ROCKY MOUNTAIN CHOCOLATE
FACTORY
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Franchisee:
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Date:
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Franchised
Location:
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Page
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1
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1
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1
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2.2. Scope of Franchise Operations
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1
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3. FRANCHISED LOCATION AND DESIGNATED
AREA
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2
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2
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3.2. Limitation on Franchise Rights;
Relocation
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2
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3.3. Franchisor’s Reservation of
Rights
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2
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3
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4.1. Initial Franchise Fee
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3
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5. DEVELOPMENT OF FRANCHISED LOCATION
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3
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3
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5.2. Conversion and Design
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3
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4
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4
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5.5. Electronic Communications
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4
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5.6. Permits and Licenses
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4
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5.7. Anti-Terrorism Representation
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5
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5.8. Commencement of Operations
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5
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5
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6.1. Initial Training Program
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5
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5
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6
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7. DEVELOPMENT ASSISTANCE
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6
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7.1. Franchisor’s Development
Assistance
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6
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7
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7
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8.2. Confidentiality of Operations Manual
Contents
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7
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8.3. Changes to Operations Manual
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7
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7
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9.1. Franchisor’s Services
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7
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9.2. Additional Franchisor Services
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8
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10. FRANCHISEE’S OPERATIONAL
COVENANTS
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8
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8
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10.2. Factory Candy Purchases
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11
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10.3. Payment for Factory Candy
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11
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10.4. Limitations on Supply
Obligations
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11
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10.5. Changes in Products
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11
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11
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11
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12
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12
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11.4. Authorization for Prearranged Payments by
Electronic Transfer
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12
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i
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Page
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13
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12.1. Approval of Advertising
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13
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13
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12.3. Marketing and Promotion Fee
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13
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12.4. Regional Advertising Programs
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14
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14
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15
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13.1. Compliance with Operations
Manual
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15
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13.2. Standards and Specifications
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15
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15
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13.4. Restrictions on Services and
Products
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15
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15
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13.6. Request to Change Supplier
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16
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13.7. Approval of Intended Supplier
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16
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14. TRADEMARKS, TRADE NAMES AND PROPRIETARY
INTERESTS
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16
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16
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14.2. No Use of Other Marks
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16
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16
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14.4. Effect of Termination
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16
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17
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14.6. Franchisee’s Business Name and
Domain Name
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17
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17
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17
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18
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15. REPORTS, RECORDS AND FINANCIAL
STATEMENTS
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18
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18
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15.2. Annual Financial Statements
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18
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18
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18
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15.5. Audit of Books and Records
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18
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15.6. Failure to Comply with Reporting
Requirements
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19
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19
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19
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16.1. Transfer by Franchisee
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19
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16.2. Pre-Conditions to Franchisee’s
Transfer
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19
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16.3. Franchisor’s Approval of
Transfer
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20
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16.4. Right of First Refusal
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21
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21
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16.6. Transfer by the Franchisor
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21
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16.7. Franchisee’s Death or
Disability
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21
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22
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22
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22
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17.3. Rights Upon Expiration
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22
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17.4. Exercise of Option for Successor
Franchise
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22
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17.5. Conditions of Refusal
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23
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ii
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Page
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18. DEFAULT AND TERMINATION
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23
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18.1. Termination by Franchisor —
Effective Upon Notice
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23
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18.2. Termination by Franchisor — Thirty
Days Notice
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24
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18.3. Franchisor’s Remedies
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25
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25
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18.5. Obligations of Franchisee Upon Termination
or Expiration
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26
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18.6. State and Federal Law
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27
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19. BUSINESS RELATIONSHIP
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27
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19.1. Independent Businesspersons
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27
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19.2. Payment of Third Party
Obligations
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28
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28
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20. RESTRICTIVE COVENANTS
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28
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20.1. Non-Competition During Term
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28
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20.2. Post-Termination Covenant Not to
Compete
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29
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20.3. Confidentiality of Proprietary
Information
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29
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20.4. Confidentiality Agreement
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29
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30
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30
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21.2. Proof of Insurance Coverage
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30
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22. MISCELLANEOUS PROVISIONS
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30
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22.1. Governing Law/Consent to Venue and
Jurisdiction
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30
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30
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31
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31
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22.5. Delegation by the Franchisor
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31
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31
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22.7. Review of Agreement
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31
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31
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31
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22.11. No Right to Set Off
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32
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32
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32
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32
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32
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Addendum to
Franchise Agreement — Location Approval
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Personal
Guaranty
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Statement of
Ownership
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Addendum to
Franchise Agreement Related to the Authorization of Prearranged
Payments
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Permit, License
and Construction Certificate
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Confidentiality
and Noncompetition Agreement
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iii
ROCKY MOUNTAIN CHOCOLATE FACTORY,
INC.
FRANCHISE AGREEMENT
THIS AGREEMENT
(the “ Agreement ”) is made this ___day of
, 20___, by and between ROCKY MOUNTAIN CHOCOLATE FACTORY, INC., a
Colorado corporation, located at 265 Turner Drive, Durango,
Colorado 81303 (the “ Franchisor ”) and
, located at
(the “ Franchisee ”), who, on the basis of the
following understandings and agreements, agree as
follows:
1.1. The
Franchisor has developed methods for establishing, operating and
promoting retail stores selling gourmet chocolates and other
premium confectionery products (“ ROCKY MOUNTAIN CHOCOLATE
FACTORY Stores ” or “ Stores ”) using
the service mark “ROCKY MOUNTAIN CHOCOLATE FACTORY” and
related trade names and trademarks (“ Marks ”)
and the Franchisor’s proprietary methods of doing business
(the “ Licensed Methods ”).
1.2. The
Franchisor grants the right to others to develop and operate ROCKY
MOUNTAIN CHOCOLATE FACTORY Stores, under the Marks and pursuant to
the Licensed Methods.
1.3. The
Franchisee desires to establish a ROCKY MOUNTAIN CHOCOLATE FACTORY
Store at a location identified herein or to be later identified,
and the Franchisor desires to grant the Franchisee the right to
operate a ROCKY MOUNTAIN CHOCOLATE FACTORY Store at such location
under the terms and conditions which are contained in this
Agreement.
2.1.
Grant of Franchise . The Franchisor grants to the Franchisee, and
the Franchisee accepts from the Franchisor, the right to use the
Marks and Licensed Methods in connection with the establishment and
operation of a ROCKY MOUNTAIN CHOCOLATE FACTORY Store, at the
location described in Article 3 of this Agreement. The
Franchisee agrees to use the Marks and Licensed Methods, as they
may be changed, improved, and further developed by the Franchisor
from time to time, only in accordance with the terms and conditions
of this Agreement.
2.2.
Scope of Franchise Operations . The Franchisee agrees at all times to
faithfully, honestly and diligently perform the Franchisee’s
obligations hereunder, and to continuously exert best efforts to
promote the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee
agrees to utilize the Marks and Licensed Methods to operate all
aspects of the business franchised hereunder in accordance with the
methods and systems developed and prescribed from time to time by
the Franchisor, all of which are a part of the Licensed Methods.
The Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store shall
offer such products and services as the Franchisor shall designate
and shall be restricted from manufacturing, offering or selling any
products or services not previously approved by the Franchisor in
writing. The Franchisee is required to devote a minimum of 50% of
all retail display space to ROCKY MOUNTAIN CHOCOLATE FACTORY brand
assorted bulk chocolates and boxed and packaged candies. The
Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store must
feature ROCKY MOUNTAIN CHOCOLATE FACTORY brand candy manufactured
by the Franchisor or its designees and sold by the Franchisor
(“ Factory Candy ”) and related nonconfectionery
items (“ Items ”) approved by the Franchisor in
writing. Depending on the retail environment and the configuration
of the Store, the Franchisee may also be permitted to make, offer
and sell confections made
in the Store,
including caramel-covered apples and candy-covered apples (“
Store Candy ”) prepared in accordance with recipes and
processes set forth in the Operations Manual, as that term is
defined in Section 8.1 . Some Stores do not offer Store
Candy.
3. FRANCHISED LOCATION AND
DESIGNATED AREA
3.1.
Franchised Location . The Franchisee is granted the right and
franchise to own and operate one ROCKY MOUNTAIN CHOCOLATE FACTORY
Store at the address and location which shall be set forth in
Exhibit I , attached hereto (“ Franchised
Location ”). The type of Store configuration shall also
be set forth in Exhibit I , attached hereto. Smaller
Stores, regardless of their configuration, are referred to as
“ Kiosks ” or “ Kiosk Stores
” in this Agreement and all references to
“Stores” shall be deemed to include Kiosk
Stores.
3.2.
Limitation on Franchise Rights; Relocation
. The rights that are hereby granted
to the Franchisee are for the specific Franchised Location and
cannot be transferred to an alternative Franchised Location, or any
other location, without the prior written approval of the
Franchisor. If the Franchisee has operated a ROCKY MOUNTAIN
CHOCOLATE FACTORY Store for not less than 12 months and
desires to relocate it to an alternative site, the Franchisee must
set forth its reasons for requesting the relocation in writing to
the Franchisor, along with a proposed new location. The Franchisor
will have 30 days from receipt of the Franchisee’s
written request to respond. If the Franchisor approves the
relocation and the proposed new location, and if the ownership of
the Franchisee does not change in any respect from the ownership of
the Franchisee before the relocation, then the Franchisee may move
its Store to the new approved location, provided that the
Franchisee signs the Franchisor’s then current form of
Franchise Agreement and opens the Store at the new location within
12 months after the Store closes at its former Franchised
Location. In addition, the Franchisee will be required to pay a
nonrefundable design fee of $2,500 to the Franchisor for the
Franchisor’s Store designers to design the layout of the
Franchisee’s new Store location. A similar design fee will
also apply if the Franchisee requests design assistance in
remodeling its Store at any time during the term of this Agreement.
See Section 5.2 below. The Marks and Licensed Methods
are licensed to the Franchisee for the operation of the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store only at the Franchised Location;
therefore, the Franchisee may not operate food carts, participate
in food festivals or offer any other type of off-site food services
using the Marks and Licensed Methods without the prior written
consent of the Franchisor, in which case the Franchisor and the
Franchisee shall execute an addendum to this Agreement relating to
the operation of “ Satellite Stores ” (if this
Agreement governs the operation of a traditional Store, any
Satellite Store(s) shall be governed by separate Franchise
Agreements) or “ Temporary Stores .”
3.3.
Franchisor’s Reservation of Rights
. The Franchisee acknowledges that
the franchise granted hereunder is non-exclusive and that the
Franchisor retains the rights, among others: (1) to use, and to
license others to use, the Marks and Licensed Methods for the
operation of ROCKY MOUNTAIN CHOCOLATE FACTORY Stores, Kiosk Stores,
Satellite Stores and Temporary Stores, at any location other than
at the Franchised Location; (2) to use the Marks and Licensed
Methods to identify services and products, promotional and
marketing efforts or related items, and to identify products and
services similar to or the same as those which the Franchisee will
sell, but made available through alternative channels of
distribution other than through traditional ROCKY MOUNTAIN
CHOCOLATE FACTORY Stores, at any location other than at the
Franchised Location, including, but not limited to, through
Satellite Stores, Temporary Stores, Kiosk Stores, co-branded
Stores, by way of mail order, (including electronic mail order),
the Internet, catalog, telemarketing, other direct marketing
methods, television, retail store display or through the wholesale
sale of its products to unrelated retail outlets or to candy
distributors or outlets located in stadiums, arenas, airports,
turnpike rest stops or supermarkets; and (3) to use and
license the use of other proprietary marks or methods in connection
with the sale of products and services similar to those which the
Franchisee will sell or in connection with the operation of retail
stores selling gourmet
2
chocolates or
other premium confectionery products, at any location other than at
the Franchised Location, which stores are the same as, or similar
to, or different from a traditional ROCKY MOUNTAIN CHOCOLATE
FACTORY Store or a Satellite Store, a Temporary Store or a Kiosk
Store, on any terms and conditions as the Franchisor deems
advisable, and without granting the Franchisee any rights
therein.
