EXHIBIT 10
Buffalo Wild Wings ® Franchise
Agreement
Between
Buffalo Wild Wings International, Inc.
5500 Wayzata Blvd., Suite 1600
Minneapolis, MN 55416
And
AMC Port Huron, Inc.
21751 West Eleven Mile Road, Suite 208
Southfield, MI 48076
248-223-9160
Authorized Location:
Street
City
State
Zip Code
Effective Date:
(To be completed by us)
--TABLE OF CONTENTS--
BUFFALO WILD WINGS ® FRANCHISE
AGREEMENT
SECTION
PAGE
DEFINITIONS
1
GRANT OF LICENSE
2
TRADEMARK STANDARDS AND REQUIREMENTS
4
TERM AND RENEWAL
5
FACILITY STANDARDS AND MAINTENANCE
6
PRODUCTS AND OPERATIONS STANDARDS AND REQUIREMENTS
10
PERSONNEL AND SUPERVISION STANDARDS
14
ADVERTISING
16
FEES, REPORTING AND AUDIT RIGHTS
18
YOUR OTHER OBLIGATIONS; NONCOMPETE COVENANTS
20
TRANSFER OF FRANCHISE
22
DISPUTE RESOLUTION
26
DEFAULT AND TERMINATION
27
POST-TERM OBLIGATIONS
28
GENERAL PROVISIONS
30
APPENDICES
A.
Trademarks
B.
Designated Area
C.
Addendum to Lease
D.
Electronic Transfer of Funds Authorization
E.
Gift Cards Participation Agreement
F.
Enrollment Form and Portal Terms and Conditions
BUFFALO WILD WINGS ® FRANCHISE
AGREEMENT
This Franchise Agreement is made this ____ day
of July, 2008 between BUFFALO WILD WINGS INTERNATIONAL, INC., an
Ohio corporation with its principal business located at 5500
Wayzata Blvd., Suite 1600, Minneapolis, Minnesota 55416
(“we” or “us”), and AMC PORT HURON,
INC., a Michigan corporation whose principal business address is
21751 West Eleven Mile Road, Suite 208, Southfield, Michigan
48076 (“franchisee” or “you”). If
the franchisee is a corporation, partnership, limited liability
company or other legal entity, certain provisions to this
Agreement also apply to its owners.
RECITALS
A.
Our parent company has developed a unique system
for video entertainment oriented, casual/fast casual restaurants
that feature chicken wings, sandwiches, unique food service and
other products, beverages and services using certain standards
and specifications;
B.
Many of the food and beverage products are
prepared according to specified recipes and procedures, some of
which include proprietary sauces and mixes.
C.
Our parent company owns the BUFFALO WILD
WINGS ® Trademark and other trademarks used
in connection with the operation of a BUFFALO WILD WINGS
®
restaurant;
D.
Our parent company has granted to us the right
to sublicense the right to develop and operate BUFFALO
WILD WINGS ® restaurants;
and
E.
You desire to develop and operate a
BUFFALO WILD WINGS ® restaurant and
we, in reliance on your representations, have approved your
franchise application.
In consideration of the foregoing and the mutual
covenants and consideration below, you and we agree as
follows:
DEFINITIONS
1.
For purposes of this Agreement, the terms below
have the following definitions:
A.
“Control Person” means the
individual who has the authority to, and does in fact, actively
direct your business affairs in regard to the Restaurant, is
responsible for overseeing the general management of the
day-to-day operations of the Restaurant and has authority to
sign on your behalf on all contracts and commercial documents.
The Control Person is identified on the Ownership and
Management Addendum attached to this Agreement.
B.
“Gross Sales” includes the total
revenues and receipts from the sale of all products, services
and merchandise sold in your Restaurant whether under any of the
Trademarks or otherwise, including any cover charges or fees,
vending or similar activities in your Restaurant or on its
premises as well as all license and use fees. Gross Sales
excludes sales taxes.
C.
“Menu Items” means the chicken
wings, sandwiches and other products and beverages prepared
according to our specified recipes and procedures, as we may
modify and change them from time to time.
D.
“Principal Owner” means any person
or entity who, now or hereafter, directly or indirectly owns a
10% or greater interest in the franchisee when the franchisee is
a corporation, limited liability company, partnership, or a
similar entity. However, if we are entering into this
Agreement
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totally or partially based on the financial
qualifications, experience, skills or managerial qualifications
of any person or entity who directly or indirectly owns less
than a 10% interest in the franchisee, we have the right to
designate that person or entity as a Principal Owner for all
purposes under this Agreement. In addition, if the
franchisee is a partnership entity, then each person or entity
who, now or hereafter is or becomes a general partner is a
Principal Owner, regardless of the percentage ownership
interest. If the franchisee is one or more individuals,
each individual is a Principal Owner of the franchisee.
Each franchisee must have at least one Principal Owner.
