Area Development Agreement
Sample Area Development Agreement
EXHIBIT B
TO FRANCHISE
OFFERING CIRCULAR
THE COFFEE BEANERY, LTD.
AREA FRANCHISE AGREEMENT
THIS AREA FRANCHISE AGREEMENT ("Agreement"), made and entered into on_____________,
200__, ("Effective Date") by and between The Coffee Beanery, Ltd., a Michigan corporation, with its
principal place of business at 3429 Pierson Place Flushing, Michigan 48433 ("Coffee Beanery"), and
____________________________, a _______________ with its principal place of business at
_________________________________________________________("Area Franchisee").
WITNESSETH:
WHEREAS, Coffee Beanery, as the result of the expenditure of time, skill, effort, and money, has developed, owns, and presently franchises a unique and distinctive system relating to the establishment and operation of retail Stores providing coffee and espresso based drinks and other food products ("System"), and which are identified by the mark COFFEE BEANERY and other Coffee Beanery-System related trade names, service marks, trademarks, logos, emblems, and indicia of origin as are now designated, or may hereafter be designated by Coffee Beanery in writing, for use in connection with the System ("Proprietary Marks");
WHEREAS, Area Franchisee desires to serve as an area franchisee of Coffee Beanery with the right to promote the sale of franchise Coffee Beanery stores which operate under the System and Proprietary Marks ("Stores") on behalf of Coffee Beanery, and the responsibility to train and provide start-up and ongoing support and assistance to ("Servicing Responsibilities"), and to monitor the performance of, certain Coffee Beanery Store operators ("Franchisees");
WHEREAS, Area Franchisee shall own and operate, to Coffee Beanery's satisfaction, a Store, and is qualified to assume the rights and obligations hereunder; and
WHEREAS, Area Franchisee understands and acknowledges the importance of ensuring that all Franchisees serviced by Area Franchisee receive proper support and assistance, and fully conform to Coffee Beanery's System.
NOW, THEREFORE, the parties agree as follows:
1. GRANT
1.1 Coffee Beanery grants to Area Franchisee, and Area Franchisee accepts, the following rights and obligations:
1.1.1 to solicit, evaluate, and screen individuals and entities seeking to establish and operate Franchises within the Territory (which may include Area Franchisee or its affiliates, all of whom are referred to as "Prospects") under the terms of a franchise agreement with Coffee Beanery ("Franchise Agreement") according to the development schedule ("Development Schedule") attached hereto as Attachment A;
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-l 09/30/%
1.1.2 to provide Servicing Responsibilities for, and to monitor the performance of, certain Franchisees located within the area described in Attachment B ("Territory"); and
1.1.3 to use the Proprietary Marks for the purposes of fulfilling Area Franchisee's obligations under this Agreement, subject to the limitations of Section 6 hereof.
1.2 Except as described in Section 1.3 of this Agreement, beginning upon Area Franchisee's completion of the training required under Section 5.1 hereof, and as long as this Agreement remains in effect thereafter, Coffee Beanery shall neither itself, nor grant to another person or entity the right to, solicit Prospects within the Territory, perform Servicing Responsibilities to Franchisees, or monitor the performance of Franchisees within the Territory.
1.3 This Agreement shall not confer any rights or obligations on Area Franchisee with respect to (i) Franchisees located outside the Territory; (ii) Franchisees who are Franchisees prior to the Effective Date of this Agreement; (iii) franchisees of any other franchise system with which Coffee Beanery or any Coffee Beanery affiliate may now or subsequently have any interest or affiliation; (iv) operate a Coffee Beanery Store except pursuant to a separate Store Franchise Agreement for each such Store; or (v) Franchisees subject to the provisions of Section 5.11 of this Agreement.
1.4 Area Franchisee shall solicit the minimum number of Prospects who become Franchisees or shall open Coffee Beanery Stores itself pursuant to separate Store Franchise Agreements with Coffee Beanery in accordance with the Development Schedule. In the event Area Franchisee fails to successfully solicit such Prospects or open such Stores so as to meet the minimum required by the Development Schedule on any date set out thereon, or any extensions thereof as described further below, this Agreement shall terminate in accordance with Section 11.2 hereof. Coffee Beanery may, in its sole discretion, offer Area Franchisee an opportunity to cure such failure to meet the Development Schedule by extending the time period(s) on the Development Schedule, or by otherwise modifying the Development Schedule.
1.5 Area Franchisee and Coffee Beanery acknowledge that Area Franchisee may determine to open and operate Coffee Beanery Stores in addition to the Store required by section 5.3.4 hereof. Area Franchisee agrees to execute and be bound by all obligations of the then current standard Coffee Beanery Store Franchise Agreement for each Coffee Beanery Store it operates.
2. TERM
2.1 The term of this Agreement shall be for 10 years from the Effective Date hereof.
2.2 Area Franchisee may, at its option, renew this Agreement for two additional terms of 10 years each, subject to the following conditions for each renewal:
2.2.1 Area Franchisee shall give Coffee Beanery written notice of Area Franchisee's election to renew not more than twelve months and no fewer than six months prior to the end of the then-current term;
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-2
09/30/06
2.2.2 Area Franchisee shall not be in default of any provision of this Agreement, including the Development Schedule, any amendment hereof or successor hereto, or any other agreement between Area Franchisee and Coffee Beanery or its affiliates (including any Store Franchise Agreement with Area Franchisee relating to any Store); and Area Franchisee shall have substantially complied with all the terms and conditions of such agreements during the terms thereof;
2.2.3 Area Franchisee and Coffee Beanery shall agree on a development schedule applicable to the renewal period, if any, which development schedule shall reasonably reflect the growth of the market for Stores in the Territory;
2.2.4 Area Franchisee shall execute Coffee Beanery's then-current form of Area Franchise Agreement, which agreement shall supersede this Agreement in all respects, and the terms of which agreement may differ materially from the terms of this Agreement; and
2.2.5 Area Franchisee shall pay a renewal fee equal to fifteen percent of the fee set forth in Section 4.1, or a negotiated fee based upon the development schedule determined for the renewal period as required under Section 2.2.3, whichever is greater.
3. DUTIES OF COFFEE BEANERY
3.1 Within three months after the Effective Date, Coffee Beanery shall provide an initial training program for Area Franchisee as described in Section 5.1 hereof. All training shall be provided at the times and locations reasonably determined by Coffee Beanery and shall be subject to the terms set forth in Section 5.1.
3.2 Coffee Beanery shall collect all fees from each Franchisee in the Territory (including from Area Franchisee or its affiliates under the Store Franchise Agreement for any Store operated by Area Franchisee or such affiliates), as required under the terms of its respective Franchise Agreement, and thereafter distribute to Area Franchisee its share of the fees, as provided in Section 4 hereof.
3.3 Coffee Beanery shall provide Area Franchisee, on loan:
3.3.1 Coffee Beanery's guidelines for screening Prospects, which guidelines shall include Coffee Beanery's then-current standards for new Franchisees, and which may include, without limitation, Coffee Beanery's standards concerning education, professional, managerial, business, financial, and other qualifications;
3.3.2 any forms required for reporting details concerning Prospects to Coffee Beanery;
3.3.3 advertising materials for purposes of promoting the sale of Franchises;
3.3.4 one copy of Coffee Beanery's Area Franchise manual (which, in Coffee Beanery's sole discretion, may be in a written or electronic format or a combination thereof), and such other manuals or materials as Coffee Beanery may develop which are germane to Area Franchisee's responsibilities under this Agreement (collectively, "Area Franchise Manual"). Coffee Beanery shall have the right to periodically modify the Area Franchise Manual.
3.4 Coffee Beanery shall promptly refer to Area Franchisee any inquiry it may receive
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-3
09/30/06
regarding the establishment of a Franchise in the Territory. Coffee Beanery shall also promptly process all referrals of Prospects forwarded by Area Franchisee and shall not unreasonably withhold its approval of any Prospect, provided such Prospect meets Coffee Beanery's then-current standards. Area Franchisee acknowledges, however, that Coffee Beanery's decision to execute a Franchise Agreement with any Prospect shall be at Coffee Beanery's sole discretion.
3.5 At the times and utilizing the methods that Coffee Beanery deems reasonable, Coffee Beanery shall have the right to monitor Area Franchisee's performance of its promotional rights and Servicing Responsibilities.
4. FEES AND COMPENSATION
4.1 In consideration of the rights granted herein, Area Franchisee has paid to Coffee Beanery
a fee of________Dollars (S_______), receipt of which is hereby acknowledged, which is fully earned
and non-refundable in consideration of administrative and other expenses incurred by Coffee Beanery in entering into this Agreement and for Coffee Beanery's lost or deferred opportunity to enter into this Agreement with others.
4.2 Beginning upon Area Franchisee's completion of the training required under Section 5.1 hereof, and as long as this Agreement remains in effect thereafter, Coffee Beanery shall pay Area Franchisee a fee equal to fifty percent of each initial fee due and actually paid without restrictions or right of refund to Coffee Beanery under each Store Franchise Agreement executed for a Coffee Beanery Store to be established in the Territory. Coffee Beanery shall pay each such fee within 30 days after the opening of each such Store.
4.3 Beginning upon Area Franchisee's completion of the training required under Section 5.1 hereof, and as long as this Agreement remains in effect thereafter, Coffee Beanery shall pay Area Franchisee fifty percent of the royalty fees, as defined in each Store Franchise Agreement, paid by Franchisees in the Territory for whom Area Franchisee provides Servicing Responsibilities.
4.4 Coffee Beanery shall collect royalty fees directly from Franchisees, and provide Area Franchisee with a quarterly report by the twentieth day of February, May, August, and November each year on the amounts collected during the preceding quarter, along with the payments due Area Franchisee from such amounts. Coffee Beanery shall have sole discretion as to the terms and conditions of collections. Any deferred payments from Franchisees shall not become payable to Area Franchisee by Coffee Beanery unless and until such fees have been collected by Coffee Beanery. In the event Coffee Beanery refunds amounts collected from Franchisees or if Area Franchisee for any reason owes money to Coffee Beanery, Coffee Beanery shall have the right, as it deems appropriate, to set-off the amount due from any monies owed to Area Franchisee, or to require Area Franchisee to pay the monies due to Coffee Beanery prior to Coffee Beanery's payment to Area Franchisee. Coffee Beanery shall have no liability to Area Franchisee for payments pursuant to this Section 4.4 in the event that any Franchisee, for any reason, fails to pay any monies owed to Coffee Beanery. Area Franchisee shall have the right, upon reasonable advance notice to Coffee Beanery, to inspect at Coffee Beanery's principal place of business, copies of all Coffee Beanery records reflecting receipt of payments from Franchisees covered by Sections 4.2 and 4.3.
4.5 In the event that Area Franchisee fails to correct any deficiencies in fulfilling its Servicing Responsibilities to any Franchisee(s) in accordance with a written notice from Coffee Beanery pursuant to Section 5.3.6, then Coffee Beanery shall have the right (but not the obligation), with respect to any such Franchisee(s) and in lieu of terminating this Agreement pursuant to Section 11.2.7, to assume
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-4
09/30/06
itself or delegate to a third party all future Servicing Responsibilities. Area Franchisee shall not receive a percentage of any Franchisee(s)' royalty payments pursuant to Section 4.4 whose Servicing Responsibilities has been transferred pursuant to this Section.
5. DUTIES OF AREA FRANCHISEE
5.1 Prior to exercising its rights and obligations set forth in Section 1.1 hereof, Area Franchisee (or, if Area Franchisee is a corporation or partnership, a principal thereof) and, at Area Franchisee's discretion, up to two of its employees, shall attend and complete, to Coffee Beanery's satisfaction, Coffee Beanery's training program for area franchisees. Area Franchisee shall attend Coffee Beanery's annual certification training program each year for the purposes of becoming certified in Coffee Beanery's then-current training necessary for Franchisees. Area Franchisee, and those employees of Area Franchisee as Coffee Beanery may reasonably designate, also shall attend and complete, to Coffee Beanery's satisfaction, such other training programs as Coffee Beanery may reasonably require from time to time. All such training shall be held in Flushing, Michigan, or such other place that Coffee Beanery shall designate, at times that Coffee Beanery shall designate. For all training programs, Coffee Beanery shall pay only for the instructors, training facilities, and training materials; and Area Franchisee shall pay for all other expenses incurred by Area Franchisee and its employees, including, without limitation, the costs of travel, food, lodging and wages.
5.2 In promoting Franchises, Area Franchisee shall:
5.2.1 advertise the System through sales presentations and other means (such as local seminars
and franchise expositions, and local newspapers). Area Franchisee shall spend a minimum of $_____per
month on System advertising, and submit such reports as Coffee Beanery shall specify to identify the advertising activities and expenditures;
5.2.2 represent the System accurately, and make no representations or omissions that contradict the terms and conditions of Coffee Beanery's Franchise Agreements, franchise offering circular ("UFOC"), or related documents;
5.2.3 refer to Coffee Beanery any inquiries from individuals or entities regarding the establishment of Franchises outside of the Territory;
5.2.4 answer all inquiries of Prospects and provide Prospects seeking to establish a Franchise in the Territory with a copy of the UFOC and other documents that Coffee Beanery may require;
5.2.5 conduct initial screening of Prospects according to the standards set by Coffee Beanery pursuant to Section 3 hereof;
5.2.6 recommend promptly to Coffee Beanery those Prospects whom Area Franchisee deems qualified by submitting to Coffee Beanery such reports and other documentation in the form prescribed by Coffee Beanery;
5.2.7 respond to requests from Coffee Beanery for clarification and/or additional information regarding any Prospect;
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-5
09/30/06
5.2.8 prepare and maintain a written report in the form prescribed by Coffee Beanery for each Prospect rejected by Coffee Beanery, which reports shall be made available to Coffee Beanery upon request; and
5.2.9 comply at all times with all applicable federal, state, and local laws and regulations affecting the promotion and sale of Franchises in the Territory, including, without limitation, those relating to registration and disclosure of relevant franchise information and unfair trade or business practices.
5.3 In discharging its Servicing Responsibilities, Area Franchisee shall:
5.3.1 provide site selection counseling and assistance, on-site inspections, site evaluations, and site recommendations, with final approval for Franchise sites to come from Coffee Beanery;
5.3.2 provide ongoing advice and consultation to Franchisees with regard to and during the construction of leasehold improvements to the Franchise premises and the installation of all equipment, fixtures, and supplies required for the operation of the Franchise, and certify to Coffee Beanery, upon the completion thereof, that all construction and installations have been completed in accordance with Coffee Beanery's prototype plans and specifications;
5.3.3 provide grand opening assistance, and other opening assistance in the manner and form designated by Coffee Beanery;
5.3.4 establish a training Store on the premises of the Area Franchisee's Franchise for Franchisees and offer therefrom initial and on-going training programs to Franchisees located in the Territory, which training Store and training programs shall conform to the standards and specifications established and modified by Coffee Beanery from time to time in the Area Franchise Manual or otherwise in writing, and which shall include such other required and optional training programs, seminars, and workshops as Coffee Beanery may from time to time deem necessary and appropriate;
5.3.5 provide such periodic and continuing assistance to the Franchisee as the Franchisee may reasonably request or as Coffee Beanery may reasonably direct or as Coffee Beanery may be obligated to provide to a Franchisee pursuant to a Store Franchise Agreement. Area Franchisee acknowledges and agrees that it has reviewed the current form of Store Franchise Agreement and understands that Coffee Beanery may periodically revise its Store Franchise Agreement, and Area Franchisee agrees to provide to Franchisees, at Coffee Beanery's request, any services as may be required under any form of Store Franchise Agreement; and
5.3.6 Area Franchisee shall correct all deficiencies in fulfilling its Servicing Responsibilities to any Franchisee(s) as may be specified by Coffee Beanery in a written notice sent to Area Franchisee. The notice shall specify the deficiencies, the Franchisee(s) affected, and the time frame for correcting such deficiencies, which time frame shall not exceed 30 days.
5.4 In monitoring the performance of Franchises, Area Franchisee shall visit each Franchisee at least once every three months during the term of the Franchise and any renewals thereof, in order to provide continuing assistance to the Franchisee and to verify compliance by each Franchisee with Coffee Beanery's standards and specifications, and all applicable laws, rules, regulations and procedures. Area Franchisee shall furnish reports to Coffee Beanery on such forms, and containing such information, as Coffee Beanery may reasonably request, with respect to each visit and any necessary follow-up visits to verify the correction of deficiencies.
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-6
09/30/06
5.5 If requested by Coffee Beanery, Area Franchisee shall develop specific marketing programs for Franchisees, using material provided or approved by Coffee Beanery.
5.6 Area Franchisee will assist Coffee Beanery in the collection of delinquent accounts and royalty payments.
5.7 Area Franchisee shall from time to time, but no less frequently than two times a year, conduct a meeting of all Franchisees in the Territory, for the purpose of describing new products and services, training, and general networking.
5.8 Except as provided in Section 4 of this Agreement, Area Franchisee shall not, itself or through or in association with any third party, directly or indirectly collect any money or other thing of value from a Prospect, a Franchisee, or a third party (such as, but not limited to, consideration of any kind furnished by a third party to Area Franchisee or its designee based upon or resulting from payment by a Prospect or Franchisee to such third party) which is in any way related to (i) the services to be provided by Area Franchisee pursuant to this Agreement; or (ii) the establishment and/or operation of a Coffee Beanery Store by a Franchisee pursuant to a Franchise Agreement (such as, but not limited to, purchases or leases of real and/or personal property).
5.9 Area Franchisee, at its expense, shall purchase or lease, and thereafter maintain, such computer hardware (including laptops), software, and firmware, required dedicated telephone and power lines, modem(s), printer(s), and other computer-related accessories or peripheral equipment as Coffee Beanery specifies in the Area Franchise Manual or otherwise in writing. Area Franchisee's computer systems shall have the capacity to electronically exchange information, messages, and other data with other computers, by such means (including but not limited to the Internet), and using such protocols (e.g., TCP/IP), as Coffee Beanery may reasonably prescribe in the Area Franchise Manual or otherwise in writing. Coffee Beanery shall have the right from time to time and at any time to retrieve data and information from Area Franchisee's computer system and use it for any purpose both during and after the term of this Agreement. Area Franchisee shall keep its computer system in good maintenance and repair and, at its expense, shall promptly install such additions, changes, modifications, substitutions, and/or replacements to the computer hardware, software, firmware, telephone and power lines, and other computer-related facilities, as Coffee Beanery directs. Area Franchisee shall not update, modify, enhance, or upgrade any computer hardware or software without Coffee Beanery's prior written consent.
5.10 Area Franchisee shall not establish any computer website including Internet and World Wide Web home pages, without Coffee Beanery's prior written approval. Any website must comply with standards specified in the Area Franchise Manual or otherwise in writing. Coffee Beanery may require that Area Franchisee establish its website as part of any website established by Coffee Beanery.
5.11 Area Franchisee shall not provide any Servicing Responsibilities to, nor shall it have the right to receive any payments pursuant to Section 4.3 hereof with respect to, any Franchisee with whom Area Franchisee or any of its officers, directors, members, partners, or shareholders have any legal or equitable ownership interest.
6. PROPRIETARY MARKS
6.1 Area Franchisee shall have the right to use the Proprietary Marks only for the limited purposes of soliciting Prospects and advising current Franchisees that it is performing, on behalf of Coffee Beanery, some of Coffee Beanery's obligations to the Franchisee pursuant to terms of the Area
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-7
09/30/06
Franchise Agreement between Coffee Beanery and the Franchisee. Area Franchisee's use of the Proprietary Marks shall be limited to the terms of Section 8 hereof.
6.2 Any and all goodwill arising from Area Franchisee's use of the Proprietary Marks in the manner authorized in Section 6.1 shall inure solely and exclusively to the benefit of Coffee Beanery and, upon expiration or termination of this Agreement, no monetary amount shall be assigned as attributable to any goodwill associated with Area Franchisee's performance of its obligations hereunder.
7. CONFIDENTIAL INFORMATION
7.1 Area Franchisee shall not, during or after the term of this Agreement, communicate, divulge, or use for the benefit of any other person, partnership, association, or corporation, any confidential information, knowledge, or know-how concerning Coffee Beanery, its guidelines for franchisee qualifications, the System, or the franchises granted by Coffee Beanery which Area Franchisee may be apprised, by virtue of Area Franchisee's operation under the terms of this Agreement. Area Franchisee shall divulge such confidential information only to such employees as must have access to it in order to perform their employment responsibilities. Any and all information, knowledge, know-how, and techniques which Coffee Beanery designates as confidential shall be deemed confidential for purposes of this Agreement unless and until Area Franchisee shall demonstrate that the information has become public knowledge.
7.2 Area Franchisee acknowledges that any failure to comply with the requirements of this Section 7 will cause Coffee Beanery irreparable injury for which no adequate remedy at law may be available, and Area Franchisee agrees that Coffee Beanery may seek, and Area Franchisee agrees to pay, all court costs and reasonable attorneys' fees incurred by Coffee Beanery in obtaining, without posting a bond, an ex parte order for injunctive or other legal or equitable relief with respect to the requirements of this Section 7.
7.3 At Coffee Beanery's request, Area Franchisee shall require anyone who may have access to confidential information to execute covenants that they shall maintain the confidentiality of information they receive in connection with their association with Area Franchisee. Such covenants shall be in a form satisfactory to Coffee Beanery including, without limitation, specific identification of Coffee Beanery as a third party beneficiary of such covenants with the independent right to enforce them.
7.4 Area Franchisee shall at all times treat the Area Franchise Manual, and the information contained therein, as confidential, and shall use all reasonable efforts to maintain such information as secret and confidential. Area Franchisee shall not at any time copy, duplicate, record, or otherwise reproduce the foregoing materials, in whole or in part, nor otherwise make the Area Franchise Manual available to any unauthorized person. The Area Franchise Manual shall at all times remain the sole property of Coffee Beanery.
8. ADVERTISING AND PROMOTION
8.1 All advertising and promotion by Area Franchisee shall be conducted in a dignified manner, conform to such standards as Coffee Beanery shall establish in the Area Franchise Manual or otherwise in writing, and not be used without Coffee Beanery's prior approval. Area Franchisee shall submit to Coffee Beanery (in the manner prescribed in Section 15.1) samples of all advertising and promotional plans and materials prior to their use, and may commence use of such plans or materials
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-8
09/30/06
seven days after Coffee Beanery's receipt unless, prior thereto, Coffee Beanery shall have furnished written notice to Area Franchisee prohibiting such use. Coffee Beanery also shall have the right at any time after Area Franchisee commences use of such material to prohibit further use, effective immediately upon receipt of written notice by Area Franchisee.
9. INSURANCE
9.1 Area Franchisee shall maintain in full force and effect at all times during the term of this Agreement, at Area Franchisee's expense, an insurance policy or policies protecting Area Franchisee, Coffee Beanery and its affiliates, and their respective shareholders, directors, employees, and agents against any demand or claim with respect to personal and bodily injury, death, or property damage, or any loss, liability, or expense whatsoever arising or in connection with the operation of Area Franchisee's business. Such policy or policies shall: (i) be written by insureds) acceptable to Coffee Beanery; (ii) name Coffee Beanery and its shareholders, directors, employees, and agents, as additional insureds; (Hi) comply with the requirements prescribed by Coffee Beanery at the time such policies are obtained; (iv) provide at least the types and minimum amounts of coverage specified by Coffee Beanery in writing; and (v) contain a waiver by Area Franchisee and its insurers of their subrogation rights against Coffee Beanery and its affiliates, and their respective shareholders, directors, employees and agents.
9.2 At least ten days prior to the time any insurance is first required to be carried by Area Franchisee, and thereafter at least thirty days prior to the expiration of any policy, Area Franchisee shall deliver to Coffee Beanery Certificates of Insurance evidencing the proper types and minimum amounts of coverage. All Certificates shall expressly provide that no less than thirty days' prior written notice shall be given Coffee Beanery in the event of material alteration to or cancellation or non-renewal of the coverages evidenced by such Certificates. Certificates evidencing the insurance required by this Section 9 shall name Coffee Beanery and its affiliates, and their respective shareholders, directors, employees, and agents, as additional insureds, and shall expressly provide that any interest of each shall not be affected by any breach by Area Franchisee of any policy provisions for which such Certificates evidence coverage.
10. TRANSFER OF INTEREST
10.1 Area Franchisee shall not transfer or assign all or any part of its rights or obligations under this Agreement to any person or legal entity without Coffee Beanery's prior written consent, which consent may be denied, with or without cause, by Coffee Beanery in its sole and absolute discretion.
10.2 Coffee Beanery shall have the right to transfer or assign all or any part of its rights or obligations under this Agreement to any person or legal entity. With respect to any assignment which results in the subsequent performance by the assignee of all of Coffee Beanery's obligations under this Agreement, the assignee shall expressly assume and agree to perform such obligations, and shall become solely responsible for all obligations of Coffee Beanery under this Agreement from the date of assignment. In addition, and without limitation to the foregoing, Area Franchisee expressly affirms and agrees that Coffee Beanery may sell its assets, its Proprietary Marks, or its System; may sell its securities in a public offering or in a private placement; may permit and participate in any transfer or distribution of its securities in connection with a spin-off; may merge, acquire other corporations, or be acquired by another corporation; and may undertake a refinancing, recapitalization, leveraged buy-out, or other economic or financial reorganization or restructuring.
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-9
09/30/06
10.3 Neither Area Franchisee nor any of its affiliates shall sell or assign any (i) assets of a Coffee Beanery Store or other assets related to the Coffee Beanery system; (ii) ownership interest in any business which operates a Coffee Beanery Store or other assets related to the Coffee Beanery system; or (iii) any Store Franchise Agreement, unless in any such instance, the Store to be affected by the sale or assignment has been open for at least one year.
11. DEFAULT AND TERMINATION
11.1 Area Franchisee shall be in default under this Agreement, and all rights granted herein shall automatically terminate without notice to Area Franchisee, if Area Franchisee attempts to assign this Agreement, or if Area Franchisee shall become insolvent or makes a general assignment for the benefit of creditors; or if a petition in bankruptcy is filed by Area Franchisee or such a petition is filed against and not opposed by Area Franchisee; or if Area Franchisee is adjudicated a bankrupt or insolvent; or if a bill in equity or other proceeding for the appointment of a receiver of Area Franchisee or other custodian for Area Franchisee's business or assets is filed and consented to by Area Franchisee; or if a receiver or other custodian (permanent or temporary) of Area Franchisee's assets or property, or any part thereof, is appointed by any court of competent jurisdiction; or if proceedings for a composition with creditors under any state or federal law should be instituted by or against Area Franchisee; or if a final judgment remains unsatisfied or of record for thirty days or longer (unless a supersedeas bond is filed); or if Area Franchisee is dissolved; or if execution is levied against Area Franchisee's business or property; or if suit to foreclose any lien or mortgage against Area Franchisee's business premises or equipment is instituted against Area Franchisee and not dismissed within thirty days; or if the real or personal property of Area Franchisee shall be sold after levy thereupon by any sheriff, marshal, or constable.
11.2 Area Franchisee shall be deemed to be in default and Coffee Beanery may, at its option, terminate this Agreement and all rights granted hereunder, without affording Area Franchisee any opportunity to cure the default, effective immediately upon receipt of notice by Area Franchisee, upon the occurrence of any of the following events:
11.2.1 If Area Franchisee (or an officer, director, shareholder or partner of Area Franchisee) is convicted of a felony, a crime involving moral turpitude, or any other crime or offense that Coffee Beanery believes is reasonably likely to have an adverse effect on the System, the Proprietary Marks, the goodwill associated therewith, or Coffee Beanery's interest therein;
11.2.2 If Area Franchisee, after curing a default pursuant to Section 11.3 hereof, commits the same default again, whether or not cured after notice;
11.2.3 If Area Franchisee repeatedly is in default under Section 11.3 hereof for failure to comply substantially with any of the requirements imposed by this Agreement, whether or not cured after notice;
11.2.4 If Area Franchisee assigns or transfers any of its rights or obligations under this Agreement without Coffee Beanery's prior written consent, in violation of Section 10.1 or attempts to make a transfer in violation of Section 10.3;
11.2.5 If Area Franchisee or any affiliate of Area Franchisee commits any act of default under a Franchise Agreement with Coffee Beanery for which such agreement is terminated; or
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-10
09/30/06
11.2.6 Unless Coffee Beanery chooses to exercise its right pursuant to Section 4.5 to transfer Servicing Responsibilities, if Area Franchisee fails to correct all deficiencies in fulfilling Servicing responsibilities to a Franchisee in accordance with the procedures described in Section 5.3.6.
11.3 Except as provided in Sections 11.1 and 11.2, and of this Agreement, Area Franchisee shall have thirty days after its receipt from Coffee Beanery of a notice of termination within which to remedy any default hereunder and provide evidence thereof to Coffee Beanery. If any such default is not cured within that time, this Agreement shall terminate without further notice to Area Franchisee, effective immediately upon the expiration of the thirty day period. Area Franchisee shall be in default hereunder for any failure to comply substantially with any of the requirements imposed by this Agreement, or to carry out the terms of this Agreement in good faith.
12. OBLIGATIONS UPON TERMINATION OR EXPIRATION
12.1 Upon termination or expiration, this Agreement and all rights granted hereunder to Area Franchisee shall forthwith terminate, and:
12.1.1 Area Franchisee shall immediately cease to perform any promotional rights, Servicing Responsibilities, and monitoring responsibilities, and shall not be entitled to receive any further fees or compensation pursuant to Section 4 hereof,
12.1.2 Area Franchisee shall pay to Coffee Beanery all damages, costs, and expenses, including reasonable attorneys' fees and expenses, incurred by Coffee Beanery subsequent to the termination or expiration of this Agreement in obtaining injunctive or other relief for the enforcement of any provisions of this Section 12; and
12.1.3 Area Franchisee shall immediately turn over to Coffee Beanery all advertising and promotional materials, the Area Franchise Manual, records, files, instructions, correspondence, brochures, forms, agreements, and any and all other materials and all copies thereof in Area Franchisee's possession related to Coffee Beanery's business, and shall otherwise cease to represent itself to the public as a current or former Coffee Beanery Area Franchisee.
13. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
13.1 The parties intend that their relationships with each other shall be as independent contractors. Each party shall be solely responsible for fulfilling its obligations under this Agreement and neither party shall constitute, appoint, or consider the other as its agent, employee or servant for any purpose whatsoever. Neither Coffee Beanery nor Area Franchisee shall have any right or authority to assume or create any obligation, express or implied, on behalf of or in the name of the other, or to bind the other in any manner whatsoever.
13.2 Area Franchisee shall indemnify and hold Coffee Beanery, and its shareholders, directors, employees and agents, harmless against any and all claims, losses, costs, expenses, liabilities, and damages arising directly or indirectly from, as a result of, or in connection with the performance by Area Franchisee and its employees and all persons acting on its behalf, of Area Franchisee's obligations and undertakings pursuant to this Agreement, or otherwise in connection with the offer and sale of Franchises, as well as the costs, including attorneys' fees, of defending against them.
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-11
09/30/06
14. APPROVALS AND WAIVERS
14.1 No delay, waiver, omission, or forbearance on the part of Coffee Beanery to exercise any right, option, duty, or power arising out of this Agreement against Area Franchisee or any other area franchisee, or any breach or default by Area Franchisee or any other area franchisee, under any of the terms or conditions of this Agreement or any other area franchise agreement, shall constitute a waiver by Coffee Beanery to enforce any such right, option, duty, or power as against Area Franchisee, or as to any subsequent breach or default by Area Franchisee.
15. NOTICES
15.1 Any and all notices required or permitted under this Agreement shall be in writing and shall be personally delivered, sent by telecopier, mailed by certified mail, return receipt requested, or dispatched by overnight delivery envelope, to the respective parties at the addresses set forth on the signature page of this Agreement unless and until a different address has been designated by written notice to the other party. Notices shall be deemed to have been received as follows: by personal delivery or telecopier ~ at the time of delivery; by overnight delivery service on the next business day following the date on which the Notice was given to the overnight delivery service; by certified mail three days after the date of mailing.
16. ENTIRE AGREEMENT
This Agreement and the documents referred to herein constitute the entire, full, and complete Agreement between Coffee Beanery and Area Franchisee concerning the subject matter hereof, and supersede all prior agreements. No amendment, change, or variance from this Agreement shall be binding on either party unless mutually agreed to by the parties and executed by their authorized officers or agents in writing.
17. SEVERABILITY AND CONSTRUCTION
Except as expressly provided to the contrary herein, each portion, section, part, term, and/or provision hereof shall be considered severable; and if, for any reason, any portion, section, part, term, and/or provision herein is determined to be invalid and contrary to, or in conflict with, any existing or future law or regulation by a court or agency having valid jurisdiction, such shall not impair the operation of, or have any other effect upon, such other portions, sections, parts, terms, and/or provisions hereof as may remain otherwise intelligible; and the latter shall continue to be given full force and effect and bind the parties hereto; and the invalid portions, sections, parts, terms, and/or provisions shall be deemed not to be a part hereof.
Any provision or covenant of this Agreement which expressly or by its nature imposes obligations beyond the expiration or termination of this Agreement shall survive such expiration or termination.
18. APPLICABLE LAW
18.1 This Agreement takes effect upon its acceptance and execution by Coffee Beanery in
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-12
09/30/06
Michigan, and any claim or controversy arising out of or related to this Agreement, or the making, performance, breach, interpretation, or termination thereof, shall be interpreted and construed exclusively under the laws of Michigan. In the event of any conflict of law, the laws of Michigan shall prevail, without regard to the application of Michigan conflict of law rules. If, however, any provision of this Agreement would not be enforceable under the laws of Michigan, and if the Territory is located outside of Michigan and such provision would be enforceable under the laws of the state in which the Territory is located, then such provision shall be interpreted and construed under the laws of that state. Nothing in this Section 18.1 is intended by the parties to subject this Agreement to any franchise or similar law, rule, or regulation of the State of Michigan to which it would not otherwise be subject.
18.2 Except as otherwise provided in this Agreement, any claim or controversy arising out of or related to this Agreement, or the making, performance, breach, interpretation, or termination thereof, except for any actions brought with respect to: (i) ownership or use of the Proprietary Marks; (ii) issues concerning the alleged violations of federal or state antitrust laws; (iii) securing injunctive relief pursuant to Section 18.7 of this Agreement; or (iv) the right to indemnification or the manner in which it is exercised, shall first be subject to non-binding mediation in Flushing, Michigan, or if Coffee Beanery's principal place of business shall be at another location at the time that mediation is sought, in the city of Coffee Beanery's then principal place of business. Mediation shall not defer or suspend Coffee Beanery's exercise of any termination right under Section 11.
18.3 No arbitration or litigation may be commenced on any claim which is subject to mediation under Section 18.2 prior to the mediation termination date, as defined in Section 18.3.3, whether or not the mediation has been commenced. Mediation under this Section 18.3 is not intended to alter or suspend the rights or obligations of the parties under this Agreement or to determine the validity or effect of any provision of this Agreement, but is intended to furnish the parties an opportunity to resolve disputes amicably, expeditiously and in a cost-effective manner on mutually acceptable terms.
18.3.1 The non-binding mediation provided for hereunder shall be commenced by the party requesting mediation giving written notice of the request for mediation to the party with whom mediation is sought. The request shall specify with reasonable particularity the matters for which non-binding mediation is sought.
18.3.2 Non-binding mediation hereunder shall be conducted by a mediator or mediation program designated by Coffee Beanery in writing. Coffee Beanery shall make the designation within a reasonable time after issuance of the request.
18.3.3 Non-binding mediation hereunder shall be concluded within 60 days of the issuance of the request, or such longer period as may be agreed upon by the parties in writing ("mediation termination date"). All aspects of the mediation process shall be treated as confidential, shall not be disclosed to others, and shall not be offered or admissible in any other proceeding or legal action whatsoever. The parties shall bear their own costs of mediation, and shall share equally in the cost of the mediator or mediation service.
18.4 Except for any actions brought with respect to: (i) ownership or use of the Proprietary Marks; (ii) issues concerning the alleged violations of federal or state antitrust laws; or (iii) securing injunctive relief or specific performance pursuant to Section 18.7 of this Agreement; or (iv) the right of indemnification or the manner in which it is executed, any claim or controversy arising out of or related to this Agreement, or the making, performance, breach, interpretation, or termination thereof, shall be finally settled by arbitration pursuant to the then-prevailing Commercial Arbitration Rules of the American Arbitration Association or any successor thereto, by one arbitrator appointed in accordance with such rules. Any award of the arbitrator shall be in writing, shall state the reasons for the award (including any
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-13
09/30/06
findings of fact and conclusions of law) and shall explain the manner in which any awarded damages are calculated. Coffee Beanery and Area Franchisee waive, to the fullest extent permitted by law, any right or claim to any punitive or exemplary damages against the other, and agree that any award shall be limited to the recovery of any actual damages sustained by them. The prevailing party also shall be entitled to recover its expenses, including reasonable attorneys' fees and accounting fees, in addition to any other relief to which it is found entitled. All arbitration proceedings shall take place in Flushing, Michigan, or if Coffee Beanery's principal place of business shall be at another location at the time that arbitration is sought, in the city of Coffee Beanery's then principal place of business. The arbitration award shall be binding upon the parties and may be entered and enforced in any court of competent jurisdiction. Any arbitration proceeding shall be limited to controversies between Coffee Beanery and Area Franchisee and shall not be expanded to include any other party, or include the adjudication of class action claims.
18.5 To the extent that a judicial action is permitted by the Agreement, any such action brought by Area Franchisee against Coffee Beanery shall be brought exclusively, and any such action brought by Coffee Beanery against Area Franchisee may be brought, in the federal district court covering the location at which Coffee Beanery has its principal place of business at the time the action is commenced; provided, however, that if the federal court would not have subject matter jurisdiction had the action been commenced in such court, then, in such event, the action shall (with respect to actions commenced by Area Franchisee), and may (with respect to actions commenced by Coffee Beanery), be brought in the state court within the judicial district in which Coffee Beanery has its principal place of business at the time the action is commenced. The parties waive all questions of personal jurisdiction or venue for the purpose of carrying out this provision.
18.6 No right or remedy conferred upon or reserved to Coffee Beanery or Area Franchisee hereby is intended to be, nor shall be deemed, exclusive of any other right or remedy herein or by law or equity provided or permitted, but each shall be cumulative of every other right or remedy.
18.7 Nothing in this Agreement shall bar Coffee Beanery's right to seek injunctive relief without the posting of any bond or security to obtain the entry of temporary and permanent injunctions and orders of specific performance enforcing the provisions of this Agreement relating to Area Franchisee's obligations. Coffee Beanery also shall be able to seek injunctive relief to prohibit any act or omission by Area Franchisee or its employees that constitutes a violation of any applicable law, is dishonest or misleading to the public, or which may impair the goodwill associated with the Proprietary Marks or System; and Area Franchisee agrees to pay all costs and reasonable attorneys' fees incurred by Coffee Beanery in obtaining such relief.
18.8 Coffee Beanery and Area Franchisee irrevocably waive trial by jury in any action, proceeding, or counterclaim whether at law or in equity, brought by either of them against the other, whether or not there are other parties in such action or proceeding. Any claim or controversy arising out of or related to this Agreement, or the making, performance, breach, interpretation, or termination thereof, shall be commenced within one year from the occurrence of the facts giving rise to such claim or action, or such claim or action shall be barred. Coffee Beanery and Area Franchisee hereby waive in any arbitration or judicial action, to the fullest extent permitted by law, any right to or claim of any punitive or exemplary damages against the other and agree that in the event of a dispute between them each shall be limited to the recovery of any actual damages sustained by it.
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-14
09/30/06
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement on the Effective Date.
Address For Notices Pursuant to Section 15.1 of This Agreement
Coffee Beanery Address 3429 Pierson Place Flushing, Michigan 48433 Attn: President
Area Franchisee Address
Signatures
THE COFFEE BEANERY. LTD.
By:_______________________
Title:_____________________
AREA FRANCHISEE
By:_______________________
Title:______________________
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-15
09/30/06
Attachment A to the Area Franchise Agreement
DEVELOPMENT SCHEDULE
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Coffee Beanery's Initials Area Franchisee's Initials
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-l
09/30/06
Attachment B to the Area Franchise Agreement
TERRITORY
Coffee Beanery's Initials Area Franchisee's Initials
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-l
09/30/06
(This page left intentionally blank.)
The Coffee Beanery, Ltd.
Uniform Franchise Offering Circular (v.2006)
Exhibit B-2
09/30/06
EXHIBIT C
TO FRANCHISE
OFFERING CIRCULAR
AREA DEVELOPMENT AGREEMENT
Coffee Beanery 2006 Development Agreement Exhibit C 09/30/06
COFFEE BEANERY INC.
AREA DEVELOPMENT AGREEMENT
Coffee Beanery 2006 Development Agreement Exhibit C 09/30/06
TABLE OF CONTENTS
Page
1. GRANT..............................................................................................................................................2
1.1 Grant.....................................................................................................................................2
1.2 Protect Development Area....................................................................................................2
1.3 No Right to Use Proprietary Marks or System.....................................................................2
2. DEVELOPMENT FEE......................................................................................................................3
2.1 Development Fee..................................................................................................................3
3. DEVELOPMENT OBLIGATIONS..................................................................................................3
3.1 Execution of Franchise Agreements.....................................................................................3
3.2 Development Schedule.........................................................................................................3
4. TERM ..............................................................................................................................................3
4.1 Term......................................................................................................................................3
5. DEVELOPER'S CONFIDENTIALITY AND NON-COMPETITION COVENANTS...................3
5.1 Confidential Information......................................................................................................3
5.2 Non-Competition During Term of Agreement.....................................................................4
5.3 Non-Competition After Expiration or Termination of Agreement.......................................4
5.4 Exceptions to Non-Compete Covenants...............................................................................5
5.5 Reducing Scope of Covenants..............................................................................................5
5.6 Enforceability of Covenants Not Affected by Developer Claims.........................................5
5.7 Breach of Covenants Causes Irreparable Injury to Coffee Beanery.....................................5
5.8 Covenants From Individuals.................................................................................................5
6. TRANSFER OF INTEREST.............................................................................................................6
6.1 Transfer of Coffee Beanery..................................................................................................6
6.2 Transfer by Developer..........................................................................................................6
6.3 No Waiver.............................................................................................................................6
6.4 Transfer by Developer Bankruptcy-Right of First Refusal...................................................6
7. DEFAULT AND TERMINATION...................................................................................................7
7.1 Termination With Notice and Without Opportunity to Cure................................................7
7.2 Termination With Notice and Opportunity to Cure..............................................................8
8. OBLIGATIONS UPON TERMINATION OR EXPIRATION.........................................................8
8.1 No Right to Open Additional Stores.....................................................................................8
8.2 Coffee Beanery's Right to Establish Stores..........................................................................8
8.3 Coffee Beanery's Right to Terminate Existing Franchise Agreements and Purchase Assets....................................................................................................................................8
8.4 Irreparable Injury to Coffee Beanery....................................................................................9
8.5 Area Development Agreement Default Does Not Constitute a Default Under
Any Franchise Agreement....................................................................................................9
8.6 Return to Materials and Other Confidential Information......................................................9
9. INDEPENDENT CONTRACTOR AND INDEMNIFICATION.....................................................9
9.1 No Fiduciary Relationship....................................................................................................9
9.2 Independent Contractor and Indemnification.......................................................................9
Coffee Beanery 2006 Development Agreement Exhibit C-i
09/30/06
10. APPROVALS AND WAIVERS.......................................................................................................9
10.1 Obtaining Approvals.............................................................................................................9
10.2 No Waiver.............................................................................................................................10
11. NOTICES...........................................................................................................................................10
11.1 Notices..................................................................................................................................10
12. ENTIRE AGREEMENT....................................................................................................................10
12.1 Entire Agreement..................................................................................................................10
13. SEVERABILITY AND CONSTRUCTION.....................................................................................11
13.1 Severability and Construction...............................................................................................11
13.2 Survival of Obligations After Expiration or Termination of Agreement..............................11
13.3 Survival of Modified Provisions...........................................................................................11
13.4 Captions................................................................................................................................11
13.5 "Affiliate" and "Principal" Defined......................................................................................11
14. DISPUTE RESOLUTION.................................................................................................................11
14.1 Choice of Law.......................................................................................................................11
14.2 Mediation of Disputes...........................................................................................................12
14.3 Mediation Procedures...........................................................................................................12
14.4 Arbitration.............................................................................................................................13
14.5 Judicial Actions..........................................................................................13
14.6 Non-Exclusive Remedy........................................................................................................13
14.7 Injunctive Relief...................................................................................................................14
14.8 Limitations on Actions..........................................................................................................14
15. ACKNOWLEDGMENTS.................................................................................................................14
15.1 Recognition of Business Risks..............................................................................................14
15.2 Receipt of Coffee Beanery Offering Materials.....................................................................14
15.3 Atypical Arrangements.........................................................................................................15
ATTACHMENT A: DEVELOPMENT SCHEDULE
ATTACHMENT B: DEVELOPMENT AREA
ATTACHMENT C: CURRENT FORM OF FRANCHISE AGREEMENT
Coffee Beanery 2006 Development Agreement
Exhibit C-ii
09/30/06
THE COFFEE BEANERY. LTD. AREA DEVELOPMENT AGREEMENT
THIS AREA DEVELOPMENT AGREEMENT ("Agreement"), made and entered into on
_________________, 200__, by and between The Coffee Beanery, Ltd., a Michigan corporation, with
its principal place of business at 3429 Pierson Place, Flushing, Michigan 48433 ("Coffee Beanery"), and
_____________________, a_____________, with its principal place of business at
______________________________________________________________("Developer").
RECITALS:
A. WHEREAS, Coffee Beanery, as the result of the expenditure of time, skill, effort, and money, has developed, owns, and presently franchises a unique and distinctive system relating to the establishment and operation of retail Stores providing coffee and espresso based drinks and other food products ("System"), and which are identified by the mark COFFEE BEANERY and other Coffee Beanery-System related trade names, service marks, trademarks, logos, emblems, and indicia of origin as are now designated, or may hereafter be designated by Coffee Beanery in writing, for use in connection with the System;
B. The distinguishing characteristics of the System include, without limitation, a distinctive design and layout, and training, management, and promotional assistance, in connection with the establishment and ongoing operation for the establishment and operation of retail Stores providing coffee and espresso based drinks and other food products, all of which may be changed, improved, and further developed by Coffee Beanery from time to time;
C. Coffee Beanery identifies the System by means of certain trade names, service marks, trademarks, logos, emblems, and indicia of origin, including the mark COFFEE BEANERY and such other trade names, service marks, and trademarks as are now designated, or may hereafter be designated by Coffee Beanery in writing, for use in connection with the System ("Proprietary Marks");
D. Developer desires to obtain certain development rights to operate business under the System which use the Proprietary Marks ("Stores"), and wishes to obtain franchises from Coffee Beanery for that purpose.
E. Coffee Beanery has decided, based on the information provided by Developer to Coffee Beanery, to grant such development rights to Developer, pursuant to the terms and conditions set forth in this Area Development Agreement ("Agreement").
The parties agree as follows:
1. GRANT
1.1 Grant Coffee Beanery hereby grants to Developer the right, and Developer accepts the obligation, pursuant to the terms and conditions of this Agreement, to establish and operate Stores pursuant to the development schedule set forth in Attachment A hereto ("Development Schedule"). Each Store shall be located in the area described in Attachment B ("Development Area") and at a specific site approved by Coffee Beanery within the Development Area ("Approved Location"), and shall be established and operated pursuant to a separate franchise agreement ("Franchise Agreement") to be entered into between
Coffee Beanery 2006 Development Agreement
Exhibit C-l
09/30/06
Developer and Coffee Beanery in accordance with Section 3.1 hereof. Each Store shall be established and operated by Developer or by an entity controlling, controlled by, or under common control with, Developer.
1.2 Protected Development Area
During the term of this Agreement, Coffee Beanery shall not establish or operate, or franchise other persons to establish or operate, a Store which is located within the Development Area. Except as specifically provided in the preceding sentence, Developer's rights under this Agreement are not exclusive, and Coffee Beanery retains the right, among others, in any manner and on any terms and conditions that Coffee Beanery deems advisable, and without granting Developer any rights therein:
(a) to own, acquire, establish and/or operate, and license others to establish and operate, Stores outside the Development Area, regardless of their proximity to or their impact on any Store located within the Development Area;
(b) to own, acquire, establish and/or operate, and license others to establish and operate, businesses under other proprietary marks or other systems, including (i) businesses which provide products and/or services similar to those provided by a Store at any location within or outside the Protected Territory and regardless, in either circumstance, of their proximity to the Approved Location or their impact on the Store Owner's Store; and
(c) to sell or distribute, at retail or wholesale, directly or indirectly, or license others to sell or distribute, any products which bear any proprietary marks, including the Proprietary Marks, whether within or outside the Development Area, and regardless of their proximity to or their impact on any Store located within the Development Area.
(d) to develop coffee locations in institutions or unique venues for which the Developer would not otherwise be qualified.
1.3 No Right to Use Proprietary Marks or System
This Agreement is not a franchise agreement, and does not grant Developer any right to use or to franchise the use of, the Proprietary Marks or the System.
2. DEVELOPMENT FEE
2.1 Development Fee Upon execution of this Agreement, Developer shall pay Coffee Beanery a development fee of $27,500,00 for the first store to be developed and $3,437.50 for each additional Store pursuant to this Agreement, which fee has been fully earned and is non-refundable, in consideration of administrative and other expenses incurred by Coffee Beanery and for the development opportunities lost or deferred as a result of the rights granted Developer herein.
3. DEVELOPMENT OBLIGATIONS
3.1 Execution of Franchise Agreements
Developer shall execute a Franchise Agreement for each Store to be franchised, the form of which shall
be that which is then being offered by Coffee Beanery to new franchisees for Stores, except that (i) the
initial franchisee fee for each Store shall be the then current initial franchise fee for Stores at the time of
execution of the franchise agreement less a discount of $3,437.50, representing the development fee paid
Coffee Beanery 2006 Development Agreement
Exhibit C-2
09/30/06
for each additional Store to be developed pursuant to Section 2.1, and (ii) Section 1.5 of the current form of franchise agreement or any provision of any different form of current agreement which permits a franchisee to enter into additional franchise agreements, shall be null and void. The current form of franchise agreement as of the date of execution is attached as Attachment C hereto.
3.2 Development Schedule Recognizing that time is of the essence, Developer agrees to satisfy the Development Schedule by executing Franchise Agreements within the time established in the Development Schedule. Failure by Developer to adhere to the Development Schedule shall constitute a default under this Agreement, as provided in Section 7.1.
4. TERM
4.1 Term Unless sooner terminated as hereinafter provided, the term of this Agreement, and all rights granted hereunder, shall expire on the date set forth in the Development Schedule as the date on which the final Franchise Agreement is to be signed.
5. DEVELOPER'S CONFIDENTIALITY AND NON-COMPETITION COVENANTS
5.1 Confidential Information
Developer shall not, during or after the term hereof, communicate, divulge, or use for the benefit of any other person, persons, partnership, association, or corporation, any confidential information, knowledge, or know-how concerning the methods of operation of the Store which may be communicated to Developer or of which Developer may be apprised by virtue of Developer's operation hereunder. Developer shall divulge such confidential information only to those employees who must have access to it in order to perform their employment responsibilities. Any and all information, knowledge, know-how, and techniques which Coffee Beanery designates as confidential shall be deemed confidential for purposes hereof, unless and until Developer shall demonstrate that the information has become public knowledge. Developer acknowledges that any failure to comply with the requirements of this Section 5 will cause Coffee Beanery irreparable injury for which no adequate remedy at law may be available, and Developer agrees that Coffee Beanery may seek, and Developer agrees to pay, all court costs and reasonable attorneys' fees incurred by Coffee Beanery in obtaining, without posting a bond, an ex parte order for injunctive or other legal or equitable relief with respect to the requirements of this Section 5. Developer shall require anyone who may have access to confidential information to execute covenants that they shall maintain the confidentiality of information they receive in connection with their association with Developer. Such covenants shall be in a form satisfactory to Coffee Beanery including, without limitation, specific identification of Coffee Beanery as a third party beneficiary of such covenants with the independent right to enforce them.
5.2 Non-Competition During Term of Agreement
Developer specifically acknowledges that, pursuant to this Agreement, Developer will receive and confidential information including, without limitation, information regarding the operational, sales, promotional, and marketing methods and techniques of Coffee Beanery and the System. Developer (or, if Developer is a corporation, limited liability company, or partnership, all principals of Developer) covenants that during the term of this Agreement, except as otherwise approved in writing by Coffee Beanery, Developer and its principals shall not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with, any person or legal entity:
Coffee Beanery 2006 Development Agreement
Exhibit C-3
09/30/06
5.2.1 Divert or attempt to divert any present or prospective business or customer of a Store to any competitor, by inducement or otherwise, or do or perform any other act injurious or prejudicial to the goodwill associated with the Proprietary Marks and the System; or
5.2.2 Own, maintain, advise, operate, engage in, be employed by, make loans to, invest in, provide any assistance to, or have any interest in or relationship or association with, any business which offers the same or similar products or services as those offered by a Store.
5.3 Non-Competition After Expiration or Termination of Agreement
Commencing upon the date of: (a) a transfer permitted under Section 6 of this Agreement; (b) expiration of this Agreement; (c) termination of this Agreement (regardless of the cause for termination); or (d) a final arbitration or court order (after all appeals have been taken) with respect to any of the foregoing events or with respect to enforcement of this Section 5.3, and continuing for an uninterrupted period of two years thereafter, Developer shall not, without Coffee Beanery's prior written consent, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, persons, or legal entity, own, maintain, advise, operate, engage in, be employed by, make loans to, or have any interest in or relationship or association with a business which offers the same as or similar products or services as those offered by a Store, and is located in or within a twenty mile radius of the Development Area.
5.4 Exceptions to Non-Compete Covenants
Sections 5.2 and 5.3 shall not apply to the ownership by Developer of a less than five percent beneficial interest in the outstanding equity securities of any company registered under the Securities Act of 1933 or the Securities Exchange Act of 1934.
5.5 Reducing Scope of Covenants
Developer understands and acknowledges that Coffee Beanery shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in Sections 5.2 and 5.3, or any portion thereof, without Developer's consent, effective immediately upon receipt by Developer of written notice thereof, and Developer agrees that it shall comply forthwith with any covenant as so modified, which shall be fully enforceable notwithstanding the provisions of Section 12 hereof.
5.6 Enforceability of Covenants Not Affected bv Developer Claims
Developer expressly agrees that the existence of any claims it may have against Coffee Beanery, whether or not arising hereunder, shall not constitute a defense to the enforcement by Coffee Beanery of the covenants in this Section 5. Developer agrees to pay all costs and expenses (including reasonable attorneys' fees) incurred by Coffee Beanery in connection with the enforcement of this Section 5.
5.7 Breach of Covenants Causes Irreparable Injury to Coffee Beanery
Developer acknowledges that Developer's violation of any covenant of this Section 5 would result in irreparable injury to Coffee Beanery for which no adequate remedy at law may be available, and Developer consents to the issuance of, and agrees to pay all court costs and reasonable attorneys' fees incurred by Coffee Beanery in obtaining, an injunction prohibiting any conduct by Developer in violation of any covenant contained in this Section 5.
5.8 Covenants From Individuals
Developer shall obtain and furnish to Coffee Beanery executed covenants similar in substance to those set forth in this Section 5 (including covenants applicable upon the termination of a person's relationship with Developer) from any or all of the following persons: (1) all officers, directors, members, and holders of a beneficial interest in five percent or more of the securities of Developer, and of any corporation directly or indirectly controlling Developer, if Developer is a corporation or limited liability company and (2) the general partners and any limited partners (including any corporation, and the officers, directors,
Coffee Beanery 2006 Development Agreement Exhibit C-4
09/30/06
and holders of a beneficial interest of five percent or more of the securities of any corporation which controls, directly or indirectly, any general or limited partner), if Developer is a partnership. Every covenant required by this Section 5.8 shall be in a form approved by Coffee Beanery including, without limitation, specific identification of Coffee Beanery as a third party beneficiary of such covenant with the independent right to enforce them.
6. TRANSFER OF INTEREST
6.1 Transfer by Coffee Beanery
Coffee Beanery shall have the right to transfer or assign all or any part of its rights or obligations under this Agreement to any person or legal entity. With respect to any assignment which results in the subsequent performance by the assignee of all of Coffee Beanery's obligations under this Agreement, the assignee shall expressly assume and agree to perform such obligations, and shall become solely responsible for all obligations of Coffee Beanery under this Agreement from the date of assignment. In addition, and without limitation to the foregoing, Developer expressly affirms and agrees that Coffee Beanery may sell its assets, its Proprietary Marks, or its System; may sell its securities in a public offering or in a private placement; may merge, acquire other corporations, or be acquired by another corporation; and may undertake a refinancing, recapitalization, leveraged buy-out, or other economic or financial reorganization or restructuring.
6.2 Transfer by Developer
Developer shall not transfer or assign all or any part of its rights or obligations under this Agreement to any person or legal entity without Coffee Beanery's prior written consent, which consent may be denied, with or without cause, by Coffee Beanery in its sole and absolute discretion.
6.3 No Waiver
Coffee Beanery consent to a transfer shall not constitute a waiver of any claims it may have against the transferring party, nor shall it be deemed a waiver of Coffee Beanery right to demand exact compliance with any of the terms of this Agreement by the transferor or transferee.
6.4 Transfer by Developer Bankruptcy-Right of First Refusal
If, for any reason, this Agreement is not terminated pursuant to Section 7.1.6 and this Agreement is assumed, or assignment of the same to any person or entity who has made a bona fide offer to accept an assignment of this Agreement is contemplated, pursuant to the United States Bankruptcy Code, then notice of such proposed assignment or assumption, setting forth (a) the name and address of the proposed assignee, and (b) all of the terms and conditions of the proposed assignment and assumption, shall be given to Coffee Beanery within 20 days after receipt of such proposed assignee's offer to accept assignment of this Agreement, and, in any event, within ten days prior to the date application is made to a court of competent jurisdiction for authority and approval to enter into such assignment and assumption, and Coffee Beanery shall thereupon have the prior right and option, to be exercised by notice given at any time prior to the effective date of such proposed assignment and assumption, to accept an assignment of this Agreement to Coffee Beanery itself upon the same terms and conditions and for the same consideration, if any, as in the bona fide offer made by the proposed assignee, less any brokerage commissions which may be payable by Developer out of the consideration to be paid by such assignee for the assignment of this Agreement.
7. DEFAULT AND TERMINATION
7.1 Termination With Notice and Without Opportunity to Cure Developer shall be in default hereunder, and Coffee Beanery may, at its option, terminate this Agreement and all rights granted hereunder, without affording Developer any opportunity to cure the
Coffee Beanery 2006 Development Agreement
Exhibit C-5
09/30/06
default, effective immediately upon receipt of notice by Developer upon the occurrence of any of the following events:
7.1.1 If Developer (or an officer, director, shareholder, general or limited partner, or member) is convicted of a felony, a crime involving moral turpitude, or any other crime or offense that Coffee Beanery believes is reasonably likely to have an adverse effect on the System, the Proprietary Marks, the goodwill associated therewith, or Coffee Beanery interest therein;
7.1.2 If Developer fails to comply with the Development Schedule;
7.1.3 If any Franchise Agreement executed pursuant to this Agreement or any other agreement between Developer and Coffee Beanery or any Coffee Beanery affiliate is terminated due to a breach or default by the franchisee;
7.1.4 If any purported assignment or transfer of any direct or indirect interest in this Agreement, in Developer, or in all or substantially all of Developer's assets is made to any third party without Coffee Beanery prior written consent, contrary to the terms of Section 6 hereof;
7.1.5 If, contrary to the terms of Section 5.1 of this Agreement, Developer or any principal or employee of Developer discloses or divulges the contents of the Manual or other confidential information provided to Developer by Coffee Beanery;
7.1.6 If Developer becomes insolvent, makes a general assignment for the benefit of creditors, files a petition in bankruptcy, or a petition in bankruptcy is filed against (and not opposed by) Developer;
7.1.7 If Developer fails to comply with, or obtain execution of and deliver, the covenants described in Section 5 hereof;
7.1.8 If Developer or any principal of Developer has made any material misrepresentations to Coffee Beanery prior to the execution of this Agreement;
7.1.9 If Developer, after curing a default pursuant to Section 7.2 hereof, commits the same, similar, or different default, whether or not cured after notice.
7.2 Termination With Notice and Opportunity to Cure Except as provided in Section 7.1 herein, Developer shall have 30 days after its receipt from Coffee Beanery of a written Notice of Termination within which to (i) remedy any default under this Agreement; (ii) comply with any federal, state, or local law or regulation; or (iii) carry out the terms of this Agreement in good faith, and to provide evidence thereof to Coffee Beanery. If any such default is not cured within the specified time, or such longer period as applicable law may require, this Agreement shall terminate without further notice to Developer effective immediately upon expiration of the 30 day period or such longer period as applicable law may require.
8. OBLIGATIONS UPON TERMINATION OR EXPIRATION
Upon termination or expiration of this Agreement, all rights granted hereunder to Developer shall forthwith terminate, and:
Coffee Beanery 2006 Development Agreement
Exhibit C-6
09/30/06
8.1 No Right to Open Additional Stores
Developer shall have no right to establish or operate any Store for which a Franchise Agreement has not been executed by Coffee Beanery at the time of termination.
8.2 Coffee Beanerv's Right to Establish Stores
Coffee Beanery shall have the right to establish, and to franchise others to establish, Stores in the Development Area except as may be otherwise provided under any Franchise Agreement in effect between Coffee Beanery and Developer.
8.3 Coffee Beanerv's Right to Terminate Existing Franchise Agreements and Purchase Assets
In the event of termination for any default by Developer, Coffee Beanery shall have the option, to be exercised within 30 days after this Agreement is terminated, to terminate the Franchise Agreement executed pursuant to this Agreement, and purchase Developer's interest in, any or all Stores regardless of whether such Store(s) are under construction or are open and operating, and all of the furnishings, equipment, signs, fixtures, supplies, inventory, or other tangible personal property of Developer related to such Store(s), at the lesser of the Store's net book value or fair market value. If the parties cannot agree on the purchase price within 30 days after Coffee Beanery exercises such option, a qualified independent appraiser shall be designated by Coffee Beanery, and the appraiser's determination of the appropriate purchase price shall be final and binding. If Coffee Beanery elects to exercise such option to purchase, it shall have the right to set off any and all amounts due from Developer and the cost of the appraisal, if any, against any payment therefor.
8.4 Irreparable Injury to Coffee Beanery
Developer agrees and acknowledges that Developer's failure to comply with the provisions of this Section 8 will result in irreparable harm to Coffee Beanery and to the Proprietary Marks, and Developer agrees to pay all damages, expenses, court costs and reasonable attorneys' fees incurred by Coffee Beanery in obtaining specific performance of, or an injunction against violation of, and/or damages resulting from a violation of, the requirements of this Section 8.
8.5 Development Agreement Default Does Not Constitute a Default Under Any Franchise Agreement
Default under this Development Agreement shall not constitute a default under any Franchise Agreement unless the action or inaction giving rise to the default hereunder also gives rise to a default under such Franchise Agreement.
8.6 Return of Materials and Other Confidential Information
Developer shall immediately deliver to Coffee Beanery records, correspondence, files, and any instructions containing confidential information relating to the Coffee Beanery System or Stores which are in Developer's possession; and all copies thereof (all of which are acknowledged to be the property of Coffee Beanery).
9. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
9.1 No Fiduciary Relationship This Agreement does not create a fiduciary relationship between Coffee Beanery and Developer. Developer shall be an independent contractor; and nothing in this Agreement is intended to constitute or appoint either party an agent, legal representative, subsidiary, joint venturer, partner, employee, or servant of the other for any purpose whatsoever.
Coffee Beanery 2006 Development Agreement
Exhibit C-7
09/30/06
9.2 Independent Contractor and Indemnification Developer acknowledges and agrees that it is not authorized to make any contract, agreement, warranty, or representation on behalf of Coffee Beanery, or to incur any debt or other obligations in the name of Coffee Beanery; and that Coffee Beanery shall in no event assume liability for, or be deemed liable hereunder as a result of, any such action; nor shall Coffee Beanery be liable by reason of any act or omission of Developer or for any claim or judgment arising therefrom against Developer. Developer shall indemnify and hold Coffee Beanery and any affiliates and their respective shareholders, directors, employees and agents, harmless against any and all claims arising directly or indirectly from, as a result of, or in connection with Developer's actions.
10. APPROVALS AND WAIVERS
10.1 Obtaining Approvals
Whenever this Agreement requires the prior approval or consent of Coffee Beanery, Developer shall make a timely written request to Coffee Beanery therefor, and such approval or consent must be obtained in writing. Coffee Beanery makes no warranties or guarantees upon which Developer may rely, and assumes no liability or obligation to Developer, by providing any waiver, approval, consent, or suggestion to Developer in connection with this Agreement, or by reason of any neglect, delay, or denial of any request therefor.
10.2 No Waiver
No delay, waiver, omission, or forbearance on the part of Coffee Beanery to exercise any right, option, duty, or power arising out of this Agreement against Developer or any other developer, or any breach or default by Developer, or by any other developer, of any of the terms, provisions, or covenants thereof, and no custom or practice by the parties at variance with the terms hereof, shall constitute a waiver by Coffee Beanery to enforce any such right, option, or power as against Developer, or as to a subsequent breach or default by Developer.
11. NOTICES
11.1 Notices Any and all notices furnished pursuant to this Agreement shall be in writing and shall be personally delivered, sent by facsimile, or dispatched by overnight delivery envelope to the respective parties at the addresses set forth on the signature page of this Agreement, unless and until a different address has been designated by written notice to the other party. Notices shall be deemed to have been received as follows: by personal delivery or facsimile ~ at time of delivery; and by overnight delivery service on the third business day following the date on which the Notice was given to the overnight delivery service. Notices furnished by facsimile shall be confirmed by overnight delivery service.
12. ENTIRE AGREEMENT
12.1 Entire Agreement This Agreement and any attachments hereto constitutes the entire and complete agreement between Coffee Beanery and Developer concerning the subject matter thereof, and supersedes all prior agreements. Developer acknowledges that it is entering into this Agreement as a result of its own independent investigation and not as a result of any representation made by Coffee Beanery or persons associated with Coffee Beanery which are contrary to the terms herein set forth or which are contrary to the terms of any offering circular, or other similar document required or permitted to be given to
Coffee Beanery 2006 Development Agreement
Exhibit C-8
09/30/06
Developer pursuant to applicable law. Except for those permitted hereunder to be made unilaterally by Coffee Beanery, no amendment, change, or variation from this Agreement shall be binding on either party unless mutually agreed to by the parties and executed by their authorized officers or agents in writing.
13. SEVERABILITY AND CONSTRUCTION
13.1 Severability and Construction
Except as expressly provided to the contrary herein, each section, part, term, and provision of this Agreement shall be considered severable; and if, for any reason, any section, part, term, provision, and/or covenant herein is determined to be invalid and contrary to, or in conflict with, any existing or future law or regulation by a court or agency having valid jurisdiction, such shall not impair the operation of, or have any other effect upon, such other portions, sections, parts, terms, provisions, and/or covenants of this Agreement as may remain otherwise intelligible; and the latter shall continue to be given full force and effect and bind the parties hereto; and the invalid portions, sections, parts, terms, provisions, and/or covenants shall be deemed not to be a part of this Agreement.
13.2 Survival of Obligations After Expiration or Termination of Agreement
Any provision or covenant of this Agreement which expressly or by its nature imposes obligations beyond the expiration or termination of this Agreement shall survive such expiration or termination.
13.3 Survival of Modified Provisions
Developer expressly agrees to be bound by any promise or covenant imposing the maximum duty permitted by law which is subsumed within the terms of any provision hereof, as though it were separately articulated in and made a part of this Agreement, that may result from striking from any of the provisions hereof any portion or portions which a court or agency having valid jurisdiction may hold to be unreasonable and unenforceable in an unappealed final decision to which Coffee Beanery is a party, or from reducing the scope of any promise or covenant to the extent required to comply with such a court or agency order.
13.4 Captions
All captions in this Agreement are intended for the convenience of the parties, and none shall be deemed to affect the meaning or construction of any provision hereof.
13.5 "Affiliate" and "Principal" Defined
For purposes of this Agreement, the term "affiliate" shall mean any person or legal entity that directly or indirectly controls, is controlled by, or is under common control with the specified person or legal entity; the term "principal" shall mean a shareholder of a corporation, a general or limited partner of a partnership, or a member of a limited liability company.
14. DISPUTE RESOLUTION
14.1 Choice of Law This Agreement takes effect upon its acceptance and execution by Coffee Beanery in Michigan, and any claim or controversy arising out of or related to this Agreement, or the making, performance, breach, interpretation, or termination thereof, shall be interpreted and construed exclusively under the laws of Michigan. In the event of any conflict of law, the laws of Michigan shall prevail, without regard to the application of Michigan conflict of law rules. If, however, any provision of this Agreement would not be enforceable under the laws of Michigan, and if the Development Area is located outside of Michigan and such provision would be enforceable under the laws of the state in which the Development Area is
Coffee Beanery 2006 Development Agreement
Exhibit C-9
09/30/06
located, then such provision shall be interpreted and construed under the laws of that state. Nothing in this Section 14.1 is intended by the parties to subject this Agreement to any franchise or similar law, rule, or regulation of the State of Michigan to which it would not otherwise be subject.
14.2 Mediation of Disputes
Except as otherwise provided in this Agreement, any claim or controversy arising out of or related to this Agreement, or the making, performance, breach, interpretation, or termination thereof, except for any actions brought with respect to: (i) ownership or use of the Proprietary Marks; (ii) issues concerning the alleged violations of federal or state antitrust laws; (iii) securing injunctive relief or specific performance pursuant to Section 14.7 of this Agreement; or (iv) the right to indemnification or the manner in which it is exercised, shall first be subject to non-binding mediation in Flushing, Michigan, or, if Coffee Beanery's principal place of business shall be at another location at the time that arbitration is sought, in the city of Coffee Beanery's then principal place of business. Mediation shall not defer or suspend Coffee Beanery's exercise of any termination right under Section 7.
14.3 Mediation Procedures
No arbitration or litigation may be commenced on any claim which is subject to mediation under Section 14.2 prior to the mediation termination date, as defined in Section 14.3.3, whether or not the mediation has been commenced. Mediation under this Section 14.3 is not intended to alter or suspend the rights or obligations of the parties under this Agreement or to determine the validity or effect of any provision of this Agreement, but is intended to furnish the parties an opportunity to resolve disputes amicably, expeditiously and in a cost-effective manner on mutually acceptable terms.
14.3.1 The non-binding mediation provided for hereunder shall be commenced by the party requesting mediation giving written notice of the request for mediation to the party with whom mediation is sought. The request shall specify with reasonable particularity the matters for which non-binding mediation is sought.
14.3.2 Non-binding mediation hereunder shall be conducted by a mediator or mediation program designated by Coffee Beanery in writing. Coffee Beanery shall make the designation within a reasonable time after issuance of the request.
14.3.3 Non-binding mediation hereunder shall be concluded within 60 days of the issuance of the request, or such longer period as may be agreed upon by the parties in writing ("mediation termination date"). All aspects of the mediation process shall be treated as confidential, shall not be disclosed to others, and shall not be offered or admissible in any other proceeding or legal action whatsoever. The parties shall bear their own costs of mediation, and shall share equally in the cost of the mediator or mediation service.
14.4 Arbitration
Except for any actions brought with respect to: (i) ownership or use of the Proprietary Marks; (ii) issues concerning the alleged violations of federal or state antitrust laws; (iii) securing injunctive relief or specific performance pursuant to Section 14.7 of this Agreement, or (iv) the right to indemnification or the manner in which it is exercised, any claim or controversy arising out of or related to this Agreement, or the making, performance, breach, interpretation, or termination thereof, shall be finally settled by arbitration pursuant to the then-prevailing Commercial Arbitration Rules of the American Arbitration Association or any successor thereto, by one arbitrator appointed in accordance with such rules. Any award of the arbitrator shall be in writing, shall state the reasons for the award (including any findings of fact and conclusions of law) and shall explain the manner in which any awarded damages are calculated. Coffee Beanery and Developer waive, to the fullest extent permitted by law, any right or claim to any punitive or exemplary damages against the other, and agree that any award shall be limited to the
Coffee Beanery 2006 Development Agreement
Exhibit C-10
09/30/06
recovery of any actual damages sustained by them. The prevailing party also shall be entitled to recover its expenses, including reasonable attorneys' fees and accounting fees, in addition to any other relief to which it is found entitled. All arbitration proceedings shall take place in Flushing, Michigan, or, if Coffee Beanery's principal place of business shall be at another location at the time that arbitration is sought, in the city of Coffee Beanery's then principal place of business. The arbitration award shall be binding upon the parties and may be entered and enforced in any court of competent jurisdiction. Any arbitration proceeding shall be limited to controversies between Coffee Beanery and Developer and shall not be expanded to include any other Developer as a party, or include the adjudication of class action claims.
14.5 Judicial Actions
To the extent that a judicial action is permitted by the Agreement, any such action brought by Developer against Coffee Beanery shall be brought exclusively, and any such action brought by Coffee Beanery against Developer may be brought, in the federal district court covering the location at which Coffee Beanery has its principal place of business at the time the action is commenced; provided, however, that if the federal court would not have subject matter jurisdiction had the action been commenced in such court, then, in such event, the action shall (with respect to actions commenced by Developer), and may (with respect to actions commenced by Coffee Beanery), be brought in the state court within the judicial district in which Coffee Beanery has its principal place of business at the time the action is commenced. The parties waive all questions of personal jurisdiction or venue for the purpose of carrying out this provision.
14.6 Non-Exclusive Remedy
No right or remedy conferred upon or reserved to Coffee Beanery or Developer hereby is intended to be, nor shall be deemed, exclusive of any other right or remedy herein or by law or equity provided or permitted, but each shall be cumulative of every other right or remedy.
14.7 Injunctive Relief
Nothing in this Agreement shall bar Coffee Beanery's right to seek injunctive relief without the posting of any bond or security to obtain the entry of temporary and permanent injunctions and orders of specific performance enforcing the provisions of this Agreement relating to Developer's obligations. Coffee Beanery also shall be able to seek injunctive relief to prohibit any act or omission by Developer or its employees that constitutes a violation of any applicable law, is dishonest or misleading to the public, or which may impair the goodwill associated with the Proprietary Marks or System; and Developer agrees to pay all costs and reasonable attorneys' fees incurred by Coffee Beanery in obtaining such relief.
14.8 Limitations on Actions
Coffee Beanery and Developer irrevocably waive trial by jury in any action, proceeding, or counterclaim whether at law or in equity, brought by either of them against the other, whether or not there are other parties in such action or proceeding. Any claim or controversy arising out of or related to this Agreement, or the making, performance, breach, interpretation, or termination thereof, brought by any party hereto against the other, shall be commenced within one year from the occurrence of the facts giving rise to such claim or action, or such claim or action shall be barred. Coffee Beanery and Developer hereby waive in any arbitration or judicial action, to the fullest extent permitted by law, any right to or claim of any punitive or exemplary damages against the other and agree that in the event of a dispute between them, each shall be limited to the recovery of any actual damages sustained by it.
15. ACKNOWLEDGMENTS
15.1 Recognition of Business Risks Developer acknowledges that it has conducted an independent investigation of the rights granted hereunder, and recognizes that the business venture contemplated by this Agreement involves business
Coffee Beanery 2006 Development Agreement Fxhibit C-11
09/30/06
risks and that its success will be largely dependent upon Developer's own abilities. Coffee Beanery expressly disclaims the making of, and Developer acknowledges that it has not received, any representation, express or implied, as to the past, current, or potential sales, income, profits, or success of existing or future Stores or Developers.
15.2 Receipt of Coffee Beanery Offering Materials
Developer acknowledges that Developer has received a copy of the complete Coffee Beanery Development Agreement for Coffee Beanery Stores, the attachments thereto, and agreements relating thereto, if any, at least five business days prior to the date on which this Agreement was executed. Developer further acknowledges that it has received the disclosure document required by the Trade Regulation Rule of the Federal Trade Commission entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures," at least ten business days prior to the date on which this Agreement was executed.
15.3 Atypical Arrangements
Developer acknowledges and agrees that Coffee Beanery may modify the offer of development rights for Stores to other developers in any manner and at any time, and that such offers and agreements have or may have terms, conditions, and obligations which may differ from the terms, conditions, and obligations in this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement on the day and year first above written.
Address For Notices Pursuant to
Section 11.1 of This Agreement Signatures
Coffee Beanery Address THE COFFEE BEANERY, LTD.
3429 Pierson Place
Flushing, Michigan 48433 By:_________________________
Attn: President
Title:_______________________
Developer Address
DEVELOPER
By:
Title:
Coffee Beanery 2006 Development Agreement Fxhthit C-1 2
09/30/06
Attachment A to Area Development Agreement
DEVELOPMENT SCHEDULE
Developer's Date of Execution of Franchise Agreement_____
Franchise Fee
1,
2.. 3..
4.
$27.500.00
Then current initial franchise fee less $3,437.50 Then current initial franchise fee less $3,437.50 Then current initial franchise fee less $3,437.50
Coffee Beanery Initials Developer's Initials
Coffee Beanery 2006 Development Agreement
Attachment A-1
09/30/06
Attachment B to Area Development Agreement
DEVELOPMENT AREA
Coffee Beanery Initials Developer's Initials
Coffee Beanery 2006 Development Agreement Attachment B-l 09/30/06
Attachment C to Area Development Agreement
CURRENT FORM OF
COFFEE BEANERY
FRANCfflSE AGREEMENT
Coffee Beanery 2006 Development Agreement
Attachment C-l
09/30/06