4.1.
Initial Franchise Fee . In consideration for the right to develop and
operate one ROCKY MOUNTAIN CHOCOLATE FACTORY Store, the Franchisee
agrees to pay to the Franchisor an initial franchise fee in the
amount set forth in Exhibit I attached hereto, all of
which is due and payable on the date the Franchisee signs this
Agreement. The Franchisee acknowledges and agrees that the initial
franchise fee represents payment for the initial grant of the
rights to use the Marks and Licensed Methods, that the Franchisor
has earned the initial franchise fee upon receipt thereof and that
the fee is under no circumstances refundable to the Franchisee
after it is paid, except as set forth in Section 5.8 of
this Agreement. If a transfer occurs, no initial franchise fee
shall be due at the time that the Franchisee transfers the Store to
another party, but a transfer fee will apply as set forth in
Section 16.2 of this Agreement.
5. DEVELOPMENT OF FRANCHISED
LOCATION
5.1.
Approval of Lease . The Franchisee shall obtain the
Franchisor’s prior written approval before executing any
lease or purchase agreement for the Franchised Location. Any lease
for the Franchised Location shall, at the option of the Franchisor,
contain provisions including: (1) allowing for assignment of
the lease to the Franchisor in the event that this Agreement is
terminated or not renewed for any reason; (2) giving the
Franchisor the right to cure any default by the Franchisee under
such lease; and/or (3) providing the Franchisor with the
right, exercisable upon and as a condition of the approval of the
Franchised Location, to execute the lease agreement or other
document providing entitlement to the use of the Franchised
Location in its own name or jointly with the Franchisee as lessee
and, upon the exercise of such option, the Franchisor shall provide
the Franchisee with the right to use the premises as its sublessee,
assignee, or other similar capacity upon the same terms and
conditions as obtained by the Franchisor. The Franchisee shall
deliver a copy of the signed lease for the Franchised Location to
the Franchisor within 15 days of its execution. The Franchisee
acknowledges that approval of a lease for the Franchised Location
by the Franchisor does not constitute a recommendation, endorsement
or guarantee by the Franchisor of the suitability of the location
or the lease and the Franchisee should take all steps necessary to
ascertain whether such location and lease are acceptable to the
Franchisee.
5.2.
Conversion and Design . The Franchisee acknowledges that the layout,
design, decoration and color scheme of ROCKY MOUNTAIN CHOCOLATE
FACTORY Stores are an integral part of the Franchisor’s
proprietary Licensed Methods and accordingly, the Franchisee shall
convert, design and decorate the Franchised Location in accordance
with the Franchisor’s plans and specifications which are
contained in a Design and Construction Manual that is considered,
for the purposes of this Agreement, to be a part of the Operations
Manual, defined in Section 8.1 . The Franchisee shall
hire an architect/designer to prepare written plans for the
Store’s layout and construction, which plans shall be
submitted to the Franchisor for its prior written approval.
Throughout the term of this Agreement, the Franchisee shall also
obtain the Franchisor’s written consent to any remodeling or
decoration of the premises before remodeling or decorating begins,
recognizing that such remodeling, decoration and any related costs
are the Franchisee’s sole responsibility. If the Franchisee
remodels its Store or if the Franchisee relocates its Store at any
time during the term of this Agreement, the Franchisee shall pay
the Franchisor $2,500 for the Franchisor’s review and
approval of the new Store design.
3
5.3.
Signs . The
Franchisee shall purchase or otherwise obtain for use at the
Franchised Location and in connection with the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, signs which comply with the standards and
specifications of the Franchisor as set forth in the Operations
Manual, as that term is defined in Section 8.1 . It is
the Franchisee’s sole responsibility to insure that any signs
comply with applicable local ordinances, building codes and zoning
regulations. Any modifications to the Franchisor’s standards
and specifications for signs that must be made due to local
ordinances, codes or regulations shall be submitted to the
Franchisor for prior written approval. The Franchisee acknowledges
the Marks, or any other name, symbol or identifying marks on any
signs shall only be used in accordance with the Franchisor’s
standards and specifications and only with the prior written
approval of the Franchisor.
5.4.
Equipment . The
Franchisee shall purchase or otherwise obtain for use at the
Franchised Location and in connection with the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, equipment of a type and in an amount which
complies with the standards and specifications of the Franchisor.
The Franchisee acknowledges that the type, quality, configuration,
capability and/or performance of the equipment are all standards
and specifications which are a part of the Licensed Methods and
therefore such equipment must be purchased, leased, or otherwise
obtained in accordance with the Franchisor’s standards and
specifications and only from suppliers or other sources approved by
the Franchisor. The Franchisee must purchase a facsimile machine
and connect it to a phone line that is separate from the main phone
number for the Store. The Franchisee shall equip the Store with an
integrated store information system (“ System
”), computer hardware and software, printers and other
designated equipment consistent with the standards and
specifications of the Franchisor. The Franchisor requires that it
be given reasonable access to information and data regarding the
Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store by
computer modem with a separate phone line dedicated to such modem,
or by another form of electronic transmission. The Franchisee must
purchase and maintain throughout the term of this Agreement a
maintenance and support agreement for the System with the
Franchisor’s designated supplier. The Franchisor also
requires the Franchisee to obtain and maintain an account with an
Internet service provider that meets the Franchisor’s
standards and specifications to facilitate electronic
communication.
5.5.
Electronic Communications . The Franchisee shall obtain and maintain
computer hardware, software and an Internet connection meeting the
Franchisor’s standards and specifications as they may exist
from time to time. The Franchisee agrees that the Franchisor may
assign an electronic mail address to the Franchisee and the
Franchisee agrees to use such address to access messages and
information posted by the Franchisor and other ROCKY MOUNTAIN
CHOCOLATE FACTORY franchise owners. The Franchisor may post
information about the Franchisee’s Store on the
Franchisor’s intranet system for comparative analysis
purposes. The Franchisee agrees to participate in the
Franchisor’s electronic intranet system and to abide by the
terms of use governing it. Information on the Franchisor’s
intranet system and the terms of use governing the
Franchisor’s intranet system are deemed to be incorporated
into the terms of the Operations Manual and any violations of the
terms of use will be treated as a violation of the rules governing
the Operations Manual.
5.6.
Permits and Licenses . The Franchisee agrees to obtain all such
permits and certifications as may be required for the lawful
construction and operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store together with all certifications from government authorities
having jurisdiction over the site, that all requirements for
construction and operation have been met, including without
limitation, zoning, access, sign, health, safety requirements,
building and other required construction permits, licenses to do
business and fictitious name registrations, sales tax permits,
health and sanitation permits and ratings and fire clearances. The
Franchisee agrees to obtain all customary contractors’ sworn
statements and partial and final lien waivers for construction,
remodeling, decorating and installation of equipment at the
Franchised Location. The Franchisee shall sign and deliver to the
Franchisor the Permit,
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License and
Construction Certificate set forth as Exhibit V to this
Agreement, to confirm Franchisee’s compliance with the
Americans with Disabilities Act and other provisions of this
Section 5.6 not later than 30 days prior to the
date the Store begins operating. Copies of all inspection reports,
warnings, certificates and ratings issued by any governmental
entity during the term of this Agreement in connection with the
conduct of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store which
indicates the Franchisee’s failure to meet or maintain the
highest governmental standards, or less than full compliance by the
Franchisee with any applicable law, rule or regulation, shall be
forwarded to the Franchisor within five days of the
Franchisee’s receipt thereof.
5.7.
Anti-Terrorism Representation . The Franchisee represents to the Franchisor
that it and all persons or entities holding any legal or beneficial
interest whatsoever in the Franchisee are not included in, owned
by, controlled by, acting for or on behalf of, providing
assistance, support, sponsorship, or services of any kind to, or
otherwise associated with any of the persons or entities referred
to or described in Executive Order 13224-Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism, as amended.
5.8.
Commencement of Operations . Unless otherwise agreed in writing by the
Franchisor and the Franchisee, the Franchisee has 180 days
from the date of this Agreement within which to complete the
initial training program, described in Section 6.1 of
this Agreement, develop the Franchised Location and commence
operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. Failure to
commence operations within this time frame shall constitute grounds
for termination under Article 18 of this Agreement. If
this Agreement is terminated by the Franchisor for failure to
commence operation of the Store within applicable time limits,
$5,000 of the initial franchise fee will be refunded to the
Franchisee. The Franchisor will extend the time in which the
Franchisee has to commence operations for a reasonable period of
time in the event factors beyond the Franchisee’s reasonable
control prevent the Franchisee from meeting this development
schedule, so long as the Franchisee has made reasonable and
continuing efforts to comply with such development obligations and
the Franchisee requests, in writing, an extension of time in which
to have its ROCKY MOUNTAIN CHOCOLATE FACTORY Store established
before such development period lapses. However, notwithstanding the
Franchisor’s written agreement to extend the
Franchisee’s development period, if more than 270 days
elapse between the date of this Agreement and the commencement of
operation of the Store, the Franchisor reserves the right, in its
sole discretion, to require the Franchisee to execute the
Franchisor’s then current form of Franchise Agreement or an
amendment to this Agreement to conform this Agreement with the
terms of the then current Franchise Agreement.
6.1.
Initial Training Program . After the Franchisee executes a lease for the
Franchised Location, the Franchisee or, if the Franchisee is not an
individual, the person designated by the Franchisee to assume
primary responsibility for the management of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, (“ General Manager ”)
is required to attend and successfully complete the initial
training program which is offered by the Franchisor at one of the
Franchisor’s designated training facilities. Up to three
individuals are eligible to participate in the Franchisor’s
initial training program without charge of a tuition or fee. The
Franchisee shall be responsible for any and all traveling and
living expenses incurred in connection with attendance at the
training program. At least one individual must successfully
complete the initial training program prior to the
Franchisee’s commencement of operation of its ROCKY MOUNTAIN
CHOCOLATE FACTORY Store.
6.2.
Length of Training . The initial training program shall consist of
7 days of instruction at a location designated by the
Franchisor; provided, however, that the Franchisor reserves the
right to waive a
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portion of the
training program or alter the training schedule, if in the
Franchisor’s sole discretion, the Franchisee or General
Manager has sufficient prior experience or training.
6.3.
Additional Training . From time to time, the Franchisor may present
seminars, conventions or continuing development programs or conduct
meetings or webinars for the benefit of the Franchisee. The
Franchisee or its General Manager shall be required to attend any
ongoing mandatory seminars, webinars, conventions, programs or
meetings as may be offered by the Franchisor. The Franchisor shall
give the Franchisee at least 30 days prior written notice of
any ongoing seminar, convention or program that is deemed
mandatory. The Franchisor shall not require that the Franchisee
attend any ongoing training in person more often than once a year.
All mandatory training will be offered without charge of a tuition
or fee; provided, however, the Franchisee will be responsible for
all traveling and living expenses which are associated with
attendance at the same.
7. DEVELOPMENT
ASSISTANCE
7.1.
Franchisor’s Development Assistance
. The Franchisor shall provide the
Franchisee with assistance in the initial establishment of the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store as follows:
a. Provision of
the initial training program to be conducted at the
Franchisor’s designated training facilities or at another
location designated by the Franchisor, as described in
Article 6 above.
b. Provision of
written guidelines for a Franchised Location that shall include,
without limitation, specifications for space requirements and build
out. The Franchisee acknowledges that the Franchisor shall have no
other obligation to provide assistance in the selection and
approval of a Franchised Location other than the provision of such
written specifications and approval or disapproval of a proposed
Franchised Location, which approval or disapproval shall be based
on information submitted to the Franchisor in a form sufficient to
assess the proposed location as may be required by the Franchisor,
in the Franchisor’s sole discretion, and on information
gathered by the Franchisor.
c. Direction
regarding the required conversion, design and decoration of the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store premises, plus
specifications concerning signs, seasonal graphics, music, decor
and equipment.
d. Direction
regarding the selection of suppliers of equipment, seasonal
graphics, music, items and materials used and inventory offered for
sale in connection with the ROCKY MOUNTAIN CHOCOLATE FACTORY Store.
The Franchisor will determine the Franchisee’s initial
inventory of Factory Candy that the Franchisee will purchase,
depending on the size and configuration of the Store. After
execution of this Agreement, the Franchisor will provide the
Franchisee with a list of approved suppliers, if any, of such
equipment, items, seasonal graphics, music, materials and inventory
and, if available, a description of any national or central
purchase and supply agreements offered by such approved suppliers
for the benefit of ROCKY MOUNTAIN CHOCOLATE FACTORY
franchisees.
e. Provision of an
Operations Manual in accordance with Section 8.1
below.
f. As the
Franchisor may reasonably schedule, and depending on availability
of personnel, the Franchisor will make available to the Franchisee
at or close to the opening of the Franchisee’s ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, a representative (“
Site
6
Representative ”) who will be present for up to five days
beginning approximately three days prior to the opening of the
Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store. If the
Franchisee’s Store opens on or near a holiday, however, the
Site Representative shall not begin the in-Store assistance until
three days after the holiday. Holidays shall include, but not be
limited to, New Years Day, Valentines Day, Easter, Memorial Day,
Fourth of July, Labor Day, Thanksgiving, Hanukkah and Christmas.
There will be no charge to the Franchisee for this service provided
by the Franchisor. The Site Representative will assist the
Franchisee’s employees in opening the Store, unless in the
Franchisor’s determination, the Franchisee or the General
Manager have sufficient prior training or experience.
8.1.
Operations Manual . The Franchisor agrees to loan to the
Franchisee one or more manuals, technical bulletins, cookbooks and
recipes and other written materials (collectively referred to as
“ Operations Manual ”) covering Factory Candy
ordering, Store Candy manufacturing, processing and stocking and
other operating and in-store marketing techniques for the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee agrees that it
shall comply with the Operations Manual as an essential aspect of
its obligations under this Agreement, that the Operations Manual
shall be deemed to be incorporated herein by reference and failure
by the Franchisee to substantially comply with the Operations
Manual may be considered by the Franchisor to be a breach of this
Agreement. Upon the expiration, transfer or termination of this
Agreement for any reason, the Franchisee shall return to the
Franchisor, or transfer to an approved transferee, if applicable,
all volumes of the manuals which together comprise the Operations
Manual. Failure to return or transfer, as applicable, all volumes
of the Operations Manual in good condition, reasonable wear and
tear excepted, shall cost the Franchisee $150 per volume, payable
to the Franchisor upon demand.
8.2.
Confidentiality of Operations Manual Contents
. The Franchisee agrees to use the
Marks and Licensed Methods only as specified in the Operations
Manual. The Operations Manual is the sole property of the
Franchisor and shall be used by the Franchisee only during the term
of this Agreement and in strict accordance with the terms and
conditions hereof. The Franchisee shall not duplicate the
Operations Manual nor disclose its contents to persons other than
its employees or officers who have signed the form of
Confidentiality and Noncompetition Agreement attached hereto as
Exhibit VI and incorporated herein by reference. The
Franchisee shall return the Operations Manual to the Franchisor
upon the expiration, termination or transfer of this
Agreement.
8.3.
Changes to Operations Manual . The Franchisor reserves the right to revise
the Operations Manual from time to time as it deems necessary to
update or change operating and marketing techniques, standards and
specifications for all components of the Licensed Methods and
approved Factory Candy, Items and Store Candy offered by Stores.
The Franchisee, within 30 days of receiving any updated
information, shall in turn update its copy of the Operations Manual
as instructed by the Franchisor and shall conform its operations
with the updated provisions within a reasonable time after receipt
of such updated information. The Franchisee acknowledges that a
master copy of the Operations Manual maintained by the Franchisor
at its principal office shall be controlling in the event of a
dispute relative to the content of any Operations
Manual.
9.1.
Franchisor’s Services . The Franchisor agrees that, during the
Franchisee’s operation of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store, the Franchisor shall make available to the
Franchisee the following services:
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a. Upon the
reasonable request of the Franchisee, consultation by telephone and
electronic mail regarding the continued operation and management of
a ROCKY MOUNTAIN CHOCOLATE FACTORY Store and advice regarding the
retail services, product quality control, inventory issues,
customer relations issues and similar advice.
b. Access to
advertising and promotional materials as may be developed by the
Franchisor, the cost of which may be passed on to the Franchisee at
the Franchisor’s option.
c. On-going
updates of information and programs regarding the candy industry,
the ROCKY MOUNTAIN CHOCOLATE FACTORY concept and related Licensed
Methods, including, without limitation, information about special
or new products which may be developed and made available to ROCKY
MOUNTAIN CHOCOLATE FACTORY franchisees.
d. Depending on
availability, allow replacement or additional General Managers to
attend the initial training program. The Franchisor reserves the
right to charge a tuition or fee in an amount payable in advance,
commensurate with the Franchisor’s then current published
prices for such training. The Franchisee shall be responsible for
all travel and living expenses incurred by its personnel during the
training program. Further, the availability of the training program
shall be subject to space considerations and prior commitments to
new ROCKY MOUNTAIN CHOCOLATE FACTORY franchisees.
9.2.
Additional Franchisor Services . Although not obligated to do so, upon the
reasonable request of the Franchisee, the Franchisor may make its
employees or designated agents available to the Franchisee for
on-site advice and assistance in connection with the on-going
operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store governed by
this Agreement. In the event that the Franchisee requests such
additional assistance and the Franchisor agrees to provide the
same, the Franchisor reserves the right to charge the Franchisee
for all travel, lodging, living expenses, telephone charges and
other identifiable expenses associated with such assistance, plus a
fee based on the time spent by each employee on behalf of the
Franchisee, which fee will be charged in accordance with the then
current daily or hourly rates being charged by the Franchisor for
assistance.
10. FRANCHISEE’S
OPERATIONAL COVENANTS
10.1.
Store Operations .
The Franchisee acknowledges that it is solely responsible for the
successful operation of its ROCKY MOUNTAIN CHOCOLATE FACTORY Store
and that the continued successful operation thereof is, in part,
dependent upon the Franchisee’s compliance with this
Agreement and the Operations Manual. In addition to all other
obligations contained in this Agreement and in the Operations
Manual, the Franchisee covenants that:
a. The Franchisee
shall maintain clean, efficient and high quality ROCKY MOUNTAIN
CHOCOLATE FACTORY Store operations and shall operate the business
in accordance with the Operations Manual and in such a manner as
not to detract from or adversely reflect upon the name and
reputation of the Franchisor and the goodwill associated with the
ROCKY MOUNTAIN CHOCOLATE FACTORY name and Marks.
b. The Franchisee
will operate its ROCKY MOUNTAIN CHOCOLATE FACTORY Store in
compliance with all applicable laws, health department regulations
and other ordinances. In connection therewith, the Franchisee will
be solely and fully responsible for obtaining a

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