, we can allow other Churro Station franchisees to, and can ourselves, seek and take locations for Churro Station shops within the area. The taking of sites in your designated area by us, or by others, may limit or eliminate the acceptable locations available to you.
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(d) If you do not find an acceptable location in your designated area within 90 days from the date of this Agreement, we can terminate this Agreement and refund one-half of your initial fee to you. We can retain the balance of your initial fee in consideration for our efforts in connection of granting you this franchise.
(e) When you have found a site that you consider acceptable, you must submit to us the information set forth in Section 5 of this Agreement in order to obtain our approval of your proposed site. You must obtain our approval of your site before you can lease, or otherwise acquire, it. You must also comply with the leasing requirements of Section 5 or we can terminate this Agreement. The refundability of your franchise fee under various circumstances related to your site and lease are discussed in Section 5.
3.03 Development of Multiple Shops
(a) If this Agreement grants you the right to open more than one Churro Station shop, your shop-opening schedule and your designated area are set forth on Exhibit B. You must open each shop by the date specified in this schedule or you will lose your right to open any shops not then open or under construction. The site selection and leasing requirements for each shop are as set forth in Section 5 of this Agreement.
(b) If you default under your shop-opening schedule, we can retain all fees you have paid to us as consideration for holding your designated area from the market and granting you development rights.
(d) The terms of this Agreement will govern all of the shops you open pursuant to the development rights granted by this Agreement.
(e) Since we charge a reduced franchise fee for your second and subsequent shops, we can, in our discretion, reduce or eliminate the initial services we provide in connection with the opening of those shops.
4. Term of the Franchise and Renewal Options.
4.01 (a) The initial term of this Agreement is 10 years, beginning on the date of this Agreement. If the term of your lease is for 10 years and it begins not more than one year after the date of this Agreement, the term of this Agreement will be extended for not more than one year so that it will expire on the date that your lease is due to expire.
(b) If this Agreement covers more than one Churro Station shop, the term of this Agreement shall be extended to cover the initial lease term of each shop covered by this Agreement, but the term will not be over 10 years for each shop.
(c) If the term of your lease, including any renewals and extensions, expires prior to the end of the 10-year term of this Agreement, this Agreement will end at the same time as your lease ends.
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(d) If you own the building in which your Churro Station shop is located, the term of your Franchise Agreement begins on the date your shop opens for business.
4.02 (a) This franchise is renewable after the expiration of the initial term for one additional period of 10 years. If you want to renew this franchise, you must give us notice in writing of that desire not less than 6 months nor more than 12 months prior to the scheduled expiration date of the initial term.
(b) If you are in default under this Agreement at the time you give us notice of your intent to renew this franchise or at the time the renewal term is to begin, we can refuse to renew your franchise. If you have been given 2 or more notices of default concerning the violation of material terms of this Agreement over the course of any 3 year period, even if those violations were cured as allowed by this Agreement, we can decline to renew your franchise.
4.03 (a) As a condition of our approving of the renewal of this franchise, you agree that we can require you to sign the form of Franchise Agreement we are using for new Churro Station franchises at the time the renewal is to take effect. If no new franchises are then being offered, the form of Franchise Agreement that will be used will be that which we specify in our reasonable discretion at the time. The new agreement may contain terms substantially different from the terms of this Agreement.
(b) After we receive the notice of your desire to renew this franchise, we will send you the form of Franchise Agreement that will govern the renewal term for your review at least 30 days prior to the expiration of the initial term. You must agree to sign the required form of Franchise Agreement within 30 days of your receipt of that agreement or you will be deemed to have withdrawn your request to renew your Churro Station franchise and, thus, to have agreed to allow the franchise to terminate at the expiration of the current term.
(c) We will not require you to pay the initial fee set forth in the Franchise Agreement you are required to sign as a condition of renewal. However, for each shop being renewed you agree to pay us a renewal fee equal to 10% of the initial franchise fee we are charging to new Churro Station franchisees at the time of your renewal, or reimburse us for our expenses and the time of our employees in connection with your renewal or renewals, whichever sum is greater. If we are not offering new Churro Station franchises at the time of your renewal or renewals, we will advise you of the amount of the renewal fee when we give you the new Franchise Agreement that is to govern the renewal term. Even though a new Franchise Agreement is signed on renewal, we will not provide the initial services that may be described in that agreement and there will be no further renewal terms available.
(d) Except in the case of a relocation of your shop as described in Section 4.05 below, as a condition of renewal, you must provide evidence that you have obtained the right to occupy your shop location for a term at least equal to the renewal term.
