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Sample Franchise Agreement
DINNER MYWAY FRANCHISE AGREEMENT
THIS DINNER MYWAY FRANCHISE AGREEMENT ("Agreement") is executed as of
this______________= day of____________________________, 200__, by and between
DINNER MYWAY, INC., a California corporation ("Dinner MyWay"),with its principal office located at 2205 Sunset Blvd., Suite #501, Rocklin, California
95765 and . 95765. and
its principal office located at____________________________________________________.
Dinner MyWay and Franchisee may sometimes hereinafter be referred to individually as the "Party" or collectively as the "Parties."
A. As the result of the expenditure of time, skill, effort and money, Dinner MyWay has developed a system for establishing and operating specialty grocery stores that focus on menu planning, meal preparation training, and distribution of self-prepared home cooked meals and related products and services under the trade name "Dinner MyWay" (the "System").
B. The characteristics of the System include, but are not limited to, the following: uniform standards and procedures for business operations; training in operation, management and promotion; advertising and promotional programs; customer development and service techniques; special graphics packaging; and other technical assistance; all of which may be changed, improved or otherwise developed by Dinner MyWay from time to time.
C. Dinner MyWay has the right to use and license the trademark "DINNER MYWAY" and other trademarks, trade dress, services marks, logos and identifying features (the "Proprietary Marks") associated with Dinner MyWay and the System.
D. Dinner MyWay desires to grant to others the right to operate Dinner MyWay stores under the Proprietary Marks and System described herein.
E. Franchisee recognizes benefits to be derived from being identified with and receiving a franchise from Dinner MyWay, and desires to obtain a nonexclusive right from Dinner MyWay to operate a Dinner MyWay store, to use the System and the Proprietary Marks, and to enter into this Agreement for that purpose.
F. It is the intention of Franchisee and Dinner MyWay to preserve continuing customer confidence in the reliability and quality of all goods, merchandise and products sold and services provided in connection with any of the Proprietary Marks.
G. Dinner MyWay may, from time to time, add and delete certain products and services promoted by Dinner MyWay as part of the product and service line to which the System then applies.
H. Franchisee has read carefully and had sufficient opportunity to be advised thoroughly of the terms and conditions of this Agreement by advisors of Franchisee's own choosing and by receipt and review of Dinner MyWay's current Uniform Franchise Offering Circular. Further, Franchisee has made an independent investigation of Dinner MyWay's
operations, and now, Franchisee and Dinner MyWay wish to enter into this Agreement so as to fully set forth all of the understandings, agreements, representations, warranties, and terms and conditions of the Parties.
NOW THEREFORE, in consideration of the foregoing recitals and the mutual promises, commitments and understandings contained herein, Dinner MyWay and Franchisee hereby agree as follows:
Section 1.1 Grant.
(a) Dinner MyWay grants to Franchisee, subject to the terms and conditions contained in this Agreement, the nonexclusive right to operate one (1) Dinner MyWay store at the location described in Exhibit A to this Agreement (the "Franchised Dinner MyWay Store") and the non-exclusive license to use the System and the Proprietary Marks (as they may be changed, improved and developed from time to time) together with such other insignia, symbols, and trademarks which may be approved and authorized by Dinner MyWay for use by Franchisee from time to time in connection with its Franchised Dinner MyWay Store.
(b) Franchisee accepts from Dinner MyWay the obligation to operate the Franchised Dinner MyWay Store pursuant to the terms and conditions of this Agreement and agrees that Franchisee will, at all times, faithfully, honestly and diligently perform its obligations hereunder, will continuously exert Franchisee's best efforts to promote and enhance the business of the Franchised Dinner MyWay Store, and will not engage in any other business or activity that may conflict with the terms and conditions of this Agreement.
Section 1.2 Rights Reserved by Dinner MyWay. Except to the extent contemplated in Section 1.3, Dinner MyWay (on behalf of itself, its licensees, franchisees and affiliates) retains the right, in its sole discretion:
(a) to own, operate and grant franchises to others to operate businesses offering some or all of the products and services authorized for sale by Dinner MyWay stores, under the Proprietary Marks and/or other trademarks, service marks and commercial symbols and pursuant to such terms and conditions as Dinner MyWay deems appropriate;
(b) to itself operate, and to grant to other persons and/or entities the right to operate, Dinner MyWay stores at such locations, including in the immediate proximity of the Exclusive Territory (as defined in Section 1.3(a) below), at such times and on such terms and conditions as Dinner MyWay deems appropriate;
(c) to sell some or all of the products and services authorized for sale by Dinner MyWay stores in any channel of distribution and/or to provide management and/or consulting services using the System to retail stores and others not operated under the Proprietary Marks; and
(d) to purchase, merge, acquire or affiliate with an existing restaurant chain or other food distribution or preparation entity having one or more store(s) or locations and to continue operating under such other name after the date of such purchase, merger, acquisition or affiliation.
Section 1.3 Right of First Refusal/Franchise Reservation
(a) Provided Franchisee is not currently in default, and a default has not occurred within the previous six (6) months, of any provision of this Agreement or any other agreement between Franchisee and Dinner MyWay, its subsidiaries or affiliates; and provided, further, Franchisee has had a minimum of 400 customers per month for at least three (3) consecutive months since its Opening Date (as defined in Section 3.4(b) below), Dinner MyWay shall not open and operate a company-owned Dinner MyWay store, or franchise to other franchisees or
other third parties another Dinner MyWay store within a_________finsert mileage! mile radius
of Franchisee's store ("Exclusive Territory") without first offering such franchise to Franchisee as set forth below. (The number to be inserted in the line above shall be between 2 miles and 5 miles and shall be mutually agreed upon between Franchisor and Franchisee prior to the execution of this Agreement.)
(b) Franchisee's Right of First Refusal. Provided the provisions in Section 1.3(a) are satisfied, if at any time during the Term (as defined herein) Dinner MyWay desires to open and operate a company-owned Dinner MyWay store in the Exclusive Territory, or franchise to another franchisee or a third party, a Dinner MyWay franchise in the Exclusive Territory, Dinner MyWay shall first offer to sell the franchise to Franchisee for the consideration and on the terms and conditions then applicable to franchisees. Dinner MyWay's offer (the "Offer") shall be made by written notice to Franchisee setting forth the proposed location, price and terms of the Offer.
(c) Time to Accept Offer. Franchisee shall have the first option to purchase the proposed franchise by accepting the Offer in writing to Dinner MyWay within thirty (30) days of receipt of the Offer.
(d) Franchisee Accepts Offer. If Franchisee gives notice of acceptance of the Offer as provided above, then Dinner MyWay shall sell the franchise to Franchisee, and Franchisee shall purchase the franchise from Dinner MyWay for the consideration and upon the terms and conditions set forth in the Offer.
(e) Franchisee Declines Franchisee's Offer. If Franchisee does not accept the Offer within thirty (30) days of receipt of the Offer, Dinner MyWay shall be free to open and operate a company-owned Dinner MyWay store within the Exclusive Territory, or to sell the proposed franchise for another Dinner MyWay Store to another franchisee, or a third party, within the Exclusive Territory for the consideration and upon the terms and conditions specified in the Offer.
Except as limited herein, Franchisee acknowledges that Dinner MyWay may open and operate company-owned Dinner MyWay stores or other businesses, franchise to other franchisees
and third parties Dinner MyWay stores or other business, in the sole and absolute discretion of Dinner MyWay, wherever and whenever it determines.