Your Principal Owner(s) are identified on the Ownership
and Management Addendum attached to this Agreement. Every
time there is a change in the persons who are your Principal
Owners, you must, within 10 days from the date of each such
change, update the Ownership and Management Addendum. As
used in this Agreement, any reference to Principal Owner
includes all Principal Owners.
E.
“Restaurant” means the
BUFFALO WILD WINGS ® Restaurant you
develop and operate pursuant to this
Agreement.
F.
“System” means the BUFFALO
WILD WINGS ® System, which consists of
distinctive food and beverage products prepared according to
special and confidential recipes and formulas with unique
storage, preparation, service and delivery procedures and
techniques, offered in a setting of distinctive exterior and
interior layout, design and color scheme, signage, furnishings
and materials and using certain distinctive types of facilities,
equipment, supplies, ingredients, business techniques, methods
and procedures together with sales promotion programs, all of
which we may modify and change from time to
time.
G.
“Trademarks” means the
BUFFALO WILD WINGS ®
Trademark and Service Mark that have been registered
in the United States and elsewhere and the trademarks, service
marks and trade names set forth on Appendix A, as we may modify
and change from time to time, and the trade dress and other
commercial symbols used in the Restaurant. Trade dress
includes the designs, color schemes and image we authorize you
to use in the operation of the Restaurant from time to
time.
H.
“Unit General Manager” means the
individual who (i) personally invests his or her full time and
attention and devotes his or her best efforts to the on-premises
general management of the day-to-day operations of the
Restaurant and (ii) meets our training requirements. The
Unit General Manager must be appointed at least 60 days prior to
the Restaurant opening and fully trained 20 days prior to the
Restaurant opening.
GRANT OF LICENSE
2.
The following provisions control with respect to
the license granted hereunder:
A.
Authorized Location . We grant to
you the right and license to establish and operate a retail
Restaurant identified by the BUFFALO WILD WINGS
® Trademarks or such other marks as we may
direct, to be located at a location to be determined, in
accordance with this subparagraph or a location to be
designated within 90 days from the date of this Agreement (the
“Authorized Location”). When a location has
been designated by you and approved by us, it will become part
of this subparagraph 2.A as if originally stated. If an
Authorized Location is not designated by you and approved by us
within 90 days from the date of this Agreement, we have the
right to declare this Agreement null and void without the return
of any Initial Franchise Fee or other amounts paid to us.
You accept the license and undertake the obligation to
operate the Restaurant at the Authorized Location using the
Trademarks and the System in compliance with the terms and
conditions of this Agreement.
B.
Designated Area . You must locate
and operate the Restaurant at an Authorized Location within the
area described in Appendix B (the “Designated
Area”). We and our affiliates
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will not locate and operate or grant to anyone
else a franchise to locate and operate a BUFFALO WILD
WINGS ® restaurant within the Designated
Area so long as this Agreement is in effect, except as provided
in subparagraph 2.D. You do not have any right to
sublicense or subfranchise within or outside of the Designated
Area and do not have the right to operate more than one
Restaurant within the Designated Area.
C.
Opening . You agree that the
Restaurant will be open and operating in accordance with the
requirements of subparagraph 5.A within (i) 270 days from the
date of this Agreement if the Restaurant is located within an
end cap, shopping mall, Special Site or other similar location,
or (ii) 365 days from the date of this Agreement if the
Restaurant is a free standing building, unless in either case we
authorize in writing an extension of time. Notwithstanding
the foregoing, if you are entering this Agreement pursuant to an
Area Development Agreement executed between you and us, you
agree to open the Restaurant by the date stated in the Area
Development Agreement. If you fail to have your Restaurant
open and in operation according to the provisions of this
subparagraph 2.C, we will have the right to terminate this
Agreement without opportunity to cure pursuant to subparagraph
13.B.2.
D.
Nonexclusivity; Our Reservation of Rights
. The license is limited to the right to develop and
operate one Restaurant at the Authorized Location located in the
Designated Area, and does not include (i) any right to sell
products and Menu Items identified by the Trademarks at any
location other than the Authorized Location, except for
authorized catering and delivery services as noted in
subparagraph 2.E, or through any other channels or methods of
distribution, including the internet (or any other existing or
future form of electronic commerce), (ii) any right to sell
products and Menu Items identified by the Trademarks to any
person or entity for resale or further distribution, or (iii)
any right to exclude, control or impose conditions on our
development of future franchised, company or affiliate owned
restaurants at any time or at any location. You
acknowledge that the consumer service area or trade area of
another BUFFALO WILD WINGS ®
restaurant may overlap with your Designated
Area.
You also acknowledge and agree that we and our
affiliates have the right to operate and franchise others the
right to operate restaurants or any other business within and
outside the Designated Area under trademarks other than the
BUFFALO WILD WINGS ® Trademarks,
without compensation to any franchisee, except that our
operation of, or association or affiliation with, restaurants
(through franchising or otherwise) in the Designated Area that
compete with BUFFALO WILD WINGS ®
restaurants in the video entertainment oriented, fast casual
restaurant segment will only occur through some form of merger
or acquisition with an existing restaurant chain (except as
otherwise provided for in this subparagraph). Outside of
the Designated Area, we and our affiliates have the right to
grant other franchises or develop and operate company or
affiliate owned BUFFALO WILD WINGS ®
restaurants and offer, sell or distribute any products or
services associated with the System (now or in the future) under
the Trademarks or any other trademarks, service marks or trade
names or through any distribution channel or method, all without
compensation to any
franchisee.
We and our affiliates have the right to offer,
sell or distribute, within and outside the Designated Area, any
frozen, pre-packaged items or other products or services
associated with the System (now or in the future) or identified
by the Trademarks, or any other trademarks, service marks or
trade names, except for Prohibited Items (as defined below),
through any distribution channels or methods, without
compensation to any franchisee. The distribution channels
or methods include, without limitation, grocery stores, club
stores, convenience stores, wholesale, hospitals, clinics,
health care facilities, business or industry locations (e.g.
manufacturing site, office building), military installations,
military commissaries or the internet (or any other existing or
future form of electronic commerce). The Prohibited Items
are the following items that we will not sell in the Designated
Area through other distribution channels or methods: any retail
food service Menu Items that are cooked or prepared to be served
to the end user or customer for consumption at the retail
location (unless sold at the limited seating facilities
referenced in subparagraph (i) of the paragraph above).
For example, chicken
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wings cooked and served to customers at a
grocery store or convenience store would be a Prohibited Item,
but the sale of frozen or pre-packaged chicken wings at a
grocery store or convenience store would be a permitted form of
distribution in the Designated Area.
You acknowledge and agree that certain locations
within and outside the Designated Area are by their nature
unique and separate in character from sites generally developed
as BUFFALO WILD WINGS ® restaurants.
As a result, you agree that the following locations
(“Special Sites”) are excluded from the Designated
Area and we have the right to develop or franchise such
locations: (1) military bases; (2) public transportation
facilities; (3) sports facilities, including race tracks; (4)
student unions or other similar buildings on college or
university campuses; (5) amusement and theme parks; and (6)
community and special events.
In addition, you acknowledge and agree that,
subject to your right of first refusal as set forth below, we
and our affiliates have the right to operate or franchise within
and outside the Designated Area one or more facilities selling,
for dine in or take out, all or some of the Menu Items, using
the Trademarks or any other trademarks, service marks or trade
names, without compensation to any franchisee, provided,
however, that such facilities shall not have an interior area
larger than 2,400 square feet and shall not have seating
capacity for more than 48 people (“Limited Seating
Facilities”). If we develop a model for a Limited
Seating Facility and determine that your Designated Territory is
an appropriate market for such a facility, we will provide to
you a written offer (“Offer”) specifying the terms
and conditions for your development of the Limited Seating
Facility. You will have 90 days following your receipt of
the Offer to accept the Offer by delivering written notice to us
of your acceptance, provided that you are not in default under
this Agreement or any other Agreement with us or our affiliates.
If you do not provide written notice to us within the time
period or if you are in default under this Agreement or any
other agreement with us or our affiliates, you will lose the
right to develop the Limited Seating Facility and we may develop
or franchise others to develop the Limited Seating Facility
within your Designated Area. You acknowledge and agree
that if you accept the Offer, we may require you to submit a
full application, pay an initial fee and sign a new form of
franchise agreement.
E.
Catering and Delivery . You may not
engage in catering and delivery services and activities within
or outside of the Designated Area, unless we authorize you in
writing, as further described in subparagraph 6.L. We and
our affiliate companies will not engage in catering and delivery
services and activities in the Designated Area; however, we have
no obligation to enforce similar covenants against any other
franchisee.
TRADEMARK STANDARDS AND REQUIREMENTS
3.
You acknowledge and agree that the Trademarks
are our parent company’s property and it has licensed the
use of the Trademarks to us with the right to sublicense to
others. You further acknowledge that your right to use the
Trademarks is specifically conditioned upon the following:
A.
Trademark Ownership . The
Trademarks are our parent company’s valuable property, and
it is the owner of all right, title and interest in and to the
Trademarks and all past, present or future goodwill of the
Restaurant and of the business conducted at the Authorized
Location that is associated with or attributable to the
Trademarks. Your use of the Trademarks will inure to our
parent company’s benefit. You may not, during or
after the term of this Agreement, engage in any conduct directly
or indirectly that would infringe upon, harm or contest our
parent company’s rights in any of the Trademarks or the
goodwill associated with the Trademarks, including any use of
the Trademarks in a derogatory, negative, or other inappropriate
manner in any media, including but not limited to print or
electronic media.
4
B.
Trademark Use . You may not use, or
permit the use of, any trademarks, trade names or service marks
in connection with the Restaurant except those set forth in
Appendix A or except as we otherwise direct in writing.
You may use the Trademarks only in connection with such
products and services as we specify and only in the form and
manner we prescribe in writing. You must comply with all
trademark, trade name and service mark notice marking
requirements. You may use the Trademarks only in
association with products and services approved by us and that
meet our standards or requirements with respect to quality, mode
and condition of storage, production, preparation and sale, and
portion and packaging.
C.
Restaurant Identification . You
must use the name BUFFALO WILD WINGS GRILL & BAR
® as the trade name of the Restaurant and
you may not use any other mark or words to identify the
Restaurant without our prior written consent. You may not
use the phrase “Buffalo Wild Wings” or
any of the other Trademarks as part of the name of your
corporation, partnership, limited liability company or other
similar entity. You may use the Trademarks on various
materials, such as business cards, stationery and checks,
provided you (i) accurately depict the Trademarks on the
materials as we prescribe, (ii) include a statement on the
materials indicating that the business is independently owned
and operated by you, (iii) do not use the Trademarks in
connection with any other trademarks, trade names or service
marks unless we specifically approve in writing prior to such
use, and (iv) make available to us, upon our request, a copy of
any materials depicting the Trademarks. You must post a
prominent sign in the Restaurant identifying you as a
BUFFALO WILD WINGS ® franchisee in a
format we deem reasonably acceptable, including an
acknowledgment that you independently own and operate the
Restaurant and that the BUFFALO WILD WINGS
® Trademark is owned by our parent company
and your use is under a license we have issued to you. All
your internal and external signs must comply at all times with
our outdoor/indoor guidelines and practices, as they are
modified from time to
time.
D.
Litigation . In the event any
person or entity improperly uses or infringes the Trademarks or
challenges your use or our use or ownership of the Trademarks,
we will control all litigation and we have the right to
determine whether suit will be instituted, prosecuted or
settled, the terms of settlement and whether any other action
will be taken. You must promptly notify us of any such use
or infringement of which you are aware or any challenge or claim
arising out of your use of any Trademark. You must take
reasonable steps, without compensation, to assist us with any
action we undertake. We will be responsible for our fees
and expenses with any such action, unless the challenge or claim
results from your misuse of the Trademarks in violation of this
Agreement, in which case you must reimburse us for our fees and
expenses.
E.
Changes . You may not make any
changes or substitutions to the Trademarks unless we direct in
writing. We reserve the right to change the Trademarks at
any time. Upon receipt of our notice to change the
Trademarks, you must cease using the former Trademarks and
commence using the changed Trademarks, at your expense. If
the changes to the Trademarks result in a required change to
outdoor signage, such changes will be subject to the provisions
in 5.F.
TERM AND RENEWAL
4.
The following provisions control with respect to
the term and renewal of this Agreement:
A.
Term . The initial term of this
Agreement is 20 years, unless this Agreement is sooner
terminated in accordance with Paragraph 13. The initial
term commences upon the Effective Date (as defined in
subparagraph 15.S) of this Agreement. We may extend this
initial term in writing for a limited period of time not to
exceed 6 months to take into account the term of any applicable
lease for the Authorized Location.
5
B.
Renewal Term and Conditions of Renewal .
You may renew your license for two renewal terms, (the
first renewal term is 10 years; the second renewal term is 5
years), provided that with respect to each renewal: (i)
you have given us written notice of your decision to renew at
least 6 months but not more than 12 months prior to the end of
the expiring term; (ii) you sign our then-current form of
franchise agreement (modified to reflect no additional renewal
term upon expiration and other modifications to reflect that the
agreement relates to the grant of a renewal), the terms of which
may differ from this Agreement, including higher fees and a
modification to the Designated Area (although in no event will
the revised Designated Area have a residential population of the
lesser of approximately 30,000 to 40,000 or the residential
population that existed as of the Effective Date); (iii) you
have complied with the provisions of subparagraph 5.E regarding
modernization and you perform any further items of modernization
and/or replacement of the building, premises, trade dress,
equipment and grounds as may be necessary for your Restaurant to
conform to the standards then applicable to new BUFFALO
WILD WINGS restaurants, regardless of the cost of such
modernizations and/or replacements, unless we determine that you
should relocate your Restaurant because your Authorized Location
no longer meets our then-current site criteria, in which case
you must comply with the 90 and 270 day relocation requirements
of subparagraph 5.D; (iv) you are not in default of this
Agreement or any other agreement pertaining to the franchise
granted, have satisfied all monetary and material obligations on
a timely basis during the term and are in good standing; (v) if
leasing the Restaurant premises (and not subject to relocation
under (iii) above), you have renewed the lease and have provided
written proof of your ability to remain in possession of the
premises throughout the renewal period; (vi) you comply with our
then-current training requirements; (vii) you pay us, at least
30 days prior to the end of the expiring term, a renewal fee in
the amount of $20,000; and (viii) you and your Principal Owners
and guarantors execute a general release of claims in a form we
prescribe.
C.
Relocation Upon Renewal . If, as a
condition of renewal, we require you to relocate your Restaurant
pursuant to subparagraph 4.B(iii) above, you receive a new term
of 20 years plus two renewal terms of 10 years and five years,
respectively, provided that with respect to the renewal, you
meet all conditions stated in subparagraph 4.B.
FACILITY STANDARDS AND MAINTENANCE
5.
You acknowledge and agree that we have the right
to establish, from time to time, quality standards regarding the
business operations of BUFFALO WILD WINGS
® restaurants and stores to protect the
distinction, goodwill and uniformity symbolized by the
Trademarks and the System. Accordingly, you agree to
maintain and comply with our quality standards and agree to the
following terms and conditions:
A.
Restaurant Facility; Site Under Control .
You are responsible for purchasing or leasing a site that
meets our site selection criteria. You must obtain our
written consent to the site. Prior to granting our consent
to a site, you must have the site evaluated by the proprietary
site evaluator software that has been developed by GeoVue, Inc.
You must execute the Enrollment Form and Portal Terms and
Conditions attached as Appendix F and pay GeoVue, Inc. an
evaluation fee of $400 per site evaluated, but you must pay for
the rights to have at least 3 sites evaluated and these fees are
nonrefundable. If your authorized location is located in an area
with a lower population or smaller trade area, we may reduce the
number of required site evaluations. You may not use the
Restaurant premises or Authorized Location for any purpose other
than the operation of a BUFFALO WILD WINGS
® Restaurant during the term of this
Agreement. We make no guarantees concerning the success of
the Restaurant located on any site to which we
consent.
You may not open your Restaurant for business
until we have notified you in writing that you have satisfied
your pre-opening obligations as set forth in subparagraphs 5.A
and 5.B and we have approved your opening date. We are not
responsible or liable for any of your pre-opening obligations,
losses or expenses you might incur for your failure to comply
with these obligations or your failure to
6
open by a particular date. We also are
entitled to injunctive relief or specific performance under
subparagraph 12.C for your failure to comply with your
obligations.
In the event that you plan to enter into any
type of lease for the Restaurant premises, you and your landlord
must sign the Lease Addendum attached as Appendix C. We
recommend you submit the Lease Addendum to the landlord at the
beginning of your lease review and negotiation, although the
terms of the Lease Addendum may not be negotiated without our
prior approval. If the landlord requires us to negotiate
the Lease Addendum, we reserve the right to charge you a fee,
which will not exceed our actual costs associated with the
negotiation. You must provide us a copy of the executed
lease and Lease Addendum within 5 days of its execution.
We have no responsibility for the lease; it is your sole
responsibility to evaluate, negotiate and enter into the lease
for the Restaurant premises.
You must execute, and provide us an executed
copy of your lease (including an executed copy of the Lease
Addendum) or the purchase agreement for the selected and
approved site for your Restaurant within 120 days from the date
of execution of this Agreement if the Restaurant will be in a
free standing location or within 90 days from the execution of
this Agreement if the selected and consented to site for the
Restaurant is in a non-free standing location. If you fail
to have your “site under control” (execute the lease
or the purchase agreement within the periods set forth in this
subparagraph), we will have the right to terminate this
Agreement without opportunity to cure pursuant to subparagraph
13.B.2.
B.
Construction; Future Alteration .
You must construct and equip the Restaurant in strict
accordance with our current approved specifications and
standards pertaining to equipment, inventory, signage, fixtures,
furnishings, accessory features (including sports memorabilia)
and design and layout of the building. You may not
commence construction of the Restaurant until you have received
our written consent to your building plans. If your
Restaurant is not constructed strictly according to the
previously consented building plans, we will not approve your
Restaurant for opening. You will have 30 days from the
date we deny our approval for opening your Restaurant to correct
all the construction problems so that your Restaurant is
strictly constructed according to the consented building plans.
If you fail to correct the problems within the 30 day
period we may immediately terminate this Agreement pursuant to
subparagraph 13.B.2. If the Restaurant opening is delayed
for the foregoing reasons, you will be responsible for any
losses and costs related to such delay.
Without limiting the generality of the prior
paragraph, you must promptly after obtaining possession of the
site for the Restaurant: (i) retain the services of one of our
designated architects; and (ii) retain the services of a general
contractor and audio/visual equipment providers and installers,
each of whom must have successfully gone through our application
process or otherwise been approved by us in writing (although if
this Agreement is for your first BUFFALO WILD WINGS
® restaurant or if you or any of your
affiliates have failed to timely open any other BUFFALO
WILD WINGS ® restaurant in accordance with
the terms of any franchise agreement with us, you must use one
of our designated general contractors); (iii) have prepared and
submitted for our approval a site survey and basic architectural
plans and specifications (not for construction) consistent with
our general atmosphere, image, color scheme and ambience
requirements as set forth from time to time in the manuals for a
BUFFALO WILD WINGS ® restaurant
(including requirements for dimensions, exterior design,
materials, interior design and layout, equipment, fixtures,
furniture, signs and decorating); (iv) purchase or lease and
then, in the construction of the Restaurant, use only the
approved building materials, equipment, fixtures, audio visual
equipment, furniture and signs; (v) complete the construction
and/or remodeling, equipment, fixtures, furniture and sign
installation and decorating of the Restaurant in full and strict
compliance with plans and specifications we approve and all
applicable ordinances, building codes and permit requirements
without any unauthorized alterations; (vi) obtain all customary
contractors’ sworn statements and partial and final
waiver; (vii) obtain all necessary permits, licenses and
architectural seals and comply with applicable
legal
7
requirements relating to the building, signs,
equipment and premises, including, but not limited to, the
Americans With Disabilities Act; and (viii) obtain and maintain
all required zoning changes, building, utility, health,
sanitation, liquor and sign permits and licenses and any other
required permits and licenses (if this Agreement is for your
first BUFFALO WILD WINGS ® restaurant
or if in any previous franchise agreement executed between you
or any of your affiliates and us, you or any of your affiliates
have not met your obligations regarding the build out of any
previous BUFFALO WILD WINGS ®
restaurant, you must retain the services of a company
specialized in assisting restaurant operators during the
construction process to assist you in submitting, processing,
monitoring and obtaining in a timely manner all necessary
construction documents, licenses and permits and to advise you
throughout the construction of your Restaurant). It is
your responsibility to comply with the foregoing conditions.
If this is not your first BUFFALO WILD
WINGS ® restaurant and you have opened all
others on a timely basis, you may request that we approve a
general contractor that is not on our current list of approved
suppliers. You, your affiliates or your Principal Owners, or any
person related to, or any entity controlled by your Principal
Owners may not be your general contractor unless you have
requested our approval and we have approved your request.
If you have signed an Area Development Agreement for 8 or
more restaurants, you also may request approval of an architect
that is not on our list of approved suppliers.
Your general contractor may not be your
audio/visual equipment provider and installer, unless your
general contractor shows expertise in this field to our
satisfaction and is approved by us prior to performing any work.
Any change to the building plans or any
replacement, reconstruction, addition or modification in the
building, interior or exterior decor or image, equipment or
signage of the Restaurant to be made after our consent is
granted for initial plans, whether at the request of you or of
us, must be made in accordance with specifications that have
received our prior written consent. You may not commence
such replacement, reconstruction, addition or modification until
you have received our written consent to your revised plans.
You must begin substantial construction (site
work, utility infrastructure and building erection) of the
Restaurant at least 150 days before the deadline to open the
Restaurant if the Restaurant will be in a free standing location
or at least 120 days before the deadline to open the Restaurant
if the Restaurant will be in a non-free standing location.
We may require you to provide us weekly development and
construction progress reports in the form we designate from the
date you begin development until the date you open the
Restaurant. For instance, you may be required to contact
the designated project manager and provide construction manual
checklists and digital photos during construction on a weekly
basis. In addition, on or before the deadlines to start
construction you must submit to us executed copies of any loan
documents and any other document that proves that you have
secured adequate financing to complete the construction of the
Restaurant by the date you are obligated to have the Restaurant
open and in operation. In the event that you fail to begin
construction or to secure financing pursuant to this paragraph,
we will have the right to terminate this Agreement without
opportunity to cure pursuant to subparagraph 13.B.2.
C.
Maintenance . The building,
equipment, fixtures, furnishings, signage and trade dress
(including the interior and exterior appearance) employed in the
operation of your Restaurant must be maintained and refreshed in
accordance with our requirements established periodically and
any of our reasonable schedules prepared based upon periodic
evaluations of the premises by our representatives. Within
a period of 30-45 days (as we determine depending on the work
needed) after the receipt of any particular report prepared
following such an evaluation, you must effect the items of
maintenance we designate, including the repair of defective
items and/or the replacement of irreparable or obsolete
items
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of equipment and interior signage. If,
however, any condition presents a threat to customers or public
health or safety, you must effect the items of maintenance
immediately, as further described in subparagraph 6.G. The
items of maintenance generally result from common wear and tear
over a period of time, accidents or lack of care. Examples
include, but are not limited to, repairing or replacing HVAC
equipment, plumbing and electrical systems that are not
functioning properly; repairing a leaking roof; repairing or
replacing broken operational and audio-visual equipment;
refreshing general appearance items such as paint (interior and
exterior) and landscaping; replacing worn carpet, furniture and
other furnishings; and conducting routine maintenance of areas
that affect the appearance of the Restaurant and goodwill of the
Trademarks such as the appearance of the outdoor signage, the
parking lot and dumpster area.
D.
Relocation . If you need to
relocate because of condemnation, destruction, or expiration or
cancellation of your lease for reasons other than your breach,
we will grant you authority to do so at a site acceptable to us
that is within your Designated Area; provided that (i) the new
site has been evaluated by the proprietary site evaluator
software that has been developed by GeoVue, Inc. (or by the
proprietary site evaluation system then being used by us) and
you have paid the $400 evaluation fee, provided, that you must
purchase the rights to have at least 3 sites evaluated unless we
determine your trade area does not require 3 evaluations; (ii)
we have consented in writing to the new site; (iii) the new
Restaurant is under construction within 90 days after you
discontinue operation of the Restaurant at the Authorized
Location; and (iv) the new Restaurant is open and operating
within 270 days after construction commences, all in accordance
with our then-current standards. If you voluntarily decide
to relocate the Restaurant, your right to relocate the
Restaurant will be void and your interest in this Agreement will
be voluntarily abandoned, unless you have given us notice of
your intent to relocate not less than 60 days prior to closing
the Restaurant, have procured a site that has been evaluated by
the proprietary site evaluator software that has been developed
by GeoVue, Inc. (or by the proprietary site evaluation system
then being used by us) and accepted by us within 60 days after
closing the prior Restaurant, have opened the new Restaurant for
business within 180 days of such closure and complied with any
other conditions that we reasonably require. You must pay
the costs of any relocation, and we reserve the right to charge
you for any reasonable costs that we incur.
In the event your Restaurant is destroyed or
damaged and you repair the Restaurant at the Authorized Location
(rather than relocate the Restaurant), you must repair and
reopen the Restaurant at the Authorized Location in accordance
with our then-current standards for the destroyed or damaged
area within 270 days of the date of occurrence of the
destruction or damage.
You do not have the right to relocate in the
event you lose the right to occupy the Restaurant premises
because of the cancellation of your lease due to your breach.
The termination or cancellation of your lease due to your
breach is grounds for immediate termination under subparagraph
13.B.2.
E.
Modernization or Remodel . You
agree that you will make such capital improvement or
modifications necessary to modernize, redecorate and upgrade
your Restaurant to reflect the current image of new
BUFFALO WILD WINGS ® restaurants as
reasonably requested by Franchisor during the term of this
Agreement (taking into consideration the cost of the
modernization, the life expectancy of the equipment and the
then-remaining term of this Agreement). We will not impose
any new standards or specifications requiring structural changes
or remodeling of your Restaurant more frequently than once every
seven (7) years.
You must complete to our satisfaction any
changes we require within a reasonable time, not to exceed 12
months from the date you are notified of any required changes,
except for outdoor signage as set forth in subparagraph 5.F.
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You acknowledge and agree that the requirements
of this subparagraph 5.E are both reasonable and necessary to
ensure continued public acceptance and patronage of
BUFFALO WILD WINGS ® restaurants and
to avoid deterioration or obsolescence in connection with the
operation of the Restaurant. If you fail to make any
improvement as required by this subparagraph or perform the
maintenance described in subparagraph 5.C, we may, in addition
to our other rights in this Agreement, effect such improvement
or maintenance and you must reimburse us for the costs we
incur.
Except for transfers under Subparagraph 11.G,
every other transfer of any interest in this Agreement or your
business governed by Paragraph 11 or any renewal covered by
Paragraph 4 is expressly conditioned upon your compliance with
these requirements at the time of transfer or renewal.
F.
Signage . The outdoor signage at
your Restaurant must comply with our then-current
specifications, which we may modify and change from time to time
due to modifications to the System, including changes to the
Trademarks. You must make such changes to the outdoor
signage as we require. We will pay for 1/3 of the cost to
replace your outdoor signage if: (i) your Restaurant’s
sign is less than 2 years old and (ii) we require that you
replace the sign within one year from the date of notification.
In any case, your failure to replace the signage within 15
months from the date of notification will constitute a default
of this Agreement under Paragraph 13. Any upgrades to the
type or size of your outdoor signage will be at your expense.
PRODUCTS AND OPERATIONS STANDARDS AND
REQUIREMENTS
6.
You must implement and abide by our requirements
and recommendations directed to enhancing substantial System
uniformity. The following provisions control with respect to
products and operations:
A.
Authorized Menu . Your business
must be confined to the preparation and sale of only such Menu
Items and other food and beverage products as we designate and
approve in writing from time to time for sale by your
Restaurant. You must offer for sale from the Restaurant
all items and only those items listed as Menu Items and other
approved food and beverage products. You must offer the
full Authorized Menu during all hours of operation, although you
may offer a limited selection of food Menu Items during the last
hour if your Restaurant is open past midnight and in excess of
12 hours during a day. We have the right to make
modifications to these items from time to time, and you agree to
comply with any modifications. You may not offer or sell
any other product or service at the Authorized Location without
our prior written consent.
B.
Authorized Products and Ingredients .
You must use in the operation of the Restaurant and in the
preparation of Menu Items and other food and beverage products
only the proprietary sauces and mixes and other proprietary and
non-proprietary ingredients, recipes, formulas, cooking
techniques and processes and supplies, and must prepare and
serve Menu Items and products in such portions, sizes,
appearance, taste and packaging, all as we specify in our most
current product preparation materials or otherwise in writing.
We will supply to you a copy of the current product
preparation materials prior to opening the Restaurant. You
acknowledge and agree that we may change these periodically and
that you are obligated to conform to the requirements. All
supplies, including containers, cups, plates, wrapping, eating
utensils, and napkins, and all other customer service materials
of all descriptions and types must meet our standards of
uniformity and quality. You acknowledge that the
Restaurant must at all times maintain an inventory of
ingredients, food and beverage products and other products,
material and supplies that will permit operation of the
Restaurant at maximum capacity.
C.
Approved Supplies and Suppliers .
We will furnish to you from time to time lists of approved
supplies or approved suppliers. You must only use approved
products, services, inventory, equipment, fixtures, furnishings,
signs, advertising materials, trademarked items and novelties,
and other
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items or services (collectively, “approved
supplies”) in connection with the design, construction and
operation of the Restaurant as set forth in the approved
supplies and approved suppliers lists, as we may amend from time
to time. Although we do not do so for every item, we have
the right to approve the manufacturer, distributor and/or
supplier of approved supplies and in some instances, require
that you use designated sources or suppliers. Along with a
number of other approval criteria, to be an approved supplier,
the supplier must have the ability to provide the product and/or
service, on a national basis, to at least 80% of the then
existing Restaurants. You acknowledge and agree that
certain approved supplies may only be available from one source,
and we or our affiliates may be that source. All
inventory, products, materials and other items and supplies used
in the operation of the Restaurant that are not included in the
approved supplies or approved suppliers lists must conform to
the specifications and standards we establish from time to time.
ALTHOUGH APPROVED OR DESIGNATED BY US, WE AND OUR
AFFILIATES MAKE NO WARRANTY AND EXPRESSLY DISCLAIM ALL
WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR ANY PARTICULAR PURPOSE, WITH RESPECT TO SERVICES, PRODUCTS,
EQUIPMENT (INCLUDING, WITHOUT LIMITATION, ANY REQUIRED COMPUTER
SYSTEMS), SUPPLIES, FIXTURES, FURNISHINGS OR OTHER APPROVED
ITEMS. IN ADDITION, WE DISCLAIM ANY LIABILITY ARISING OUT
OF OR IN CONNECTION WITH THE SERVICES RENDERED OR PRODUCTS
FURNISHED BY ANY SUPPLIER APPROVED OR DESIGNATED BY US.
OUR APPROVAL OR CONSENT TO ANY SERVICES, GOODS, SUPPLIERS,
OR ANY OTHER INDIVIDUAL, ENTITY OR ANY ITEM SHALL NOT CREATE ANY
LIABILITY TO US.
D.
Computer System . You must purchase
and use any computer system that we develop or select for the
Restaurant, including all future updates, supplements and
modifications (the “Computer System”). The
Computer System may include all hardware and software used in
the operation of the Restaurant, including electronic
point-of-sale cash registers and back office programs used to
record, analyze and report sales, labor, inventory and tax
information. The computer software package developed for
use in the Restaurant may include proprietary software.
You may be required to license the proprietary software
from us, an affiliate or a third party and you also may be
required to pay a software licensing or user fee in connection
with your use of the proprietary software. All right,
title and interest in the software will remain with the licensor
of the software. The computer hardware component of the
Computer System must conform to specifications we develop.
We reserve the right to designate a single source from
whom you must purchase the Computer System. You
acknowledge and agree that we will have full and complete access
to information and data entered and produced by the Computer
System. You must, at all times, have at the Authorized
Location internet access with a form of high speed connection as
we require and you must maintain: (i) an email account for our
direct correspondence with the Control Person; and (ii) a
separate email account for the Restaurant.
E.
Serving and Promotional Items . All
sales promotion material, customer goodwill items, cartons,
containers, wrappers and paper goods, eating and serving
utensils and other items, and customer convenience items used in
the sales promotion, sale and distribution of products covered
by this Agreement are subject to our approval and must, where
practicable, contain one or more of the Trademarks. We may
require you to carry and offer for sale in the Restaurant a
representative supply of approved trademarked clothing and other
novelty items, including special promotional items that we
develop and market from time to time.
F.
Health and Sanitation . Your
Restaurant must be operated and maintained at all times in
compliance with any and all applicable health and sanitary
standards prescribed by governmental authority. You also
must comply with any standards that we prescribe. In
addition to complying with such standards, if the Restaurant is
subject to any sanitary or health inspection by any governmental
authorities under which it may be rated in one or more than one
classification, it must be maintained and operated so as to be
rated in the highest available health and sanitary
classification with respect to each governmental agency
inspecting the same. In the event you fail to be rated in
the highest classification
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or receive any notice that you are not in
compliance with all applicable health and sanitary standards,
you must immediately notify us of such failure or
noncompliance.
G.
Evaluations . We or our authorized
representative have the right to enter your Restaurant at all
reasonable times during the business day for the purpose of
making pe
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