Area Development Agreement
Sample Area Development Agreement
t
EXHIBIT 6
DEVELOPMENT SERVICES AGREEMENT AND AMENDMENT
DEVELOPMENT SERVICES AGREEMENT
This Development Services Agreement (the "Agreement") is made as of
20__, between_____________________, a___________________("Owner"), and Yum Restaurant
Services Group, Inc., a Delaware corporation ("Yum").
The project (the "Project") is a restaurant (the "Restaurant") comprising the brands (individually a "Brand" and collectively "Brands") checked below:
A&W ___ KFC ___ Long John Silver's ___ Pizza Hut _ Taco Bell ___
Other (________________.__) ___.
If Real Estate Services or Real Estate Services and Construction Services (all as described
below and sometimes referred to as "Services") are required, the trade area is_________________
(the "Trade Area").
If only Construction Services (as described below) are required, the Project address is:
ARTICLE 1 GENERAL PROVISIONS
Yum shall furnish certain development and construction administration Services in an expeditious and economical manner consistent with the interests of Owner. Owner shall endeavor to promote harmony and cooperation among the architect, contractor and other persons or consultants employed by Owner.
ARTICLE 2 YUM'S RESPONSIBILITIES
Yum shall perform the Services described in this Article. The categories of Services to be performed under this Agreement shall be indicated with a check mark to the left of each item.
___ 2.1 Real Estate Services $12,000
conduct a trade area analysis for the Restaurant within the Trade Area considering , among other things, competitor performance, demographics, generators and traffic analysis
identify and evaluate potential sites for the Restaurant within the Trade Area considering, among other things, comparable transactions, market values, access and visibility
YUM-DSA-Rev. 9/2003
-1-
select a site for the Restaurant within the Trade Area with the approval of Owner
negotiate and prepare a purchase contract or lease on behalf of Owner, as well as documents required by such purchase contract or lease, including easements, memoranda of lease and non-disturbance agreements, with the approval of Owner and Owner's counsel
prepare a site submittal package as required by each effected Brand
assist with the Brand approval process
perform those Services set forth in the Feasibility Phase in Paragraph 2.2.1 below subject to Paragraph 4.3 below
2.2 Construction Services $19,500
2.2.1 Feasibility Phase
coordinate a construction and zoning analysis and on-site investigation of the Project site
recommend and order a site sketch and assist to obtain Brand approval of same
recommend a building type and equipment package
develop the Project budget (building, site, equipment and miscellaneous fees)
develop the Project schedule
2.2.2 Design Phase
coordinate geo-technical and environmental soils testing and review same (all test costs to be paid by Owner)
coordinate the completion of an ALTA survey of the property and review same (all survey costs to be paid by Owner)
open escrow, obtain a title insurance commitment and review same (only if Owner selects Real Estate Services above, and
!YUM-DSA-Rev. 9/2003
-2-
with all escrow, title commitment and title insurance costs to be paid by Owner)
manage the architect, civil engineer and other consultants in the preparation of all applicable plans and specifications for the permitting and construction (all design and consulting fees and related costs to be paid by Owner)
prepare and monitor the Project schedule for completion of design activities
Permit Phase
coordinate utility company plan submittals (all utility company fees and deposits to be paid by Owner)
submit all applicable permit applications (all permit fees and deposits to be paid by Owner)
arrange for and manage representation at municipal/public hearings
manage consultant activities such as traffic engineers, attorneys and permit expediters (all fees and costs to be paid by Owner)
prepare and monitor the Project schedule for completion of permit activities
resolve title, soils and survey issues, and close lease or purchase transaction, including recording necessary documents, obtaining title insurance policy in amount customary for Yum and obtaining original recorded documents, or certified copies if originals are lost (only if Owner selects Real Estate Services above, and with all fees and costs to be paid by Owner)
Construction Management Phase
recommend general contractors for bidding the Project
prepare and conduct the invitation to bid
conduct a pre-bid meeting and respond to questions by the bidders
-3-
■ prepare bid spreadsheet and analyze the bids
make recommendation to Owner regarding the successful bidder
secure a construction contract for execution by Owner
conduct a pre-construction meeting with Owner and the general contractor
communicate the construction start date to utility companies, applicable government agencies, and the equipment distributor
■ supervise the construction of the Project for conformance to plans and specifications
monitor progress against the Project schedule, and provide Owner with reports of Project progress against the schedule
conduct on site inspections of the Project
review change orders and payment requests and make recommendations to Owner regarding approval of sarrie
coordinate the delivery and installation of all equipment required for the Project
conduct the preliminary punch list and the final purxh list process
assist in the "close out" of the Project
ARTICLE 3 ADDITIONAL SERVICES
Yum agrees that it shall furnish additional services (the "Additional Services") as authorized by Owner. The method and amount of compensation shall be based upon z. fixed fee, the hourly rates for Yum services and personnel set forth below, or any combination thereof, which shall be
YUM-DSA-Rev. 9/2003
-4-
agreed to in writing by the parties prior to the commencement by Yum of the Additional Services.