(f) Franchise Reservation. Anytime during the Term of this Agreement, and provided Franchisee is not in default under any terms of this Agreement, Franchisee has the right to reserve the purchase of a franchise in a particular location ("Reserved Location"). In order to reserve a particular location, Franchisee shall provide Franchisor with a written request to reserve a particular location, not to exceed an area of more than five (5) miles in radius and shall pay Franchisor a non-refundable reservation fee of Five Thousand Dollars ($5,000.00) ("Reservation Fee"). Upon receipt of the Reservation Fee, Franchisor agrees that after receipt of the notice to request a reservation, if Franchisor has not previously reserved the requested Reserved Location to another party or entered into a separate franchise agreement within the Reserved Location, Franchisor agrees that Franchisor will hold the Reserved Location for Franchisee for six (6) months from the date of the reservation request. If Franchisee does not sign a new franchise agreement in the Reserved Location within the six (6) month period, Franchisor will keep the Reservation Fee in consideration of the deferral of Franchisor's opportunity to sell franchises in the Reserved Location to others. The reservation does not give Franchisee any rights to operate in the Reserved Location, nor does it permit Franchisee to offer, sell, transfer, assign or through any other means transfer its reservation rights in whole or in part to any other party.
Section 1.4 Relocation of the Franchisee! Dinner MyWay Store. Franchisee may not change the site of the Franchised Dinner MyWay Store without Dinner MyWay's prior written consent, which consent shall not be unreasonably withheld.
ARTICLE 2 TERM
Section 2.1 Initial Term. The initial term of this Agreement shall extend for ten (10) years from the date of this Agreement (the "Term"), unless otherwise sooner terminated pursuant to Article 12 of this Agreement. Franchisee accepts this Franchise with the full and complete understanding that the franchise granted hereby contains no promise or assurance of renewal at the end of any Term. The sole and entire conditions under which Franchisee will have the opportunity of obtaining a successor Dinner MyWay Franchise Agreement at the expiration of the Term are those set forth in Section 2.2.
Section 2.2 Renewal of the Term. Franchisee may, at its option, renew the Term for as many succeeding Terms as elected by Franchisee, each equal to a period of ten (10) years, provided that all the following conditions are met:
(a) Advance Notice. Franchisee shall give Dinner MyWay written notice of its intention to renew the Term not less than nine (9) months nor more than twelve (12) months prior to the end of the then-current Term;
(b) Completion of Maintenance. Refurbishing, and Upgrading. At least six (6) months prior to the expiration of the then-current Term, Dinner MyWay shall be entitled to inspect the Franchised Dinner MyWay Store and give notice of all required maintenance,
refurbishing, renovating and upgrading, and Franchisee shall complete to Dinner MyWay's reasonable satisfaction, all maintenance, refurbishing, renovating and upgrading required by Dinner MyWay's notice no later than sixty (60) days prior to expiration of the then-current Term;
(c) No Default. Franchisee shall not be in breach of any provision of this Agreement or any other agreement between Franchisee and Dinner MyWay, its subsidiaries or its affiliates, and Franchisee shall have substantially complied with all the terms and conditions of such agreements during the terms of such agreements;
(d) Execute the Current Franchise Agreement. Franchisee, within sixty (60) days prior to the expiration of the then-current Term, shall execute and deliver to Dinner MyWay the then-current form of Dinner MyWay Franchise Agreement ("New Franchise Agreement"). There will be no renewal fee required. Upon execution and delivery by Dinner MyWay to Franchisee of the New Franchise Agreement and upon expiration of the then-current Term, the New Franchise Agreement shall supersede, in all respects, this Agreement. The terms of the New Franchise Agreement may materially differ from the terms of this Agreement;
(e) Meet Current Qualifications and Training Requirements. Franchisee shall have complied with Dinner MyWay's then-current qualification and training requirements; and
(f) Execute General Release. Franchisee shall execute a general release, in a form prescribed by Dinner MyWay, of any and all claims against Dinner MyWay and its subsidiaries and affiliates, and their respective officers, directors, shareholders, agents, attorneys and employees except for known liabilities of Dinner MyWay to Franchisee and liabilities from which Dinner MyWay may not require a release under any applicable state laws.
If Dinner MyWay, in its sole and absolute discretion, determines that all of the conditions specified above have been satisfied, the New Franchise Agreement shall be deemed accepted by Dinner MyWay on the terms and conditions specified in the New Franchise Agreement executed by Franchisee, and the Term shall be renewed commencing on the date following the expiration of the old Term. If Dinner MyWay determines that any of the conditions specified above have not been satisfied, it shall notify Franchisee in writing that the New Franchise Agreement has not been accepted and that the renewal is not effective and shall specify the reasons therefor.
Section 2.3 Reinstatements and Extensions. In the event any termination or expiration of the Term would violate any applicable laws, Dinner MyWay may reinstate or extend the Term for the purpose of complying with such laws, for the duration provided by Dinner MyWay in a written notice to Franchisee, without waiving any of Dinner MyWay's rights under this Agreement or otherwise modifying this Agreement.
ARTICLE 3 FEES AND PAYMENTS
Section 3.1 Types of Fees. Franchisee shall pay Dinner MyWay the following fees in readily available United States currency:
(a) Initial Franchise Fee. The initial franchise fee is Twenty-Four Thousand Dollars ($24,000.00) or Eighteen Thousand Dollars ($18,000.00) if you are an existing franchisee and are opening an additional franchise location (the "Initial Franchise Fee") and is due and payable in full on or before the execution of this Agreement. The Initial Franchise Fee shall be deemed fully earned by Dinner MyWay and deemed non-refundable upon execution of this Agreement in consideration for the administrative and other costs incurred by Dinner MyWay, and opportunities lost or deferred as a result of the rights granted to Franchisee in this Agreement, except in accordance with subsection (b) below.
(b) Refunds of Initial Franchise Fee. If Franchisee is not accepted by Dinner MyWay within thirty (30) days from the date of this Agreement, then Dinner MyWay will refund one hundred percent (100%) of the Initial Franchise Fee to Franchisee without interest, as well as refund the Opening Advertising Fee (as defined herein), less any Out-of Pocket Expenses (as defined herein) and reasonable fees incurred for any training and other assistance Dinner MyWay may have provided to Franchisee under this Agreement. "Out-of-Pocket Expenses" shall include, but not be limited to, reasonable mileage reimbursement, photo-copying, postage, lodging and meals, if 100 miles outside of Sacramento County, and other direct costs. If a site for Franchisee's Dinner MyWay store is not selected within six (6) months from the date of this Agreement, the Franchised Dinner MyWay Store is not open for business to the general public within nine (9) months from the date of this Agreement, or if Dinner MyWay determines that Franchisee failed to satisfactorily complete its Basic Management Training (as defined below), as determined in Dinner MyWay's sole discretion, then Dinner MyWay will refund one hundred percent (100%) of the Initial Franchise Fee to Franchisee without interest, as well as refund the Opening Advertising Fee, less Dinner MyWay's Out-of-Pocket Expenses and reasonable fees incurred for any training and other assistance Dinner MyWay may have provided to Franchisee under this Agreement.
(c) Royalty Fee. Franchisee shall pay Dinner MyWay a recurring monthly nonrefundable royalty fee (the "Royalty Fee") during the Term in an amount equal to five percent (5%) of Franchisee's monthly Gross Revenues (as defined in Section 3.2) for the assistance, licenses and services of Dinner MyWay set forth in Article 4.