4.04 As a condition of the renewal of this franchise, you agree that we can require you to update your equipment, refurbish your shop, and update your shop signage to the extent and in
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the manner we reasonably require in order to bring your shop up to the standards of those Churro Station shops opened closest in time to your renewal period. We agree to notify you of such requirements, and the time within which they must be accomplished, at the time we provide you with a copy of the Franchise Agreement that will be used for your renewal term. By signing the new Franchise Agreement, you agree to comply with our requirements within the time periods we specify.
4.05 If we reasonably anticipate that one or more of the Churro Station shops governed by this Agreement can do materially better at a new location, as a condition of our approving the renewal of your franchise, we can require you to relocate the concerned shop or shops when the lease or leases currently in effect on the location or locations expire. Your duties and our services in connection with any relocation will be as governed by the new form of Franchise Agreement that you will sign as a part of the renewal process. If you relocate your shop when you renew, in addition to the applicable renewal fee we can also charge you our relocation fee for each relocated shop to compensate us for the additional services we provide in connection with the relocation, including providing our site and lease approval and the design and construction consulting we provide in connection with your new site or sites. Our relocation fee is equal to 30% of the franchise fee we are charging to new Churro Station franchisees at the time of your relocation. If we are not granting new franchises at the time of your relocation, the relocation fee will be equal to 30% of the franchise fee we were charging for new Churro Station franchises at the time we stopped granting new franchises, adjusted by any increase in the Consumer Price Index as described in Section 21 below.
4.06 If any renewal not otherwise permitted by this Agreement is mandated by law, to the extent allowed, the renewal period or periods, and the terms of renewal, will be governed by the provisions of the Franchise Agreement we are using for new Churro Station franchisees at the time the relevant renewal period is due to start. If we are not offering new Churro Station franchises at that time, the renewal period or periods, and the new franchise terms, will be governed by the provisions governing renewal terms set forth in the Franchise Agreement that we were using at the time we stopped offering new Churro Station franchises.
4.07 As a condition of renewal, you will have to sign a general release of all claims against us so that we do not start the renewal term with unresolved issues between us.
5. Location and Protected Territory.
5.01 As used in this Agreement, the word "lease" also means a sublease or other agreement by which you are allowed to occupy your shop location, including a deed by which you own it.
5.02 (a) We will consult with you regarding the general criteria for your shop location so that you will know what type of location to look for. However, we have no responsibility to find a location for you. It is your responsibility to find a location for your shop that is acceptable to us within the required time period.
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(b) Sometimes the protected territories granted in connection with locations approved for other franchisees may overlap the area in which you have priority to look for a site. If such a protected territory has been granted to another franchisee before you find a location we approve, you will not be able to locate your shop within that protected territory, even though it is partially in your designated area or the area in which you have the right to open multiple Churro Station shops.
5.03 (a) If you have been granted the right to open more than one Churro Station shop, the designated area within which you have the exclusive right to open your shops, and the time within which you must open each shop, are listed on Exhibit B. As long as you are in compliance with the requirements of that exhibit, we will not authorize other Churro Station franchisees to seek or take locations in the designated area, and we will not do so ourselves. If you open all of the shops called for by your shop opening schedule, we will not grant franchises to third parties within that area, and will not open a Churro Station shop within that area ourselves, as long as you are in good standing under this Agreement.
(b) If you open more than one shop pursuant to the multiple shop opening requirements described in Exhibit B, you must continuously own and operate all of those shops during the term of this Agreement in order for your exclusive rights under this Agreement to remain in effect.
5.04 If you do not find an acceptable location for your first Churro Station shop within 90 days from the date of this Agreement, or do not comply with the multiple shop opening requirements listed on Exhibit B, if appropriate, we can terminate this Agreement without giving you further time within which to find a location for your shop or shops.
5.05 (a) When you find a location, you must provide us with the details of the site. To assist us in deciding whether to approve the location, you must provide us with the information we request at the time, which may include population and demographic data concerning the area of the site, the identity of other food enterprises in the same shopping center, mall, complex, or area where your shop is proposed to be located, the nature of the residential, commercial, and office development in the area, and so forth. In addition, such things as traffic patterns, the layout of the proposed space, the visibility and accessibility of the proposed location, the other physical attributes of the location, and similar data must be provided to us if reasonably obtainable. If the site is in a shopping center or other multitenant development, you must provide us with a layout of the shopping center or development with the location of your proposed shop indicated. If we request additional information for our evaluation of the proposed site, you agree to use your best efforts to provide the requested information to us promptly. All costs in connection with obtaining the information set forth above and supplying it to us are strictly your responsibility.