Services/Personnel Rate/Hour
Director of Development $80.00
Construction.Manager 50.00
Real Estate Manager 50.00
ARTICLE 4 OWNER'S RESPONSIBILITIES
4.1 Owner shall provide full information in a timely manner regarding the requirements of the Project, including a program which sets forth Owner's objectives, constraints and criteria, including space requirements and relationships, flexibility and expandability requirements, special equipment and systems, and site requirements.
4.2 In connection with the provision of Real Estate Services, Owner agrees as follows:
4.2.1 Owner shall furnish Yum with a list of sites Owner has examined in the Trade Area along with a list of any real estate brokers used by Owner in such examination, designating which real estate brokers have been consulted on which sites.
4.2.2 If Yum has used a real estate broker to find a site, Owner will support such broker in obtaining a commission from the seller or landlord, as the case may be.
4.2.3 For a period of three (3) years after the execution of this Agreement, Owner will not be able to develop as a Yum restaurant any sites presented to Owner by Yum pursuant to this Agreement, which sites are rejected by Owner. A "Yum restaurant" includes any A&W, KFC, Long John Silver's, Pizza Hut and/or Taco Bel! restaurants.
4.2.4 The selection and approval of a site by Yum or any Brand, and its acceptance by Owner, shall not be construed or implied as any representation that such site shall generate any specified level of sales or otherwise be profitable for Owner. Owner accepts all risks connected with the operation of the Restaurant at such site.
4.2.5 Owner shall take all steps necessary to qualify for any franchise agreement required to operate the Yum restaurant, including training, providing documents and information and making required payments.
4.3 As part of the Feasibility Phase, Owner agrees as follows:
4.3.1 Owner shall pay for all aerial photograph fees, consulting fees and
related costs.
-5-
YUM-DSA-Rev. 9/2003
4.3.2 At the conclusion of the Feasibility Phase, Ov/ner shall decide upon
a building type and equipment package. Owner shall also provide Yum with approval of the Project budget and schedule.
4.4 As pan of the Design Phase, Owner agrees as follows:
4.4.1 Upon the request of Yum, Owner shall retain a geo-technical, environmental and/or soils investigation firm to perform soils testing and investigative services as required for the Project. Such services may include but are not limited to test borings, test pits, determinations of soil bearing values, percolation tests, evaluations of hazardous materials, and ground corrosion and resistivity tests, including necessary operations for anticipating subsoil conditions, with reports and appropriate professional recommendations. Yum and Owner shall evaluate such tests, and Owner, with the advice of Yum shall decide what remedial measures to take, if any; provided that Yum may, on behalf of Owner, take or cause to be taken customary actions in the normal course.
4.4.2 Upon the request of Yum, Owner shall retain an architect, civil engineer and other design consultants as required for the Project.
4.4.3 Upon the request of Yum, Owner shall retain a surveyor to furnish [ surveys describing physical characteristics, legal limitations and utility locations for the site of the
Project, and a written legal description of the site. The surveys and legal infolTnation shall include,
; as applicable, grades and lines of streets, alleys, pavements and adjoining property and structures;
adjacent drainage; rights-of-way, restrictions, easements, encroachments, zoning, deed restrictions,
: boundaries and contours of the site; locations, dimensions and necessary data pertaining to existing
buildings, other improvements and trees; and information concerning available utility services and
lines, both public and private, above and below grade including inverts and depths. All the
information on the survey shall be referenced to a Project benchmark. Yum and Owner shall
evaluate such information, and Owner, with the advice of Yum shall decide what remedial
measures to take, if any; provided that Yum may, on behalf of Owner, take or cause to be taken
customary actions in the normal course.
4.4.4 Upon the request of Yum, Owner shall furnish, a title commitment i and be solely responsible for reviewing the commitment and objecting to title matters; provided that
if Owner has selected Real Estate Services above, then Yum may order the title commitment on Owner's behalf, both Yum and Owner shall evaluate such commitment, and Owner, with the advice of Yum shall decide what remedial measures to take, if any; provided that Yum may, on behalf of Owner, take or cause to be taken customary actions in the normal course.
4.4.5 Owner shall furnish structural, mechanical, chemical, air and water pollution tests, tests for hazardous materials, and other laboratory and environmental tests, inspections and reports required by law. Yum and Owner shall evaluate such tests, and Owner, with the advice of Yum shall decide what remedial measures to take, if any; provided that Yum imay, on behalf of Owner, take or cause to be taken customary actions in the normal course.