(d) Opening Advertising Fee. An opening advertising fee of Three Thousand Dollars ($3,000.00) (the "Opening Advertising Fee") shall be payable simultaneously with the execution of this Agreement. The Opening Advertising Fee will be held for the benefit of Franchisee to fund opening advertising expenditures as described in Section 8.2. The Opening Advertising Fee will be promptly refunded in the event the Initial Franchise Fee is refunded to Franchisee pursuant to Section 3.1(b).
(e) National Advertising Contributions. Franchisee shall pay Dinner MyWay a continuing monthly contribution to the Dinner MyWay Marketing Fund (as defined in Section 8.3) during the Term in an amount equal to two percent (2%) of the monthly Gross Revenues (as such term is defined in Section 3.2) (the "National Advertising Contribution"). Franchisee is also obligated to participate in any local or regional cooperative advertising programs in accordance with Section 8.3(e) herein.
(f) Renewal Fee. There is no renewal fee.
(g) Transfer Fee. In the event of a transfer of Franchisee's interest in the Franchised Dinner My Way Store, or of any interest requiring Dinner MyWay's consent under Article 11, Franchisee must, in addition to meeting all other requirements set forth in this Agreement, pay a Transfer Fee as set forth in Section 11.3(j).
(h) Training Fee. There is no training fee charged for the initial training of two (2) individuals for Basic Management Training, as that expense is included in the Initial Franchise Fee. However, at the election of Franchisor, Franchisee is required to pay for Dinner MyWay's Out-of-Pocket Expenses (as herein defined) incurred for any training such as refresher training or advanced management training and for Basic Management Training of new Managers, as described in Section 4.5. Franchisee shall be solely responsible for its own costs and expenses associated therewith, including but not limited to, all travel, meals and lodging costs.
Section 3.2 Gross Revenues. The term "Gross Revenues" as used in this Agreement shall mean the total amount received or receivable by Franchisee arising from, connected with or related to the sale of all goods, merchandise or services, rental fees and all business transacted in or from the Franchised Dinner MyWay Store, by Franchisee, directly or indirectly, excluding only the following:
(a) the amount of any federal, state, or local sales or excise taxes or other similar taxes, separately stated, which may now or hereafter be required by law to be collected and paid by Franchisee to any governmental agency or authority; and
(b) the amount of any refund to customers for bona fide returns of goods sold.
Section 3.3 Payment Schedule. The Royalty Fee and National Advertising Contributions must be paid to Dinner MyWay in the method set forth in Section 3.4, along with the delivery of any required reports, no later than the 10th day of each month during the Term with respect to the immediately preceding month. Any payment or report not actually received by Dinner MyWay on or before the due date will be deemed past due and subject to the charges described in Section 3.5.
Section 3.4 Payment System.
(a) Pre-Authorized Transfers. All required payments by Franchisee to Dinner MyWay or any of its affiliates, upon the request of Dinner MyWay, shall be effectuated by the use of pre-authorized transfers from Franchisee's operating account through the use of an automated clearing house ("ACH") network designated by Dinner MyWay (the "Payment System"). Franchisee shall deposit all Gross Revenues received by Franchisee in Franchisee's operating account accessed by the Payment System on a Staggered Weekly Basis as set forth below. For purposes of this Agreement, a week shall begin on Sunday and end on Saturday and the Gross Revenues of that week shall be immediately due on the second Monday following the end of that first week ("Staggered Weekly Basis").
(b) Franchisee's Cooperation In Establishing Payment System. Franchisee shall cooperate with Dinner MyWay in all respects to implement the Payment System at least fifteen (15) days prior to the date on which the Franchised Dinner MyWay Store is first opened for business to the general public (the "Opening Date"). Franchisee agrees to cooperate with Dinner MyWay in all respects in maintaining the efficient operation of the Payment System. Franchisee shall give its financial institution instructions in a form provided or approved by Dinner MyWay and shall obtain the financial institution's agreement to follow such instructions. Franchisee shall provide Dinner MyWay with copies of such instructions and agreement. The financial institution's agreement may not be withdrawn or modified without the prior written approval of Dinner MyWay, which approval shall be within the sole discretion of Dinner MyWay. Franchisee shall also execute such other forms relating to the Payment System as Dinner MyWay may request from time to time. Franchisee shall pay all the charges imposed by Franchisee's financial institution relating to the Payment System.
(c) Dinner MyWay May Receive Banking Statements. Dinner MyWay may require Franchisee's financial institution to send a monthly statement of all activity in the operating1 account accessed by the Payment System to Dinner MyWay at the same time as it sends such statements to Franchisee, and such other reports of the activity in such operating account as Dinner MyWay may reasonably request. If Franchisee maintains any other accounts of any type for the Franchised Dinner MyWay Store, Franchisee shall identify such accounts to Dinner MyWay and provide to Dinner MyWay copies of the monthly statements for all such accounts and the details of all deposits and withdrawals to them. In the event Dinner MyWay requires Franchisee's financial institution to send a monthly statement of all activity in the operating account accessed by the Payment System, Franchisee shall execute all reasonably required documents to effectuate release of Franchisee's monthly statements as the financial institutions may require.
(d) Franchisee's Payment Obligations Absolute. Franchisee agrees that its obligations to make payments as specified in this Agreement and any other agreement entered into with Dinner MyWay or any of its subsidiaries or affiliates with respect to the Franchised Dinner MyWay Store, and the rights of Dinner MyWay and its subsidiaries and affiliates, if any, to receive such payments, are absolute and unconditional, and are not subject to any abatement, reduction, setoff, defense, counterclaim or recoupment due or alleged to be due to, or by reason of, any past, present or future claims which Franchisee has or may have against Dinner MyWay, any of its subsidiaries or affiliates, or against any other person for any reason whatsoever.
Section 3.5 Late Charges. Although each failure to pay amounts due to Dinner MyWay when due will be a material breach of this Agreement, to encourage prompt payment and to cover the costs and expenses involved in handling and processing late payments, without limiting any other rights or remedies of Dinner MyWay, if any payment under this Agreement or any other agreement between Dinner MyWay and Franchisee relating to the Franchised Dinner MyWay Store becomes overdue for any reason, except for (i) Dinner MyWay's failure to access Franchisee's operating account when sufficient funds were in the operating account and the Payment System was in effect, or (ii) banking errors or malfunctions outside Franchisee's reasonable control, late charges will be imposed on such overdue amount, equal to twelve percent (12%) per annum or one percent (1%) per month.
Section 3.6 Guaranty of and Security for Franchisee's Obligations. As security for all monetary and other obligations of Franchisee to Dinner MyWay, the individual Franchisee, the shareholders of a corporate Franchisee, the general partners of a general partnership or limited partnership Franchisee, or the beneficial owners of the equity interests of any other entity constituting Franchisee, and the spouses of the foregoing, if any, shall execute and deliver to Dinner MyWay their personal, absolute, continuing, joint and several guaranty of Franchisee's obligations hereunder in the form of a Guaranty attached hereto as Exhibit B. In addition, Franchisee hereby grants to Dinner MyWay an absolute, continuing, first priority security interest in all the tangible and intangible personal property of every kind and description acquired by Franchisee, whether now existing or later acquired, including, all inventory, goods, materials, supplies, tools, fixtures, furniture, equipment and machinery, as such property is attached to any part of the Franchised Dinner MyWay Store or used in connection with the use or operation of the Franchised Dinner MyWay Store. To perfect such security interest, Franchisee shall execute and deliver to Dinner MyWay (if required by applicable law) a UCC-1 Financing Statement securing such collateral in the form approved by Dinner MyWay. Franchisee shall take all other action reasonably requested by Dinner MyWay to perfect Dinner MyWay's security interest as granted to it hereunder.
ARTICLE 4 DUTIES OF DINNER MYWAY
During the Term, and provided that Franchisee is not in default under this Agreement, Dinner MyWay shall provide Franchisee, from time to time, with the following assistance and services:
Section 4.1 Site Selection Assistance. Franchisee shall be responsible for obtaining a site for the Franchised Dinner MyWay Store that satisfies Dinner MyWay's site selection criteria. Dinner MyWay shall provide site selection counseling and assistance to Franchisee as Dinner MyWay may reasonably deem advisable. Further, Dinner MyWay shall provide on-site evaluation as Dinner MyWay may deem advisable in response to Franchisee's requests for site approval. Dinner MyWay shall provide its written notice of approval or disapproval of Franchisee's proposed site within forty-five (45) days of submission. A site shall be deemed submitted to Dinner MyWay for approval upon Dinner MyWay's receipt from Franchisee of a site analysis report, as specified by Dinner MyWay, for the specific location contemplated. Dinner MyWay's approval of a site location shall not be unreasonably withheld. Dinner MyWay's approval of a site is not a representation or a warranty of any kind, expressed or implied, by Dinner MyWay that the Franchised Dinner MyWay Store will be profitable or that Franchisee's sales will attain any predetermined levels, or such Franchised Dinner MyWay Store is suitable to the area. Such approval is intended only to indicate that the proposed site meets Dinner MyWay's minimum criteria for identifying sites. Franchisee agrees that Dinner MyWay's approval or disapproval of a proposed site shall not impose any liability or obligation on Dinner MyWay. Unless otherwise agreed to in writing, site approval will be conditioned upon Dinner MyWay's receipt of evidence of Franchisee's ownership, lease or control of the site upon which the Franchised Dinner MyWay Store shall be located.
Section 4.2 Lease. In the event Franchisee intends to lease the site for the Franchised Dinner MyWay store from a third party ("Leased Location"), such lease shall be subject to Dinner MyWay's written approval as set forth below. Dinner MyWay shall assist Franchisee in its lease negotiations by giving to Franchisee a franchisee/tenant lease negotiation checklist. In addition, the lease shall provide the following:
(a) The lease shall contain provisions that, in the event this Agreement is for any reason terminated or not renewed due to a default in Franchisee's obligations, allow for, at the option of Dinner MyWay, Dinner MyWay's right to cure any default in Franchisee's leasehold obligations under the lease, and/or Dinner MyWay's right to take an assignment of the lease upon such default in Dinner MyWay's discretion.
(b) Franchisee shall, at all times, keep Dinner MyWay informed of Franchisee's progress toward the satisfaction of all obligations and conditions contained in any lease.
(c) Franchisee acknowledges that Dinner MyWay's approval of a lease or any assistance in the lease, or site selection, does not constitute legal advice nor create any attorney-client relationship between Dinner MyWay's legal counsel and Franchisee, and Franchisee is advised to obtain the independent advice of qualified individuals concerning all such matters. Franchisee further acknowledges that Dinner MyWay's approval of a lease or any assistance in the lease, or site selection, or of any other involvement by Dinner MyWay or Dinner MyWay's legal counsel, does not constitute a guaranty, recommendation or endorsement of any kind.
(d) Any lease for the Leased Location shall be subject to the prior written approval of Dinner MyWay. Dinner MyWay shall provide its written notice of approval or disapproval within forty-five (45) days after receipt of a copy of the lease from Franchisee. After final execution of the lease is completed, Franchisee shall provide Dinner MyWay with a fully executed copy of the lease.
Section 4.3 Building Plans and Specifications. Dinner MyWay shall loan to Franchisee (A) a sample set of standard building plans for the Franchised Dinner MyWay Store and specifications and/or standard recommended floor plan, and (B) specifications of Dinner MyWay's requirements for design, decoration, layout, equipment, furniture, fixtures and signs for the Franchised Dinner MyWay Store.
Section 4.4 Lists, Forms and Schedules. Dinner MyWay shall supply to Franchisee (A) a list of all required equipment, supplies, materials, inventory and other items necessary to operate the Franchised Dinner MyWay Store and a list of approved suppliers of all such items, and (B) an initial set of forms, including, but not limited to, standard brochure and various operational forms, such as standardized forms for reporting accounting information, daysheets, invoices and contract forms.
Section 4.5 Management Training.
(a) Four-Day Training. Dinner MyWay shall provide four (4) days of instruction for up to two (2) persons ("Trainees") in Dinner MyWay's corporate headquarters and/or at such other location as Dinner MyWay may specify in writing ("Basic Management Training"). Each
such Trainee must, prior to the Opening Date, at a time scheduled by Dinner MyWay, complete to the reasonable satisfaction of Dinner MyWay the then-current Basic Management Training.
(b) Franchisee or Manager Must Attend Training. Unless otherwise agreed in writing by Dinner MyWay, at least one (1) of the Trainees described in subsection (a) above shall be Franchisee, or if Franchisee is a partnership, corporation, limited liability company or other entity, the partner, officer, manager, or employee having responsibility for the day-to-day operations of the Franchised Dinner MyWay Store (the "Manager").
(c) Topics Covered. Basic Management Training shall cover hiring, marketing, bookkeeping techniques, inventory, control, purchasing, kitchen work, use of forms, quality control procedures, merchandising, promotion, advertising techniques, and products and services, sales techniques, methods and suggestions. The content, operation and manner of conducting Basic Management Training shall be in the sole control of Dinner MyWay.
(d) Expenses Paid by Franchisee. Franchisee shall be responsible for all expenses of the Trainees in attending Basic Management Training, including all travel, lodging and meal expenses, and compensation of, such Trainees. All costs and expenses incurred to have additional employees or agents of Franchisee attend Basic Management Training, including reasonable training fees, shall be borne by Franchisee.
(e) Partial Refund upon Failure of Basic Management Training. In the event any Trainee fails to satisfactorily complete Basic Management Training, as determined by Dinner MyWay in its sole discretion, Dinner MyWay may elect to terminate this Agreement. In such event, Franchisee shall be entitled to the refunds provided in Section 3.1(b) herein above.
(f) Subsequent Training. In the event the Manager passes away, is physically or mentally incapable (as determined by a reputable physician) or is no longer willing or able to exercise day-to-day control over the Franchised Dinner MyWay Store, Franchisee shall, within sixty (60) days thereafter, designate a new Manager of the Franchised Dinner MyWay Store with the same responsibility. Such new Manager and all other successive Managers, if any, shall be required to attend Basic Management Training at Franchisee's sole cost and expense within sixty (60) days after the time such new person is designated the Manager, and such new person shall be considered the Manager under this Agreement. Franchisee shall be solely responsible for the costs and expenses associated therewith, including but not limited to, the then-prevailing standard rates charged by Dinner MyWay for Basic Management Training and all travel, meals and lodging costs, and compensation of, such new Manager.
Section 4.6 Loan of Dinner MyWay Manuals. During the Term, Dinner MyWay shall loan to Franchisee one (1) copy of Dinner MyWay's confidential, proprietary operating manual(s) for franchisees (the "Dinner MyWay Operating Manuals") which shall remain the exclusive property of Dinner MyWay at all times.
Section 4.7 Inspection. Dinner MyWay shall provide on-site assistance and inspection of the installation of Dinner MyWay's signage and equipment and shall generally inspect the Franchised Dinner MyWay Store and provide Franchisee with advice and comments as Dinner
MyWay deems appropriate to ensure that Franchisee conforms to applicable standards one (1) month prior to the Opening Date.
Section 4.8 Pre-Opening On-Site Training. Dinner MyWay shall make available to Franchisee pre-opening on-site training of a minimum of two (2) days, in most instances to be conducted at the Franchised Dinner MyWay Store shortly before the Opening Date and during the first week of operation, at the times Dinner MyWay deems appropriate. Such on-site training program shall cover material aspects of the operation of the Franchised Dinner MyWay Store including financial control, marketing techniques, maintenance of quality standards, employee hiring and motivation, kitchen work, inventory control, security standards, merchandising techniques, promotional and advertising techniques, operations, purchasing and sales.
Section 4.9 Opening Assistance. In addition to the on-site training prior to the opening as set forth in Section 4.8, Dinner MyWay will coordinate the expenditure of the Opening Advertising Fee, assist in securing advertising and vendor promotional materials and provide an opening team to assist in the opening of the Franchised Dinner MyWay Store.
Section 4.10 Continued Assistance and Support.
(a) Periodic Visits. Dinner MyWay shall, at its sole expense, provide assistance and support to Franchisee in the development and operation of the Franchised Dinner MyWay Store by means of periodic visits by a field representative of Dinner MyWay. If requested by Franchisee, Dinner MyWay will furnish additional guidance and assistance to deal with Franchisee's unusual or unique operating problems at reasonable per diem fees, charges and out-of-pocket expenses established from time to time by Dinner MyWay.
(b) Hotline. Dinner MyWay shall, during its regular business hours, maintain a telephone "hotline" for informational assistance for Franchisee and/or maintain a web-based help desk whereby Franchisee can directly email questions or issues to Franchisor and Franchisor will return email inquiries within a reasonable period, not to exceed forty-eight (48) hours, unless events beyond Franchisor's control occur.
(c) Advertising. Dinner MyWay shall generally promote the Franchised Dinner MyWay Store through advertising and public relations campaigns using National Advertising Contributions paid by Franchisee to Dinner MyWay. Dinner MyWay shall provide direction regarding the proper usage of the Proprietary Marks. Dinner MyWay shall also provide Franchisee the promotional methods and materials Dinner MyWay may develop from time to time. Franchisee grants to Dinner MyWay a non-transferable, non-exclusive, royalty-free license to use Franchisee's tradename, trademarks or other proprietary marks now owned or hereafter adopted, acquired or developed by Franchisee for Dinner MyWay to generally promote the Franchised Dinner MyWay Store or the Dinner MyWay System through advertising and public relation campaigns.
(d) Website Representation. So long as Dinner MyWay maintains a website for marketing and sales purposes (which shall be in the sole and absolute discretion of Dinner MyWay), Dinner MyWay shall list the Franchised Dinner MyWay Store on its corporate website at url www.DinnerMyWay.com (the "Dinner MyWay Website") and post certain other
information provided by Franchisee subject to Dinner MyWay's approval in Dinner MyWay's sole discretion. The Dinner MyWay Website shall have a feature that allows customers to schedule sessions with the Franchised Dinner MyWay Store online. Dinner MyWay shall have sole discretion over the design, layout, and content of the Dinner MyWay Website. Dinner MyWay shall not be liable to Franchisee for any default or delay in the performance of its obligations under this Section 4.10(d) if caused, directly or indirectly, by a power outage, systems failure, or by any other cause not within the reasonable control of Dinner MyWay or which by the exercise of reasonable diligence Dinner MyWay is unable to prevent. Franchisee is prohibited from operating its own website in connection with marketing or promoting its Franchised Dinner MyWay Store, any other Dinner MyWay franchise, the System, or the Proprietary Marks. Dinner MyWay shall be the only authorized operator of a website devoted to Dinner MyWay and the System, and which uses in any way the Proprietary Marks.
(e) Additional Training. Dinner MyWay, from time to time, may provide refresher training programs or seminars, or advanced management training, at such locations as may be designated by Dinner MyWay, which may be required for the Manager or Franchisee's other employees, at the option of Dinner MyWay. Such mandatory training shall not be required more often than twice each year. Franchisee shall not be required to pay training fees for any mandatory training; however, Franchisee shall be solely responsible for all costs and expenses associated with attending such mandatory training, including, but not limited to, all travel, meals and lodging costs, and compensation of, Franchisee's attendees.
Section 4.11 Right to Delegate Duties. Franchisee acknowledges Dinner MyWay's right to delegate any or all of the aforementioned duties or any other duties of Dinner MyWay hereunder to a designee. Franchisee shall be required to discharge its duties in all respects with such designee to the extent requested by Dinner MyWay, from time to time, in the same manner with which Franchisee is otherwise required to do so with Dinner MyWay.
ARTICLE 5 GENERAL DUTIES OF FRANCHISEE
Franchisee understands and acknowledges that every detail of the operation of the Franchised Dinner MyWay Store is important to Franchisee, Dinner MyWay and the other Dinner MyWay franchisees in order to develop and maintain high and uniform operating standards, increase the demand for the products sold and services rendered by Dinner MyWay franchisees, and to protect and enhance Dinner MyWay's Proprietary Marks, reputation and goodwill. Nothing contained in this Agreement shall be construed to limit or restrict Franchisee's right to set its own prices or to limit or restrict the persons to whom Franchisee may sell, provided that all such sales occur at the Franchised Dinner MyWay Store or pursuant to a delivery from the Franchised Dinner MyWay Store.
Section 5.1 Construction Plans and Permits.
(a) Engagement of Architect or Engineer. Franchisee shall employ an architect or engineer reasonably approved by Dinner MyWay to prepare a site plan and plans and specifications adapting Dinner MyWay's standard plans and specifications to Franchisee's
approved location and to local and state laws, regulations and ordinances, and lease requirements and restrictions. Such plans shall include interior and exterior design of the building, layout, floor plan, and parking facilities and shall include specifications for color, decor, equipment and machines related to the System. Any material modifications to the standard plans and specifications must be approved by Dinner MyWay, which approval shall not be unreasonably withheld or delayed. The modified plans and approvals, once approved by Dinner MyWay, shall not thereafter be materially changed or modified without the further prior written consent of Dinner MyWay.
(b) Signage. Franchisee shall only use that signage at the Franchised Dinner MyWay Store that complies with the drawings and specifications provided by Dinner MyWay. If such signage cannot be used because of local ordinances or applicable building codes, then Franchisee must submit to Dinner MyWay detailed drawings and specifications of the proposed signage to be used, in sufficient detail acceptable to Dinner MyWay, which signage can only be used upon receiving the prior written approval of Dinner MyWay. Franchisee agrees that, other than the Proprietary Marks, no other name, symbol or identifying marks shall be used in conjunction with the approved signage; provided, however, that a trademark of an approved vendor may be displayed with Dinner MyWay's prior written approval. Franchisee shall obtain Dinner MyWay's prior written consent as to the manner of the use of the trademarks of approved vendors and the configuration of the signage in each instance.
(c) Permits. Franchisee shall obtain all licenses, permits, and certifications as may be required for the lawful construction and operation of the Franchised Dinner MyWay Store, together with certifications from all governmental authorities having jurisdiction over the Franchised Dinner MyWay Store that all necessary permits have been obtained and that all requirements for construction and operation have been met, including, but not limited to, zoning, access, sign, fire, health, environmental and safety requirements.
Section 5.2 Construction and Opening Requirements.
(a) Commencement of Construction. Franchisee shall commence construction or build-out in accordance with the terms of Franchisee's lease for the location of the Franchised Dinner MyWay Store, but in no event later than six (6) months after the execution of this Agreement unless prevented from doing so due to permitting issues or site restrictions, or other circumstances beyond Franchisee's reasonable control.
(b) Completion of Construction and Opening. Unless prevented from doing so due to permitting issues or site restrictions, Franchisee shall complete construction or build out of the Franchised Dinner MyWay Store, including all exterior and interior carpentry, electrical, painting and finishing work and installation of all approved fixtures, equipment, and signs in accordance with the site layout and plans and specifications, at Franchisee's expense, in accordance with the terms of Franchisee's lease for the location of the Franchised Dinner MyWay Store, and the Franchised Dinner MyWay Store shall be open for business to the general public no event later than nine (9) months from the execution of this Agreement, exclusive of time lost by reason of strikes, lockouts, fire, other casualties, and acts of God. Dinner MyWay and its agents shall have the right to inspect the construction at all reasonable times.
(c) Certificate of Occupancy and Opening. Franchisee shall, within ten (10) days after completion of construction or build-out, apply for a "Certificate of Occupancy" for the Franchised Dinner MyWay Store from the applicable regulatory agency. After obtaining the Certificate of Occupancy, Franchisee shall obtain Dinner MyWay's approval for opening and shall open the Franchised Dinner MyWay Store within twenty (20) days thereafter. Franchisee and Dinner MyWay agree that time is of the essence in the construction and opening of the Franchised Dinner MyWay Store.
Section 5.3 Licenses, Permits and Taxes. Franchisee shall: (Aa) secure and maintain in full force and effect in Franchisee's name all required licenses, permits and certificates relating to the operation of the Franchised Dinner MyWay Store; (BbJ deliver copies of any and all of the foregoing to Dinner MyWay within five (5) days of request; (€cj pay promptly all taxes and assessments when due; and (©dj operate the Franchised Dinner MyWay Store in full compliance with all applicable laws, ordinances and regulations, including, but not limited to, laws relating to occupational hazards, health and workers' compensation insurance, unemployment insurance, and withholding and payment of federal and state income taxes, social security taxes and sales taxes.
Section 5.4 Conditions Precedent to Opening. Franchisee agrees not to open the Franchised Dinner MyWay Store for business until: (Aa) all of Franchisee's obligations pursuant to Sections 5.1 through 5.3 have been fulfilled; (BbJ training of Franchisee, its Manager(s), and other employees has been completed to Dinner MyWay's reasonable satisfaction; (GcJ the Initial Franchise Fee, Opening Advertising Fee, and all other amounts due to Dinner MyWay and its affiliates under this Agreement have been paid; (DdJ Dinner MyWay has been furnished with certificates of insurance and copies of all insurance policies required by Section 10.2, or such other evidence of insurance coverage as Dinner MyWay reasonably requests; and (Efi) Dinner MyWay's opening team is available to assist and be present at the opening of the Franchised Dinner MyWay Store.
Section 5.5 Use of the Location. Franchisee shall keep the Franchised Dinner MyWay Store open for business and in normal operation for such minimum hours and days as Dinner MyWay may from time to time prescribe in the Dinner MyWay Operating Manuals or otherwise in writing, except as may be limited by local law. Franchisee shall refrain from using or permitting the use of the site of the Franchised Dinner MyWay Store for any other purpose or activity other than the operation of the Franchised Dinner MyWay Store at any time without first obtaining the written consent of Dinner MyWay.
Section 5.6 Conditions and Appearance. Franchisee shall maintain the Franchised Dinner MyWay Store in an attractive, clean, and safe condition and as otherwise set forth in the Dinner MyWay Operating Manuals.
Section 5.7 Operational Requirements. Franchisee shall operate the Franchised Dinner MyWay Store in conformity with such uniform methods, standards and specifications as Dinner MyWay may from time to time prescribe, including, but not limited to, in the Dinner MyWay Operating Manuals, to ensure that the highest degree of quality and service is uniformly maintained. Franchisee agrees:
(a) Comply with Payment System. To comply with the Payment System established by Dinner MyWay, as may be amended from time to time;
(b) Comply with Dinner MyWay's Procedures and Systems. To comply with all of the procedures and systems instituted by Dinner MyWay both now and in the future, including, but not limited to, those relating to sales, operations, software and hardware requirements, terms and conditions of use of the Dinner MyWay Website, good business practices, advertising and other obligations and restrictions set forth in this Agreement and in the Dinner MyWay Operating Manuals, as may be amended from time to time;
(c) Maintain Sufficient Inventory. To maintain in sufficient supply (as Dinner MyWay may prescribe in the Dinner MyWay Operating Manuals or otherwise in writing), and use at all times, only such inventory, equipment, materials, advertising methods and formats, and supplies as conform with Dinner MyWay's standards and specifications, if any, therefor, at all times sufficient to meet the anticipated volume of business, and to refrain from deviating therefrom without Dinner MyWay's prior written consent;
(d) Offer all Services and Products. To sell or offer for sale all and only the services and products expressly approved for sale in the Dinner MyWay Operating Manuals or otherwise in writing by Dinner MyWay and to refrain from any deviation from Dinner MyWay's standards and specifications for providing or selling the same without Dinner MyWay's prior written consent;
(e) Discontinue Selling Disapproved Items. To discontinue selling and offering for sale any such items as Dinner MyWay may, in its absolute discretion, disapprove in writing at any time; and
(f) Purchase. Maintain and Replace Equipment. To purchase and install, at Franchisee's expense, all fixtures, furnishings, signs and equipment as Dinner MyWay may reasonably specify from time to time in the Dinner MyWay Operating Manuals or otherwise in writing. The equipment shall be maintained in a condition that meets operational standards specified in the Dinner MyWay Operating Manuals and, as equipment becomes obsolete, unsafe or inoperable, Franchisee will replace the equipment with the types and kinds of equipment as are then approved for use in the Franchised Dinner MyWay Store. If Dinner MyWay reasonably determines that additional or replacement equipment is needed because of a change in technology, customer concerns or because of health or safety considerations, Franchisee will, at its sole cost and expense, install the additional equipment or replacement equipment within the reasonable time specified by Dinner MyWay.
Section 5.8 Hiring, Training and Appearance of Employees. Franchisee shall maintain a competent, conscientious staff and employ such minimum number of employees as are necessary to meet the anticipated volume of business of the Franchised Dinner MyWay Store and take such steps as are reasonably necessary to ensure that its employees meet its employment criteria and keep a neat personal appearance and comply with such dress code as Dinner MyWay may prescribe. Franchisee acknowledges and agrees that Franchisee shall be solely responsible for all employment decisions and functions, including, but not limited to, those related to hiring, firing,
establishing wage and hour requirements, disciplining, supervising, and record keeping, and that Dinner MyWay shall not assume any liability or duties related thereto.
Section 5.9 Approved Specifications and Sources of Supply. Franchisee shall purchase or lease all products and services used in connection with the operation of the Franchised Dinner MyWay Store from manufacturers and suppliers who provide the types of services and quality of food products that satisfy the minimum requirements of Dinner MyWay as set forth in the Dinner MyWay Operating Manuals. For the convenience of Franchisee, Dinner MyWay shall provide a list of recommended suppliers and servicers, but Franchisee shall be under no obligation or requirement to order and obtain supplies and goods solely from those on the recommended list.
Section 5.10 Credit Cards and Other Methods of Payment. Franchisee shall, at all times, maintain credit card relationships with VISA®, Master Card®, American Express®, Discover® and such other credit and debit card issuers of sponsors, check verification services, financial center services, and electronic fund transfer systems as Dinner MyWay may designate from time to time in order that Franchisee may accept customers' credit and debit cards, checks, and other methods of payment.
Section 5.11 Management of the Franchised Dinner MyWay Store. At least one (1) full-time Manager must devote his or her best efforts to the management and operation of the Franchised Dinner MyWay Store. Franchisee acknowledges and agrees that the Franchised Dinner MyWay Store requires the day-to-day supervision of at least one (1) Manager at all times during which the Franchised Dinner MyWay Store is open for business. Such Manager is required to complete Basic Management Training in accordance with Section 4.5.
Section 5.12 Telephones and Answering Service. Franchisee shall at all times maintain continuously the number of operating telephone lines, fax lines and telephone numbers to be used exclusively by Franchisee for the operation of the Franchised Dinner MyWay Store prescribed from time to time by Dinner MyWay, with sufficient staff to handle telephone calls and telefaxes in an efficient and courteous manner at all times during business hours.
Section 5.13 Tax Payments; Contested Assessments. Franchisee shall promptly pay when due all taxes levied or assessed by any federal, state or local tax authority, including, but not limited to, unemployment taxes, withholding taxes, sales taxes, income taxes, tangible commercial personal property taxes, real estate taxes, intangible taxes and any and all other indebtedness incurred by Franchisee in the conduct of the Franchised Dinner MyWay Store.
Section 5.14 Customer Surveys. Upon the reasonable request of Dinner MyWay, Franchisee shall present to its customers such evaluation forms as are periodically prescribed by Dinner MyWay and shall participate and/or request its customers to participate in any marketing surveys performed by or on behalf of Dinner MyWay.
Section 5.15 Inspections.
(a) Dinner MyWay may Conduct Inspections. Upon reasonable notice from Dinner MyWay, Franchisee shall permit Dinner MyWay, and/or its designees, to enter the Franchised Dinner MyWay Store or the office of Franchisee at times during normal business hours for
purposes of conducting inspections which shall include, but not be limited to, evaluations regarding the general maintenance, repair, and cleanliness of the Franchised Dinner MyWay Store and the conformity of the operations to Dinner MyWay's standards as set forth in the Dinner MyWay Operating Manuals. Franchisee shall cooperate fully with Dinner MyWay and/or its designees in such inspections by rendering such assistance as Dinner MyWay's designees may reasonably request and by permitting Dinner MyWay's designees, at their option, to observe the manner in which Franchisee is selling its products and rendering its services, to monitor sales volume, to confer with Franchisee's employees and customers and to remove samples of any products, supplies and materials, in amounts reasonably necessary to return to the office of Dinner MyWay for inspection and record-keeping, at Dinner MyWay's expense. The inspections may be conducted without prior notice at any time when Franchisee or one of its employees is at the Franchised Dinner MyWay Store. All such inspections shall be conducted so as not to unduly disrupt Franchisee's business.
(b) Franchisee shall Correct Deficiencies. Upon notice from Dinner MyWay, and without limiting Dinner MyWay's other rights under this Agreement, Franchisee agrees to take such steps as may be necessary to correct immediately any deficiencies detected during such inspections, including, without limitation, immediately desisting from the further use of any equipment, advertising, materials, products, supplies or other items that do not conform to Dinner MyWay's then current requirements. In the event Franchisee fails or refuses to correct such deficiencies, Dinner MyWay shall have the right, without any claim to the contrary by Franchisee, to enter the Franchised Dinner MyWay Store or the office of Franchisee without being guilty of trespass or any other tort, for the purposes of making or causing to be made such corrections as may be required, at the expense of Franchisee, which expense Franchisee agrees to pay upon demand.
Section 5.16 Franchisee's Performance Standards. Franchisee acknowledges and agrees that the granting of Franchisee's rights under this Agreement are expressly conditioned upon Franchisee's successful penetration of the market in which the Franchised Dinner MyWay Store is located. Franchisee agrees to promote actively and aggressively the products and services of the Franchised Dinner MyWay Store.
Section 5.17 Agreement With Landlord. Franchisee shall be required to obtain an agreement with Franchisee's landlord, in a form acceptable to Dinner MyWay, whereby the landlord agrees, among other things, to mail to Dinner MyWay copies of all written notices, including but not limited to, all notices of default sent to Franchisee by Franchisee's landlord to Dinner MyWay, and agrees to allow Dinner MyWay the opportunity to cure such defaults and take occupancy of the Franchised Dinner MyWay Store.
Section 5.18 Renovation and Upgrading. Recognizing the value of uniform national standards to Franchisee, Dinner MyWay and the System, Franchisee shall, at its sole cost and expense, from time to time, abide by any reasonable requirement of Dinner MyWay with regard to the remodeling and upgrading of the Franchised Dinner MyWay Store to comply with standards then applicable to new franchises and company-owned Dinner MyWay stores, provided, however, that such requirements shall not impose an undue economic burden on Franchisee. If any changes in or additions of equipment or changes in or additions to the Franchised Dinner MyWay Store are required by Dinner MyWay in connection with upgrading or remodeling, Franchisee will bear the
entire cost of such upgrading or remodeling. FRANCHISEE ACKNOWLEDGES THAT POSSIBLE ADDITIONAL INVESTMENT MAY BE CALLED FOR PURSUANT TO THIS SECTION.
ARTICLE 6 PROPRIETARY MARKS
Section 6.1 Limited License for the Proprietary Marks. Dinner MyWay grants to Franchisee, subject to the terms and conditions of this Agreement, a non-transferable, nonexclusive license, without a right to sublicense or assign, to use the Proprietary Marks now owned or which by license Dinner MyWay has the right to use, or hereafter are adopted, acquired or developed by Dinner MyWay, in the operation of the Franchised Dinner MyWay Store. Nothing in this Agreement shall be construed as authorizing or permitting their use at or from any other location or for any other purpose.
Section 6.2 Restrictions on Franchisee's Use of the Proprietary Marks. With respect to Franchisee's use of the Proprietary Marks pursuant to this Agreement, Franchisee agrees that:
(a) Use in Accordance with all Restrictions. Franchisee shall use only the Proprietary Marks as designated, from time to time, by Dinner MyWay, only in the manner required or authorized and permitted by Dinner MyWay and only in connection with the operation of the Franchised Dinner MyWay Store;
(b) Not Use Any Other Marks. Franchisee shall use the Proprietary Marks as the sole tradename and service mark identifications for the Franchised Dinner MyWay Store, provided that Franchisee shall identify itself as an independent licensee of the Proprietary Marks, in the manner prescribed by Dinner MyWay;
(c) Only Display as Designated by Dinner MyWay. Franchisee agrees to display prominently the Proprietary Marks on and/or in connection with all materials designated and authorized by Dinner MyWay and in the manner prescribed by Dinner MyWay; and
(d) Signage Requirements. Subject to Section 5.1(b), Franchisee shall maintain a suitable sign or graphics package at, or near, the front of the Franchised Dinner MyWay Store on any pylon sign, building directory or other area identifying the Franchised Dinner MyWay Store only as "Dinner MyWay." Such signage shall conform in all respect to Dinner MyWay's requirements, except to the extent prohibited by local laws and regulations.
Section 6.3 Franchisee's Lack of Ownership. Franchisee expressly acknowledges Dinner MyWay's ownership or license rights in and to the Proprietary Marks. Franchisee agrees not to represent in any manner that Franchisee has any ownership in the Proprietary Marks, except as granted herein. Franchisee further agrees that its use of the Proprietary Marks shall not create in its favor any right, title or interest in or to the Proprietary Marks except as the right to use same is expressly set forth in this Agreement.
Section 6.4 Infringement by Franchisee. Franchisee acknowledges that the use of the
Proprietary Marks outside the scope of this Agreement, without Dinner MyWay's prior written
consent, is an infringement of Dinner MyWay's rights in and to the Proprietary Marks, and expressly covenants that during the Term, and after the expiration or termination of the Term, Franchisee shall not, directly or indirectly, commit an act of infringement or contest or aid in contesting the validity or right of Dinner MyWay to the Proprietary Marks, or take any other action in derogation of Dinner MyWay's rights in and to the Proprietary Marks.
Section 6.5 Indemnification of Franchisee. Dinner MyWay agrees to indemnify Franchisee against and to reimburse Franchisee for all damages for which it is held liable finally (by nonappealable judgment) in any proceeding arising solely out of Franchisee's proper use of any of the Proprietary Marks, and for all costs reasonably incurred by Franchisee in the defense of any such claim brought against it or in any such proceeding in which it is named as a party; provided that Franchisee: (Aa) has timely notified Dinner MyWay of such claim or proceeding in accordance with Section 6.6(a); (BbJ has otherwise complied with this Agreement; and (GcJ allows Dinner MyWay sole control of the defense and settlement of the action in accordance with Section 6.6(b). Dinner MyWay shall not be liable for any consequential or incidental damages, even if it has been advised or knows of the likelihood thereof.
Section 6.6 Claims Against the Proprietary Marks.
(a) Trademark Infringement. In the event of any possible claim of infringement, actual claim of infringement, illegal use by others, unfair competition, any challenge to Franchisee's right to use any of the Proprietary Marks, or in the event Franchisee becomes aware of any use of or claims to any mark, name, logo or any other commercial symbol identical to or confusingly similar to any of the Proprietary Marks, Franchisee shall promptly notify Dinner MyWay in writing of such an event no more than five (5) days after Franchisee's discovery of such an event. Franchisee acknowledges that Dinner MyWay shall have the right to determine whether action will be taken on account of any possible infringement or illegal use. Dinner MyWay shall have the right to commence or prosecute such action in Dinner MyWay's own name and may join Franchisee as a party to the action if Dinner MyWay determines it to be reasonably necessary for the continued protection and quality control of the Proprietary Marks. Dinner MyWay shall bear the reasonable cost of any such action, including attorneys' fees. Franchisee will not institute any action on account of any possible infringement or illegal use without first obtaining Dinner MyWay's prior written consent.
(b) Dinner MyWay Controls Action. Dinner MyWay shall have sole discretion to take such action as it deems appropriate and the right to control exclusively any litigation or U.S. Patent and Trademark Office or other proceeding arising out of any such infringement, challenge, or claim or otherwise relating to any of the Proprietary Marks. Franchisee agrees to execute any and all instruments and documents, render such assistance, and do such acts and things as may, in the opinion of Dinner MyWay's counsel, be necessary or advisable to protect and maintain the interests of Dinner MyWay in any litigation or U.S. Patent and Trademark Office or other proceeding, or to otherwise protect and maintain the interests of Dinner MyWay in the Proprietary Marks.
Section 6.7 Franchisee's Use Non-Exclusive. The right and license to use the Proprietary Marks granted under this Agreement to Franchisee is non-exclusive, and Dinner MyWay thus may (A^) itself use the Proprietary Marks in company-owned Dinner MyWay stores, and grant
licenses and franchises to others to use the Proprietary Marks; (Bb) establish, develop, and license or franchise other systems, different from the System licensed pursuant to this Agreement, without offering or providing Franchisee any rights in, to, or under such other system; (€cj sell such products and services authorized for the Franchised Dinner MyWay Store under a name or names dissimilar to the Proprietary Marks, without offering or providing Franchisee any rights in, to, or under such other arrangements or agreements; and (DdJ modify or change, in whole or in part, any aspect of the Proprietary Marks.
Section 6.8 Goodwill Solely Belongs to Dinner MyWay. Franchisee agrees that all goodwill associated with the Franchised Dinner MyWay Store and identified by the Proprietary Marks shall inure directly and exclusively to the benefit of Dinner MyWay and is the sole and exclusive property of Dinner MyWay. Franchisee will derive no benefit from such goodwill except through profit received from the operation or possible permitted sale of the Franchised Dinner MyWay Store during the Term.
Section 6.9 Modification of the Proprietary Marks. If it becomes advisable at any time in Dinner MyWay's sole discretion to modify or discontinue use of the Proprietary Marks, and/or to use one or more additional or substitute trade or service marks, Franchisee at its sole expense, shall adopt, use and display only such Proprietary Marks as are then approved by Dinner MyWay and shall promptly discontinue use and display of the outmoded or superseded marks.
DINNER MYWAY OPERATING MANUALS AND OTHER CONFIDENTIAL
Section 7.1 Confidentiality of Manuals.
(a) Treat Confidential. Franchisee shall at all times treat the Dinner MyWay Operating Manuals and any other trade secrets and confidential, proprietary information concerning various aspects of the System and related confidential information under or in connection with this Agreement as confidential, and shall use its best efforts to maintain such information as confidential. The Dinner MyWay Operating Manuals shall, at all times, be kept in a locked, secured area within the Franchised Dinner MyWay Store. Franchisee shall strictly limit access to the Dinner MyWay Operating Manuals to the Manager(s). Employees of Franchisee shall have access to the Dinner MyWay Operating Manuals to the extent reasonably necessary to perform their duties as employees. Franchisee's employees shall be advised that they are subject to the same confidentiality requirements as set forth herein. Franchisee acknowledges that it shall be responsible for the acts and conduct of its employees and restrict access to confidential information to those employees who have a "need to know" in order to perform their jobs. Franchisee shall not at any time, without Dinner MyWay's prior written consent, copy, record or otherwise reproduce any of the Dinner MyWay Operating Manuals, in whole or in part, nor otherwise make the same available to any unauthorized person except as may be required by law, regulation or court order. Any duplication, disclosure, or dissemination of the Dinner MyWay Operating Manuals, or any portion thereof, in any way shall constitute a material breach of this Agreement and may subject Franchisee, in Dinner MyWay's sole and absolute discretion, to liquidated damages in an amount not to exceed five percent (5%) of
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