(b) If we approve the proposed location for your Churro Station shop, we will notify you promptly of that approval. If we do not approve the site, we agree to notify you promptly of our objections and the steps you can take, if any, to make the site acceptable to us.
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5.06 (a) As soon as possible after we approve your proposed location, but in no event more than 90 days after we do so, you must obtain a signed lease for the site. If no lease is then available, you agree to get a letter of intent from the landlord of your prospective Churro Station shop setting forth the basic terms of the proposed lease and accepting you as a tenant.
(b) You must provide the terms of your proposed lease to us for our approval prior to signing the lease. The provided terms should include the proposed term of the lease, any renewal options, rental and other charges, fees, or costs, limitations on the use of the premises and similar terms, along with the form lease proposed by the lessor. We must approve the lease form and leasing terms in writing before you may enter into the lease, unless we waive this requirement in writing.
(c) At our option, we can provide you with our comments on the lease terms. We are not responsible for any errors or omissions we may make in our comments on the lease, or, if we assist you in negotiating the terms of the lease, in our negotiation of the lease terms. We strongly advise you to obtain the advice of competent legal counsel when reviewing the lease to understand your rights and obligations. Neither by approving your site or your lease do we guaranty or warrant in any way that the site or lease terms are adequate for your needs or purposes. Our requirements, reviews, approvals, and assistance are for our own purposes and are not a representation or warranty guaranteeing you success in the approved location or under the terms of the concerned lease.
(d) You agree to provide us with a copy of your fully-executed lease within 5 days of its execution.
(e) If you do not obtain a lease, or, if appropriate, a letter of intent, for the site within the required time period, we can terminate this Agreement and refund one-half of your initial franchise fee, the balance of which we can retain in consideration for our efforts in connection of granting you this franchise and approving your proposed location. Once you have signed a lease, all fees and amounts you have paid to us become nonrefundable.
5.07 As a condition of our approving your proposed lease we can require you and the lessor of the site to enter into an agreement allowing the assignment of the lease to us in the event this Agreement expires or is terminated. The agreement may contain other terms concerning your occupancy and/or our rights upon the expiration or termination of this Agreement. The agreement we use for this purpose on the date this Agreement is attached to the Franchise Offering Circular that accompanied this Agreement.
5.08 (a) If we find or are presented with an acceptable site in your designated area before you have found an acceptable location for your Churro Station shop, we will make that location available to you, unless, for some reason, the site is limited in such a way that we cannot offer the site to you.
(b) If we present you with such a location, you will have 5 days from being notified of the location within which to accept the location. If you do not accept the location in
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writing within the 5-day period, we can offer the location to another Churro Station franchisee, we can retain the location for a company-owned Churro Station shop, and/or we can terminate this Agreement and refund the initial franchise fee you have paid us, less one-half of the franchise fee you have paid which we can retain as consideration for granting you the franchise and presenting you with the proposed location. If we do not terminate this Agreement for that reason, the provisions concerning your obligation to find an acceptable location for your shop, and the time period within which you must do so, remain in effect.
5.09 Your Churro Station shop must be open for business within 6 months from the date you sign your lease, or, if appropriate, a letter of intent. If it is not, we can terminate this Agreement, unless, in our judgment, you have used due diligence in attempting to satisfy the requirements of this Section 5 and in our judgment the delay is beyond your reasonable control in which case we will extend the 6 month period for a reasonable period of time. If we terminate this Agreement because you have not opened your shop within the time required, we can retain your entire franchise fee as consideration for our efforts in connection with selling you the franchise, approving your site, and our other activities on your behalf to the date of the termination.
5.10 (a) In connection with our consideration and approval of your proposed shop location, if you desire a protected territory in connection with your shop we must agree with you upon any protected territory to be granted in connection with the proposed location and enter that protected territory on Exhibit A to this Agreement. We base the boundaries of your protected territory principally upon the Hispanic population within those borders. Our agreement on a protected territory within a reasonable time, if any protected territory is to be granted in connection with your shop, is a condition to the continuation of this Agreement. If, within a reasonable time we cannot agree on a protected territory, or to agree that there will be no protected territory, we can terminate this Agreement and refund one-half of your initial franchise fee the balance of which we can retain as consideration for granting you the franchise and approving your location.
(b) Once we have approved your location and lease, and have agreed with you on a protected territory, you will be authorized to enter into the lease for your shop location. If for any reason you execute your lease prior to Exhibit A being executed by both of us, your shop will be deemed not to have been granted any protected territory.
(c) The franchise awarded by this Agreement is only for the location or locations described in Exhibit A to this Agreement and does not permit you to use the licensed assets at any other location or for any other purpose except as otherwise provided in this Agreement.
(d) If this Agreement covers more than one shop, Exhibit A will be amended as the location for each shop covered by this Agreement is approved and any protected territory assigned in connection with each location is granted.
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5.11 (a) Except as provided below, by granting you a protected territory, we agree not to locate a company-owned or franchised shop of the type franchised by this Agreement within that territory during the term of this Agreement.
(b) Excluded from the restriction set forth in subsection 5.11(a) above are any competing units owned, operated, and/or franchised by any person or entity with whom or which we may merge, by whom or which we are acquired, or which we acquire or otherwise become affiliated after the date of this Agreement. However, we agree that no such entity will own, operate, or franchise any facilities using the principal service marks and trademarks that are licensed to you under this Agreement.
(c) Designation of the protected territory does not grant or imply any marketing or clientele exclusivity within that area, except as noted elsewhere in this Agreement.
(d) You do not have the right to open any additional Churro Station shops in your protected territory unless you have been granted the right to open more than one Churro Station shop in this Agreement or we otherwise agree.
5.12 (a) You can relocate your Churro Station shop only with our prior written consent. As a condition of giving you our consent, you must sign a general release of all claims against us, our members, officers, employees, and agents, and sign the Franchise Agreement we are using for new Churro Station franchises at the time of the relocation.
(b) You can only relocate your shop within the protected territory originally granted to vou. if any. Your relocated shop cannot be within the protected territory granted to another Churro Station franchisee, or within an area reserved for or to a Churro Station shop that we own or that is owned by one of our affiliates. The site, lease, design, construction, decoration, equipping, stocking, and every other aspect of your relocated Churro Station shop must be accomplished in accordance with the requirements that exist at the time for new Churro Station shops. We may design a new protected territory for you depending on new location of your store.
(c) To compensate us for the costs we incur in connection with your relocation, as a condition of approving your relocation, you must pay us a relocation fee in an amount equal to 30% of the franchise fee we are charging at the time for new Churro Station franchises to help defray the costs we incur in connection with your relocation. If we are not offering new Churro Station franchises at the time of your relocation, we will provide you with the Franchise Agreement we propose to use in connection with your relocation when we give you our consent to the relocation. The relocation fee in that case will be equal to 30% of the franchise fee we were charging for new Churro Station franchises at the time we stopped granting new franchises, and adjust that amount by any increase in the Consumer Price Index as described in Section 21 below.
(d) If we grant our consent to your relocation but think your current location is viable, you agree that we have the right to require you to assign your lease to us, or our nominee,
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or to sublease the location to us, or our nominee, as a condition of our approval of your relocation. We also have the right to enter into a new lease for the space you are vacating, or one in the same shopping center or commercial area, or to have another Churro Station franchisee do so, and to open a company-owned or franchised Churro Station shop in that location.
5.13 (a) Nothing in this Agreement, including granting you a protected territory, prevents us, our licensor, our affiliates, or others whom we or they authorize, from marketing goods bearing the Churro Station name or marks, or names or marks similar or related to the name Churro Station, or any other products or services, to independent retail outlets, at wholesale, by means of catalogs, by mail order, by electronic means, including over the Internet, whether within your protected territory or elsewhere. Such goods may be the same as, or may be different from, goods you carry in your Churro Station shop. You will not be entitled to any compensation or other benefit because of sales made as a result of such activities, even if such sales affect your business.
(b) Nothing in this Agreement, including granting you a protected territory, prevents us, our licensor, our affiliates, and/or others whom we or they authorize, from conducting businesses providing goods or services that are not materially similar to those provided by the standard Churro Station shop, whether under the Churro Station names or marks, or under other names or marks, whether within your protected territory or elsewhere. You will not be entitled to any compensation or other benefit as a result of the sales made by or to such businesses, even if their activities affect your sales.
5.14 (a) Unless we consent in writing to the contrary, you can use your Churro Station shop only for providing the services and selling the merchandise we approve and, then, only in the manner we specify. Except as otherwise provided in this Agreement, you are authorized to provide services and sell goods only to retail customers and only from your shop.
(b) Except as provided elsewhere in this Agreements, you agree not to market any goods or services related to your Churro Station business through independent retail outlets, at wholesale, by means of catalogs, by mail order, by electronic means, including over the Internet, or by other alternative means.
5.15 Without our written consent, no business, other than the business franchised by this Agreement, can be located in your shop. Only with our consent can you operate your Churro Station shop inside the business premises of someone else.
5.16 (a) You are authorized to solicit wholesale customers for the products you produce in your Churro Station shop or shops unless and until we specify otherwise. Unless we specify otherwise at any time, prospective wholesale customers do not have to be within your protected territory or territories.
(b) You may not provide products to any wholesale customer without our prior written consent, which consent we agree not to unreasonably withhold or delay. We will base our judgment on whether to grant such consent on our evaluation of the operation of your
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existing Churro Station shop or shops, your history of compliance with this Agreement, our estimate of whether you can consistently provide the highest quality product to your prospective customer, your ability to provide professional customer service, the proximity of your prospective customer's facilities to other Churro Station shops, and similar considerations.
(c) Once granted, we have the right to withdraw our approval of any or all of your wholesale accounts at any time if, in our reasonable judgment, you have committed one or more material violations of this Agreement, the operation of your Churro Station shop or shops is suffering on account of your wholesale activities, or for any other reason, you are not consistently providing the highest quality products to those accounts, if the facilities of any of your wholesale customers are near any current or future Churro Station shops, if you do not provide professional customer service to your wholesale accounts, if we decide it is more orderly, or will enhance our position versus our competitors, to create exclusive areas or areas of primary responsibility concerning wholesale accounts, or for other commercially reasonable business reasons.
(d) If we learn of any prospective wholesale account that we feel you can adequately service, we can require you to service that account and you agree to do so to the best of your ability. If we do not feel that you can service any such account, we can offer that account to another Churro Station franchisee or can service that account ourselves, or refer the account to our affiliates, no matter where the facilities of that account are located.
5.17 (a) A "national or regional account" is an arrangement we may make with larger businesses or other entities in which we agree to discount the products we sell for those affiliated with the designed business or entity. We can sell to national or regional accounts even if their facilities are located within your protected territory.
(b) If we establish a national or regional accounts program and the facilities of any business or entity we designate as such an account is located within your protected territory, we can require, or authorize, you to service those facilities. In that case, you agree to use your best efforts to service those accounts. You agree to honor the discounts we establish for such accounts and to service them in the manner we direct.
5.18 Except as provided in elsewhere in this Agreement, neither you, our other franchisees, our licensor, our affiliates, nor we are prohibited from soliciting retail sales to customers in your protected territory nor are you not prohibited from soliciting retail sales to customers outside of your protected territory. You are not entitled to any compensation, allowance, payment, or other consideration on account of any sales made by others to those who live or work within your protected territory.
5.19 (a) If you have the opportunity to provide Churro Station merchandise at special events in your protected territory, such as fairs, exhibitions, charity events, concerts, conventions, and the like, you agree to notify us of such an opportunity immediately. You must also advise us whether you want to participate in the event. If you want to participate in the event, you agree to do so and to follow our requirements in that regard. If you do not want to participate in the
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special event, we, or any person or entity we may designate, can do so even though the event is in your protected territory.
(b) We will advise you of any criteria we deem reasonably necessary for the protection of the image of Churro Station shops, such as the appearance of any displays, booths, tables, and the like, you may use at the event. We can condition our approval of your participation in a special event on your compliance with such criteria.
(c) If we notify you of a special event in your protected territory, and any requirements we may prescribe concerning your participation in the event, you will have 5 days after your receipt of this information within which to notify us of your desire to participate in the event. If you elect to participate in the event, you agree to do so in accordance with our requirements. If you elect not to participate in the event, or do not notify us of your election to participate in the event within the 5 day period, we, or any person or entity we designate, can participate in the event even though the event is in your protected territory.
(d) If you do not participate in the special event and we, an affiliate, or a person or entity we designate, does so, you will not be entitled to any compensation because of such participation, or otherwise.
6. Design and Construction of your shop; Maintenance and Repair.
6.01 After you sign your lease, we will provide you with one set of representative plans and specifications for a typical Churro Station shop at our expense. These plans will be an example of a Churro Station shop layout and will not be drawn specifically for your shop space or necessarily in accordance with the requirements of local laws. All architectural and engineering services required to conform the provided plans and specifications to your actual shop premises, and to local laws and requirements, must be obtained at your expense.
6.02 You must provide us with a copy of the proposed layout for your Churro Station shop as soon as it is completed by your architect or designer. We must approve the final plans and specifications proposed to be used in the construction of your Churro Station shop prior to their use in construction. Your plans must be provided to us in such detail and must contain such items, as we from time to time require. You must pay for all of the plans and specifications provided to us.
6.03 We will provide you with a list of the equipment, decor, furniture, fixtures, and similar items needed for your shop. You agree to purchase all necessary signs, trade fixtures, equipment, interior decoration items, and inventory as may be needed for the preparation of your shop, and all other items we specify and those required by the final plans and specifications we have approved.
6.04 We agree to be available to consult with you on the telephone regarding your design and construction obligations. However, it is your responsibility to see that your shop is built, equipped, decorated, stocked, and opened without delay and in strict accordance with the plans and specifications we have approved.
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6.05 If the plans and specifications we have approved are changed in any material manner before or during the construction of your shop, we must approve those changes before the changes are implemented.
6.06 If this Agreement is terminated for any reason following the submission to us of any plans and/or specifications for your proposed Churro Station shop, all such plans and/or specifications become our property with no payment, compensation, or other consideration of any kind to you.
6.07 You agree that the construction of your shop will be performed by a licensed general contractor unless we specifically otherwise agree in writing.
6.08 It is agreed that the approval of your plans, specifications, and any other action or inaction by us, is done solely for our own purposes and not to protect you. Therefore, you agree that we do not warrant or guaranty in any way that those plans and specifications are suitable, adequate, or guaranty you success in your shop.
6.09 It is agreed that we assume no responsibility for the work of independent contractors employed by us or by you.
6.10 You agree to keep us fully informed of the progress of the construction of your Churro Station shop.
6.11 We have the right to inspect your site and the construction activity on it at all reasonable times. You agree to cooperate, and to cause your contractors to cooperate, with our agents in the performance of such inspections. It is agreed that all such inspections are for our own purposes and are not designed to protect you, to guaranty that the construction is adequate, or is in accordance with the approved plans and specifications.
6.12 Unless we waive the right to a final inspection of your premises, you agree not open for business until we conduct a final inspection of your shop and approve the opening of your shop. You agree that we have the right to prevent the opening of your shop until the requirements of the plans and specifications that we have approved, and you have met our other requirements concerning the construction, equipment, decor, decorations, furnishings, fixturing, signs, stocking, staffing, and our other opening requirements.
6.13 (a) You agree that the furniture, fixtures, and equipment of your shop must be purchased from suppliers we have specified or otherwise approved. We agree to advise any reputable supplier of our requirements for these items.
(b) You agree to purchase from us those items that we specify. We agree to sell any items we require you to purchase from us at our cost plus not more than 4-020% to cover our administrative and other costs.
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6.14 You agree to adhere strictly to our recipes and ingredient requirements and to serve only approved items in your Churro Station shop.
6.15 We must approve all signs and menu boards you use in connection with your Churro Station shop and the suppliers from whom you propose to acquire them.
6.16 You agree that we are not responsible for delays or losses occurring during the design, construction, equipping, decorating, stocking, furnishing, fixturing, or preparation of your shop for opening, whether caused by the condition of the premises, the design, engineering, construction, equipping, decorating, or stocking of your shop, or for any other reason.
6.17 You agree that you will pay promptly all of the designers, engineers, contractors, suppliers, and others employed in the design, construction, fixturing, decorating, improving, and supplying of your shop, except to the extent that there is a bona fide dispute between you and any such provider, in which case you agree to use your best efforts to resolve the dispute promptly and in an equitable manner.
6.18 Once your Churro Station shop is open for business, no alteration of the interior or exterior of your shop may be made without our prior written consent.
6.19 The maintenance and repair of your shop is your sole responsibility. You agree to keep and maintain your shop, including the interior, exterior, immediately surrounding areas, signs, trade fixtures, equipment, decor, furnishings, and all other tangible property used in connection with your shop, in a high condition of cleanliness, repair, and appearance, and to replace promptly any item of property that is not capable of being maintained in a high state of cleanliness, repair, and appearance.
6.20 You agree that all replacement, remodeling, refurbishing, alteration, modification, and/or redecoration of your shop, any material part of it, or thing in or on it will be made only with our prior consent.
6.21 You agree to repair, refinish, repaint, replace, and otherwise redo your shop, the furnishings, fixtures, decor, equipment, signs, and any other tangible part of your shop at your expense at such times as we reasonably direct. We agree that we will not require any such activity during the first 5 years of the term of this Agreement. We agree that the cost of any replacement, remodeling, refurbishing, alteration, modification, and/or redecoration we require will not exceed a total of $15,000.00, as adjusted by any increase in the Consumer Price Index as described in Section 21 below, without your consent.
6.22 We reserve the right to modify our shop concept, format, design, signage, name, commercial symbols, decor, products, services, and all other aspects of Churro Station shops, and/or our business, at any time in our reasonable business judgment in order to meet competition and to attempt to enhance the business of Churro Station shops. In the event that we do so, you agree to adhere to such changes in the manner and within the time periods we
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reasonably specify. All such alterations and modifications will be at your sole cost and expense, subject to the limitation set forth in Section 6.21 above.
7. Training and Preopening Assistance.
7.01 We agree to train you in the operation of your Churro Station shop prior to its scheduled opening. The training will take place at a time and location we specify. If you are a partnership, corporation, limited liability company, or other entity, at least one of the trainees must be a general partner, principal shareholder, member, or owner, as appropriate, unless we otherwise approve. You agree that your Churro Station shop will only be under the overall supervision of a person who has successfully completed our training course or, with our prior written consent, a person who was trained by a person who successfully completed our training course.
7.02 In addition, we will train your shop manager at the same time as we train you. You agree to require your shop manager attend our training course with you. We may limit the contents of the training we provide to your shop manager to matters we feel are of concern to a shop manager.
7.03 Our training course will last approximately 5 days and will cover such things as Churro Station business policies, basics of food storage and preparation, food serving, presentation, and display, inventory purchasing practices and control, employee selection and training, shop operations, advertising and promotion, bookkeeping and accounting, and similar subjects.
7.04 If this Agreement allows you to open more than one Churro Station shop, we will train one shop manager for each Churro Station shop you open following your initial shop. If for any reason we agree that no one need be sent to our training course following the opening of your first Churro Station shop, no refund of any portion of the franchise fee, or any other fees, will be made.
7.05 You and your shop manager must attend our training course at the same time unless we agree otherwise. You and your manager must complete our training course to our reasonable satisfaction prior to the opening of your shop.
7.06 You agree to bear all of your own travel, living, and all other costs, expenses, and salary, and those of your manager in connection with attending our training course.
7.07 If your shop manager, or the partner, shareholder, member, or owner sent to training on behalf of any partnership, corporation, limited liability company, or other entity, fails to complete our training course in a manner reasonably satisfactory to us, you must send another person or persons to our training program at a time acceptable to us. We can charge the training fee set forth below for each such additional person sent to our training course for this reason. If such additional persons are not sent to and/or do not complete our training course to our reasonable satisfaction, we can terminate this Agreement without a refund of any kind.
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7.08 If this franchise is owned by an individual and that individual fails to complete our training in a manner reasonably satisfactory to us, we can terminate this Agreement without any refund of the franchise fee or any of your other costs or expenses.
7.09 If a partnership, limited liability company, corporation, or other entity owns this franchise and intends to have a partner, member, shareholder, or owner, as appropriate, active in the operation of the shop and that person does not complete our training course in a manner we reasonably find satisfactory, that such person can not operate or supervise the operation of the shop.
7.10 If we terminate this Agreement for any of reasons set forth in this Section 7, you agree that, at our option, we will be allowed to purchase some or all of your shop assets at their fair market value as described in Section 16.08 below. You further agree that if this Agreement is so terminated, we can also require you to assign us your shop lease without compensation. It is agreed that no refund of the franchise fee will be payable if this Agreement is terminated for any of the reasons set forth in this Section 7.
7.11 Should you be required to send an additional person to attend our training course, or if you want us to train any additional people at any time and should we agree to do so, we can charge an additional training fee of $250.00 per day per trainee, as that fee may be adjusted by any increase in the Consumer Price Index as described in Section 21 of this Agreement.
7.12 The training of your employees, other than the employees who attend our training course, is your responsibility.
7.13 You agree that your Churro Station shop will not be opened for business until we in our reasonable judgment certify that a sufficient number of your employees have been adequately trained to operate your shop.
7.14 (a) You must notify us of the planned opening date of your shop at least 30 days prior to the opening. We will provide you with the services of one or more members of our staff at your shop approximately 2 days before you open to advise and assist you during the period immediately before and immediately after the opening of your shop. When our representative or representatives arrive at your shop and the length of time he, she, or they will stay is strictly within our discretion.
(b) If your shop is not ready when our representative or representatives arrive, and for that reason he, she, or they cannot perform the preopening functions for which he, she, or they were sent, you agree to pay the added lodging and subsistence costs of our representative or representatives as well as paying us a fee for each day that our representative or representatives are prevented from completing the functions for which he, she, or they were sent. The fee that we will charge will not exceed $300.00 per day. A deposit against this fee must be paid when we request it or we can recall our representative or representatives and charge you for the costs of sending him, her, or them back to your shop when it is ready for opening.
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(c) If your shop is not ready when our representative or representatives arrive, as an alternative to keeping our representative or representatives at your shop, we can recall our representative or representatives until we are satisfied that your shop is ready to open. If we do that, you agree to pay for the costs of sending our representative or representatives back to your shop in addition to paying us the fee described in subsection (b) for each day our representative or representatives spend traveling to and from your shop.
(d) You agree to cooperate, and will cause your employees to cooperate, with us and our representatives in all matters related to the training of your personnel and all of your other obligations under this Agreement, before, during, and after the opening of your shop.
7.15 (a) We can offer system-wide refresher courses, seminars, conventions, meetings, and similar programs for our franchisees. If we do so, you agree personally to attend such events, up to a maximum of one such program in any 12 month period.
(b) In addition to the foregoing, if we sponsor regional training seminars or other meetings of any nature for our franchisees and/or their employees in the region in which your shop is located, you agree to attend all such events, and/or to send to those sessions the person or persons we designate, but not more often than one such event during any 6-month period.
(c) All of your expenses in connection with attending such meetings, sessions, events, and programs, and the salaries and expenses of your employees, are your responsibility.
(d) We reserve the right to charge reasonable fees for attendance at the above-described meetings, conventions, seminars, courses, sessions, events, and programs, and you agree to pay such amounts at the times and in the manner we specify.
8. Shop Operations and Continuing Assistance.
8.01 (a) You agree to follow all systems, procedures, practices, techniques, processes, supply requirements, sources, formats, and the like, and meet the operating standards, that we periodically specify for the operation of your shop.
(b) Our manuals and the systems, procedures, forms and various other material we give you periodically, contain proprietary information concerning the operation of Churro Station shops. You acknowledge that improper use or disclosure of our proprietary information will cause us irreparable injury and that we can seek and obtain a temporary restraining order, and a preliminary and permanent injunction, against such improper use or disclosure, in addition to seeking damages and other relief on account of such actions.
(c) You agree to use our confidential information only in connection with establishing and operating your shop. If you make improper disclosure or use of our proprietary information, we can terminate this franchise without giving you notice or an opportunity cure the default.
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(d) After the termination or expiration of this Agreement, you agree not to use or disclose our confidential information for any purpose whatsoever except as we may authorize or direct in writing.
8.02 You agree to use your best efforts to prevent any unauthorized disclosure of our trade secret material by your employees, agents, and others over whom you have control. In this regard, you agree to follow the security procedures and employ the security practices that we specify periodically, including having your employees sign our confidentiality and nondisclosure agreement.
8.03 You agree to return all copies of our manuals and all other material you obtained from or through us upon the expiration or termination of this Agreement or at such other times as we request. You agree not to copy or otherwise duplicate our manuals or material except as we direct or approve.
8.04 We have the right to make changes in our manuals and other material, and to specify other systems, procedures, forms, and requirements. You agree to follow these changes at the times and in the manner we indicate. If there are costs involved in this compliance, you must bear those costs. We agree that these changes will not unreasonably increase your obligations, including your economic obligations, during the term of this Agreement without your prior written consent.
8.05 You agree to use your best efforts to produce the maximum volume of sales from your Churro Station shop but only in a manner that is consistent with the terms of this Agreement and with our manuals and directives.
8.06 (a) In order to maintain and enhance the high standards and public image of Churro Station shops, you agree to carry all of the menu items specified by us from time to time and not to carry items not approved by us.
(b) You agree to operate your Churro Station shop in the highest quality manner and in accordance with all applicable laws and regulations and as prescribed by our manuals and other directives.
(c) Since morning business is important to Churro Station shops, unless we agree otherwise, you agree to open your shop no later than 6:00 A.M. weekdays. Other than that, you can set your own hours and days of operation. However, if in our judgment your hours or days of operation are not commercially reasonable, we can specify the hours and/or days of operation you must be open for business.
8.07 You agree that we have sole discretion as to the content of your menu and further agree that we may change the menu in whole or in part from time to time within our absolute discretion. You agree to comply promptly with our directives in this regard.
8.08 You agree to adhere strictly to our requirements and instructions as to the ingredients, method of preparation, processing, handling, wrapping, presentation, and serving of
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The original documents were scanned as an image. The original file can be downloaded at the link above.