-6-
YUM-DSA-Rev. 9/2003
4.4.6 Owner shall furnish the services of other consultants when such services are required by the scope of the Project and are requested by Yum.
4.4.7 The services, information, surveys and reports required in Paragraphs 4.4.1 through 4.4.6 shall be furnished at Owner's expense, and Yum shall be entitled to rely on the accuracy and completeness thereof. Moreover, Yum may, on behalf of Owner, without making request of Owner, and at Owner's expense, order or otherwise procure such services, information, surveys or reports as Yum, in its sole discretion, determines reasonably necessary.
4.4.8 Owner shall be solely responsible to (a) conduct crime surveys and gather other information pertinent to employee and customer security, and (b) determine the type and level of security measures, including without limitation safes, alarms and surveillance systems.
4.5 As part of the Permit Phase, Owner agrees as follows:
4.5.1 Owner shall, through its civil engineer, provide an accurate and complete set of utility company plan submittals.
4.5.2 Owner shall complete all necessary permit applications necessary to enable the construction of the Project to proceed.
4.5.3 Upon the request of Yum, Owner shall retain the services of consultants, traffic engineers, attorneys or other expediters required to achieve permit approvals.
4.5.4 The services and information required in Paragraphs 4.5.1 through 4.5.3, including any permit fees, shall be furnished at Owner's expense. Moreover, Yum may, on behalf of Owner, without making request of Owner, and at Owner's expense, order or otherwise procure such services or information as Yum, in its sole discretion, determines reasonably necessary
4.5.5 Owner shall be solely responsible to close the lease or purchase transaction after all permits are obtained , including recording necessary documents and obtaining title insurance; provided that if Owner has selected Real Estate Services above, then Yum shall be responsible to close the lease or purchase transaction, obtain title insurance in an amount and with exceptions typically approved by Yum, obtain original recorded documents (or certified copies, if originals are lost), all escrow, recording, transfer and related closing fees to be paid by Owner.
4.6 As part of the Construction Management Phase, Owner agrees as follows:
4.6.1 Owner shall enter into a contract with a contractor for the construction of the Project. The standard form construction contract provided by Yum shall be utilized by Owner in the negotiation of the terms of the contract with the contractor. Owner shall also enter into purchase orders for the procurement of all equipment and furnishings required for the Project. All construction and equipment procurement costs shall be paid by Owner.
YUM-DSA-Rev. 9/2003
-7-
4.6.2 Owner shall, through its representatives, including the architectural and design consultants retained by Owner, furnish the required information and services, and shall render approvals and decisions as expeditiously as necessary for the order progress of the work of the contractor. All architectural and consulting fees required hereunder shall be furnished at Owner's expense.
4.7 Upon the request of Yum, Owner shall retain the services of additional outside consultants as required for the Project. Any such services required hereunder shall be furnished at Owner's expense.
4.8 Owner shall be solely responsible to comply with the terms1 and conditions of the lease or purchase agreement for the real property comprising the Project, including without limitation, tracking and meeting all time frames and making required payments.
4.9 Owner shall be solely responsible to comply with the terms and conditions of any and all other agreements Owner may have with Yum, or any entity controlling, controlled by or under common control with Yum, including without limitation, any franchise, license or preferred
: developer agreements, and neither the execution, delivery nor performance o: this Agreement shall ; modify or otherwise affect the rights of Yum or any entity controlling, controlled by or under common control with Yum, or the obligations of Owner under such other agreements.
ARTICLE 5 PAYMENT FOR SERVICES
5.1 Payments for the Services performed by Yum shall be made as follows:
5.1.1 If only Real Estate Services are elected, Owner shall pay Yum (a) $6,000.00 prior to site registration, (b) the additional $6,000 prior to site package completion, and (c) and fees for Additional Services within 30 days after the date of Yum's invoice(s) there;or.
5.1.2 If only Construction Services are elected, Owner shall pay Yum (a) $9,750.00 prior to the commencement of the Feasibility Phase, (b) the additional $9,750.00 prior to the commencement of construction of the Project, and (c) and fees for Additional Services within
i 30 days after the date of Yum's invoice(s) therefor.
5.1.3 If both Real Estate Services and Construction Services are elected, Owner shall pay Yum (a) $7,875.00 prior to site registration, (b) an additional $7,875.00 pnor to site package completion, (c) an additional $7,875.00 prior to the commencement of the Feasibility Phase, (d) an additional $7,875.00 prior to the commencement of construction of the Project, and :(e) and fees for Additional Services within 30 days after the date of Yum's invoice(s) therefor.
5-2 Amounts unpaid 30 days after the invoice shall bear interest at the rate of 1-1/2% jper month.
-8-
YUM-DSA-Rev. 9/2003
ARTICLE 6 TERMINATION, SUSPENSION OR ABANDONMENT
6.1 This Agreement may be terminated by either party upon not less than seven days written notice should the other party fail substantially to perform in accordance with the terms of this Agreement through no fault of the party initiating the termination.
6.2 If the Project is suspended by Owner for more than 30 consecutive days, Yum shall be compensated for Services performed prior to notice of such suspension. When the Project is resumed, Yum's compensation shall be equitably adjusted to provide for expenses incurred in the interruption and resumption of Yum's Services.
6.3 This Agreement may be terminated by Owner upon not less than seven days written notice to Yum in the event that the Project is permanently abandoned. If the Project is abandoned by Owner for more than 90 consecutive days, then Yum may terminate this Agreement by giving written notice.
6.4 Failure of Owner to make payments to Yum in accordance with this Agreement shall be considered substantial nonperformance and cause for termination.
6.5 If Owner fails to make payment when due Yum hereunder, Yum may, upon seven days written notice to Owner, suspend performance of Services under this Agreement. Unless payment in full is received by Yum within seven days of the date of the notice, the suspension shall take effect without further notice. In the event of a suspension of Services, Yum shall have no liability to Owner for delay or damage caused Owner because of such suspension of Services.
6.6 In the event of termination not the fault of Yum, Yum shall be compensated for all Services performed prior to termination.
ARTICLE 7 MISCELLANEOUS PROVISIONS
7.1 Unless otherwise provided, this Agreement shall be governed by the law of the place where the Project is located.
7.2 Owner and Yum, respectively, bind themselves, their partners, successors, assigns and legal representatives to the other party to this Agreement and to the partners, successors, assigns and legal representatives of such other party with respect to all covenants of this Agreement. Neither Owner nor Yum shall assign this Agreement without the written consent of the other.
7.3 This Agreement represents the entire and integrated agreement between Owner and Yum concerning the Project and supersedes all prior negotiations, representations or agreements, either written or oral, with respect thereto. This Agreement may be amended only by written instrument signed by both Owner and Yum.
-9-
YUM-DSA-Rev. 9/2003
7.4 This Agreement does not constitute an application for, or a grant of, a franchise or license agreement, a preferred developer agreement or any other franchise, license or development rights with respect to the Project or otherwise. Owner is solely responsible to obtain any such agreements or rights directly from the franchisor for the applicable Brand(s).
7.5 Nothing contained in this Agreement shall create a contractual relationship with or a cause of action in favor of a third party against either Owner or Yum.
7.6 Unless otherwise provided in this Agreement, Yum shall have no responsibility for the discovery, presence, handling, removal or disposal of or exposure of persons to hazardous materials in any form at the Project site, including but not limited to asbestos, asbestos products, polychlorinated biphenyl (PCB) or other toxic substances.
7.7 Yum shall have the right to include representations of the design of the Project, including photographs of the exterior and interior, among Yum's promotional and professional materials. Yum's materials shall not include Owner's confidential or proprietary information if Owner has previously advised Yum in writing of the specific information considered by Owner to be confidential or proprietary. Owner shall provide professional credit for Yum on the construction sign and in the promotional materials for the Project.
OWNER YUM
Yum Restaurant Services Group, Inc. a Delaware corporation
By: _____________________________ By:
Its: Its:
Date: Date:
-10-
YUM-DSA-Rev. 9/2003
AMENDMENT TO THE
DEVELOPMENT SERVICES AGREEMENT
FOR THE STATE OF ILLINOIS
In recognition of the requirement of the Illinois Franchise Disclosure Act, the parties to the attached WINGSTREET, LLC DEVELOPMENT SERVICES AGREEMENT (the "Agreement") agree as follows:
Section 8.3 of the Agreement, under "Miscellaneous Provisions", shall be supplemented by the following paragraph which shall be considered an integral part of the Agreement:
"The representations made in the Offering Circular are unaffected by any statements in any integration clause in this contract and the Illinois Franchise Disclosure Act and Rules prohibiting such statement shall remain in full force and effect."
To the extent this Amendment shall be deemed to be inconsistent with any terms or conditions of said Development Agreement or Exhibits or Attachments thereto, the terms of this Amendment shall govern.
IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and delivered this Amendment to the Development Services Agreement on the same day and year that the Development Services Agreement has been executed.
ATTEST: WingStreet, LLC
A Delaware Limited Liability Company
By:
ATTEST: FRANCHISEE:
By:_ Title: