Exhibit 10.27
FRANCHISE AGREEMENT
THIS AGREEMENT, made this 7th day of July, 1982, by and between STUCKEY'S,
INC. (hereinafter called "Company") , and Bowlin's Inc., 136 Louisiana N.E.,
Albuquerque, NM 87108 a(n) (individual) (partnership) (corporation) of New
Mexico (hereinafter called "Franchisee").
RECITALS
The Company is a wholly-owned subsidiary of Pet Incorporated, a Delaware
corporation, and through Pet Incorporated possesses the entire right, title and
interest in certain registered and common law trademarks and service marks,
including STUCKEY'S, STUCKEY'S with Carriage and Lace Design, and STUCKEY'S
PECAN SHOPPE which are used in the business of Stuckey's, Inc. to identify its
STUCKEY'S PECAN SHOPPE operations and the origin of products and services
therein available. The foregoing trademarks and service marks and additional
trademarks and service marks which are or may be, from time to time, designated
by the Company, are hereinafter referred to as "Proprietary Marks". Substantial
sums have been and continue to be expended by the Company in advertising,
promoting and publicizing its Proprietary Marks.
The Company manufactures, distributes and sells certain products under the
Proprietary Marks and operates and franchises a chain of distinctive drive-in
food, confection, gift and service stores under the name STUCKEY'S PECAN SHOPPE.
The Company has developed and built a strong demand for the products sold and
the services provided in said stores and has established a reputation and good
will related to its STUCKEY'S PECAN SHOPPE stores.
The Franchisee is fully informed about and recognizes the good reputation
and required high standards of the STUCKEY'S PECAN SHOPPE and understands the
importance thereof to Company. Franchisee desires to continue in the business of
a STUCKEY'S PECAN SHOPPE, in accordance with the standards specified by the
Company, at and from the premises described in Section 1 on the terms and
conditions herein set forth.
THEREFORE, IN CONSIDERATION OF the mutual agreements herein contained and
for other good consideration acknowledged by each to be satisfactory, the
parties hereto agree as follows:
1. GRANT OF FRANCHISE:
The Company hereby licenses Franchisee, subject to the terms and
conditions hereof, to operate a STUCKEY'S PECAN SHOPPE, and to use in connection
therewith the Proprietary Marks of Company, at the specific location
(hereinafter referred to as "Premises") defined as:
Stuckey's Pecan Shoppe #253
I-40 & State Road 344
Edgewood, NM 87015
While this Agreement shall be and remain in effect,
(a) Franchisee shall use the said premises exclusively for the
business of a STUCKEY'S PECAN SHOPPE according to standards
adopted by the Company for its STUCKEY'S PECAN SHOPPE system,
and Franchisee shall not use, allow or permit the Premises to
be used for any other purpose;
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(b) Franchisee shall have the non-exclusive privileges of selling
Company's products and using the name STUCKEY'S as applied to
products and services of and by the Company in the operation of
a STUCKEY'S PECAN SHOPPE, including products and services as
may in the future, from time to time, be made a part of and
identified with the STUCKEY'S PECAN SHOPPE system;
(c) Franchisee may advertise the business operated under this
license under the names STUCKEY'S and STUCKEY'S PECAN SHOPPE,
and Franchisee may use on said Premises the Company's
Proprietary Marks, designs, advertising and other identifying
features. Company, however, reserves the right to change the
name under which the business of its STUCKEY'S PECAN SHOPPE
system is conducted and, in such event, to require Franchisee
to use the new name in the operation of its franchise hereunder
according to standards prescribed by the Company.
(d) Notwithstanding the provisions of the foregoing subparagraphs,
Franchisee shall not use the name STUCKEY'S, or any name
visually or phonetically similar thereto, as the name of or as
part of any firm or corporate name, or on any product other
than those manufactured and sold by Company, or as a prefix,
suffix or other modifying word, phrase, term, sign or symbol
not expressly authorized by Company.
2. LOCATION CLAUSE:
The Franchisee acknowledges that the franchise and license granted
under this Agreement is solely for the location set forth in Section 1. Nothing
in this Agreement shall be construed to authorize or permit Franchisee to use or
exercise the franchise or license, or any related right or privilege, at or in
any other location or for any other purpose; provided, however, that Franchisee
shall be permitted to erect billboards at other locations consistent with
Company's policies regarding outdoor advertising, and Franchisee shall be
permitted to engage in other advertising and promotion of the franchise and
license granted by this Agreement.
Notwithstanding the foregoing paragraph, in the event of the
relocation of the highway upon which the franchise granted by this Agreement is
located, Franchisee shall have the option to relocate the franchise or to add
under the provisions of this Agreement an additional location on the relocated
highway, provided that such location or additional location is not within the
franchise area defined in any other STUCKEY'S PECAN SHOPPE franchise agreement
to which the Company is a party, and that the Company is first advised thereof
in writing and gives its consent in writing, which consent shall not be
unreasonably withheld.
3. RESTRICTION ON GRANTING OF FRANCHISEES WITHIN SPECIFIC AREA:
During the term of this Agreement, the Company will not grant a
similar franchise and license to any other person, partnership, corporation, or
other entity, and the Company will not erect a company-owned STUCKEY'S PECAN
SHOPPE within the following described area:
#253: Edgewood, New Mexico: Beginning at the present store location on
Interstate 40 in a westerly direction to the Stuckey store located west of the
city of Albuquerque, New Mexico and in an easterly direction to the Stuckey
store located at Santa Rosa, New Mexico.
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4. FRANCHISE CONSIDERATION:
Franchisee shall pay to Company throughout the term of this Agreement
a franchise fee at the rate of two percent (2%) of gross sales of the franchise.
The franchise fee shall be paid to the Company monthly at the rate of 2% of
gross sales in the month for which payment is made.
The Company is endeavoring to improve the performance of its store
operations. Changes in establishment practices, in its franchise relationships
and in the format of business of the STUCKEY'S PECAN SHOPPE are reflected in
this Agreement and further, are anticipated. Such changes and other concerted
efforts will establish new directions for the Company, its image and hopefully,
our increased sales and profitability of store operations, including franchise
stores. It is agreed, therefore, that during the term of this Agreement, the
Company may from time to time increase the rate of percentage of the franchise
consideration to be paid under this Section 4; provided, however, that:
(i) No increase shall be made until after two (2) years from the
date hereof;
(ii) No increase shall be for more than fifteen percent (15%) of the
rate in effect immediately prior to the increase;
(iii) No increase shall be made at a time earlier than three (3)
years after the immediately preceding increase;
(iv) No increase in the rate shall result in a rate greater than the
franchise consideration rate provided in the then current
franchise contract form, provided that such form contains a
franchise fee provision higher than this Agreement;
(v) No increase in the rate will be made under this Agreement
without taking similar actions at a reasonably concurrent time
with respect to all franchise agreements then outstanding
having in effect a franchise fee the same as in effect at such
time under this Agreement. Such action will not be deemed to
have not been taken if the action or effect thereof is enjoined
by any legal or administrative action or prohibited by any
applicable law.
For purposes of this paragraph, the term "gross sales" shall mean all
sales whether for cash or upon credit and without regard to whether collected,
made by Franchisee in the operation of the business licensed hereunder, less
discounts and allowances, if any, and returns of products and the like, and
excluding any sales tax or other taxes (but not excluding sales or other taxes
normally constituting a part of a product's posted price) imposed on the sale
price and collected from the customer. The monthly franchise fee payments to be
made as provided for by this Section shall be remitted to the Company within
twenty (20) days following the end of each month.
5. ADVERTISING FEE:
In addition to the franchise consideration to be paid under Section 4,
Franchisee shall pay to the Company an advertising fee within twenty (20) days
after the end of each calendar month equal to five tenths of one percent (.5%)
of gross sales of the franchise for the month for which payment is to be made.
Gross sales for purposes of this Section 5 shall mean gross sales as
defined in Section 4 hereof.
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Company shall deposit all advertising fees paid hereunder in a
cooperative advertising fund. The Company shall also contribute to said fund an
amount in respect to each Company-owned STUCKEY'S PECAN SHOPPE store computed in
the same manner as the advertising fee paid by the Franchisee. Such fund shall
be used exclusively in the advertising and promotion of STUCKEY'S PECAN SHOPPES
and STUCKEY'S products and services rendered thereat. The Company shall have
responsibility for the creation and execution of all advertising and promotion
supported by such fund.
Franchisee may engage, at its own expense, in advertising and
promotional programs of its own; provided, however, that all advertising and
promotional material proposed by Franchisee shall be approved by the Company
prior to use.
6. COMPANY OBLIGATIONS AND STANDARDS OF QUALITY AND OPERATIONS:
During the term of this Agreement, the Company shall provide the
following to Franchisee:
(a) Standard plans and specifications for physical improvements,
such as fixtures, furnishings, signs and the like, and design
and layout for Franchisee's store;
(b) Training in the operation of a STUCKEY'S PECAN SHOPPE, as more
specifically covered in Section 9;
(c) Accounting forms for reporting transactions and financial data
as required by this Agreement;
(d) A copy of all of the Company's current manuals affecting the
operations of Franchisee's STUCKEY'S PECAN SHOPPE, including
its Operating, Food Service, and Petroleum Service Manuals.
During the term of this Agreement, the Company shall determine
specifications, standards and operating procedures for the STUCKEY'S PECAN
SHOPPES, including standards for products used or sold in STUCKEY'S PECAN
SHOPPES, standards of service, standards for furnishings and equipment, and
standards specifically for:
(i) The safety, maintenance, cleanliness, function and appearance
of the Franchisee's premises, including fixtures, equipment and
signs;
(ii) The general appearance and demeanor of employees, their dress
and uniforms;
(iii) The quality, style and other characteristics of merchandise
carried for sale, and bags, boxes and other packaging
materials;
(iv) Days of operation and minimum hours per day during which
Franchisee's store will be open for business, which minimum
hours per day shall be from 7:00 AM to 8:00 PM from April 1 to
October 31 and from 7:00 AM to 6:00 PM from November 1 to March
31;
(v) Advertising and promotion;
(vi) Accounting and reporting forms and use thereof;
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(vii) Recordkeeping;
(viii) Extension of credit and acceptance of credit cards;
(ix) Use and illumination of exterior and interior signs, posters,
designs and similar items;
(x) Compliance with government regulations;
(xi) The handling of returns of product by customers and customer
complaints and adjustments.
The Company shall keep Franchisee informed of all such standards and
Franchisee agrees to comply with them. Company agrees to use its best efforts to
secure adherence to these standards by all STUCKEY'S PECAN SHOPPES, whether
Company-owned or franchised, all for the purpose of attaining and maintaining
uniformity of the distinguishing characteristics of the STUCKEY'S PECAN SHOPPE
system.
7. PURCHASE OF TRADEMARK PRODUCTS:
Company will sell to Franchisee, subject to the availability thereof,
all products which it manufactures and distributes for sale in its STUCKEY'S
PECAN SHOPPE system bearing a Proprietary Mark. Franchisee will purchase, stock
and offer for sale as many lines of such product as reasonably practicable, it
being the purpose of this provision to assure that all STUCKEY'S PECAN SHOPPES
are (i) supplied with STUCKEY'S products, and (ii) identified with the national
image of the STUCKEY'S PECAN SHOPPE system and the products and services
available therein. Franchisee shall have the obligation to develop and promote
diligently the sale of STUCKEY'S products and services.
Franchisee will not sell under the franchise granted herein any
products manufactured or sold by others unless the same are approved by the
Company, which approval the Company shall not unreasonably withhold. A
Franchisee desiring to sell products and services or to use supplies other than
those offered by the Company shall submit samples thereof to the Company in
accordance with procedures established by the Company. The Company shall advise
Franchisee of its approval or rejection within forty-five (45) days of
Franchisee's submittal of a request for approval. Any rejection shall be by
notice in writing to Franchisee. An approval shall be deemed given after the
expiration of the forty-five (45) days referred to above.
8. COMPANY TRADEMARKS:
Franchisee acknowledges the validity and the ownership in the Company
of the Proprietary Marks and designs employed by the Company in the operation of
STUCKEY'S PECAN SHOPPES. Franchisee agrees to use such Proprietary marks and
designs only as permitted by the Company. All good will developed in conducting
the business of the STUCKEY'S PECAN SHOPPE covered by this Agreement shall inure
to the benefit of the Company.
9. TRAINING:
The Company shall provide a training program for Franchisee, and the
Franchisee, or the person engaged by Franchisee to be manager from time to time
of the STUCKEY'S PECAN SHOPPE licensed by this Agreement, shall participate
therein, unless excused by the Company. Such person, upon successful completion
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of the training program, shall be certified as having successfully completed
said program. Company reserves the right to refuse to certify a person who does
not successfully complete the training program. No person who is not certified
by the Company shall serve as manager of a STUCKEY'S PECAN SHOPPE, including
that operated pursuant to this Agreement.
Expenses incurred by the Franchisee, including transportation and
living expenses, wages and other employee costs, during training shall be borne
by Franchisee; but no charge shall be made by Company to Franchisee for the
training program so provided.
10. RIGHT TO INSPECTION OF PREMISES:
Company shall have the right at all times during Franchisee's normal
business hours to enter upon Franchisee's premises and to inspect Franchisee's
facilities and operations to determine and assure compliance with standards of
quality and service prescribed by Company. Company shall make available to
Franchisee within a reasonable period of time a report of such inspection.
Company shall have the right to remove from the premises, without
liability for trespass or other tort, any items that are not in conformance with
this Agreement and with applicable current standards and specifications.
11. LAWS AND ORDINANCES:
Franchisee shall have the obligation to operate and maintain its
business and premises in compliance with all applicable laws and ordinances, and
shall give assurances thereof to Company upon request.
12. SALES STAFF:
Franchisee shall maintain an adequate staff of sales people and clerks
and shall maintain a manager of the store who shall meet the standards
prescribed by Company for managers.
13. BUILDING, CONSTRUCTION AND MAINTENANCE:
Franchisee shall undertake no reconstruction or material alteration of
its STUCKEY'S PECAN SHOPPE structure without the written approval of the
Company, which approval shall not be unreasonably withheld. Withholding of
approval hereunder of a reconstruction or material alteration not meeting
applicable standards of the Company at the time such reconstruction or material
alteration is to be done shall be deemed not unreasonably withheld. Franchisee
shall keep all structures in good repair and well painted and decorated inside
and outside. It shall at all times maintain the premises, including the interior
and exterior of buildings, salesroom, restrooms, storerooms, and service station
in a clean, orderly, and sanitary condition satisfactory to Company. Franchisee
shall not maintain or erect on the Premises any outbuildings, storage
facilities, trailers, and the like, without the approval of the Company; and in
the event of approval, then only consistent with the conditions of such
approval.
14. BUILDING REFURBISHING:
In addition to regular maintenance, Franchisee agrees to refurbish the
store in which Franchisee operates as the Company may require, from time to
time, to maintain or improve appearance and efficient operations. For purposes
of this Section, refurbishing shall include (i) replacement of worn out or
obsolete fixtures, equipment and signs, (ii) substitution or addition of new or
improved fixtures, equipment and signs, (iii) redecorating and repair of the
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interior and exterior of the premises and repair and resurfacing of parking
facilities, and (iv) modification of design and layout, including structural
modifications and remodeling.
15. SIGNS:
Franchisee shall prominently display on said premises advertising
signs of such nature, form, color, number, location and size, and composed of
such material, as the Company shall direct or approve in writing.
In the event the Company disapproves of any Franchisee's sign, the
Company shall give written notice to such Franchisee explaining why such sign is
not satisfactory to Company, and if such disapproved sign is not corrected to
Company's satisfaction within a reasonable period of time after written notice
is received by the Franchisee, provided that the Company disapproval is not
unreasonable, then Company shall have the right to enter upon the premises for
the purpose of removal thereof without paying therefor and without being thereby
deemed guilty of or liable for trespass or any other tort.
In order to enhance the advertising of the franchise business,
Franchisee shall maintain off premises a reasonable number of road signs
satisfactory to the Company. Franchisee shall incur all costs for such signs,
including, but not limited to, the construction, maintenance, and insurance for
such signs.
16. ACCOUNTING AND FINANCIAL RECORDS:
Franchisee shall keep accurate, complete and up-to-date books and
records regarding sales, inventory, profit and loss from operations and
financial standing of the Franchisee, and will permit the Company during normal
business hours to inspect such books and records. Franchisee shall submit with
each continuing royalty payment under Section 4, a true, correct and complete
statement of gross sales for the period for which payment is submitted, on forms
or in a manner prescribed by the Company.
In order to further the maintenance of a uniform accounting system and
practice, Company shall advise and assist in setting up Franchisee's books and
records, at no extra charge to the Franchisee. Franchisee will permit an
examination of his accounts, books and records to be made by the Company, or a
person designated by the Company, at such time or times as the Company may
designate in writing. A copy of a report of any such examination shall be
furnished to the Franchisee. In the event that the books and records of account
of the Franchisee are maintained by the Company on behalf of the Franchisee, the
obligation of the Franchisee under this paragraph shall be deemed to be met.
The Company may, at Franchisee's request, agree to keep the books and
records of Franchisee. In such event, Franchisee shall execute the Company's
Accounting Service Agreement which shall be deemed, while in effect, a
supplement to this Agreement.
17. INSURANCE:
Franchisee shall purchase and keep in force during the term of this
Agreement adequate insurance covering the business operations of the franchise,
which insurance shall be in amounts and with carriers acceptable to the Company.
Such insurance shall include Stuckey's, Inc. as named insured. Franchisee shall
file with the Company appropriate certificates of insurance and provide for
copies of all notices of renewal or cancellation to be sent to the Company. The
insurance and minimum amounts required of the Franchisee by the Company are as
follows:
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(a) Comprehensive general liability insurance, including product
liability coverage, of not less than $1,000,000.
(b) Vehicle liability insurance, including coverage of vehicles
that may be used by employees in connection with the business
of Franchisee, of not less than $1,000,000.
(c) Workmen's Compensation insurance and other insurance that may
be required by law applicable to Franchisee's business in the
jurisdiction where located.
18. CUSTOMER COMPLAINTS:
Franchisee shall give Company immediate notice of any injury to person
or damage to property occurring on Franchisee's premises or arising out of the
operation of its business as a STUCKEY'S PECAN SHOPPE. Franchisee will receive,
investigate and adjust all complaints, whether received directly by Franchisee
or forwarded to Franchisee by the Company, arising out of the operation of its
business, all with a view to securing and maintaining the good will of the
public towards STUCKEY'S products and services. Franchisee shall indemnify
Company and save Company harmless from and against all claims for damages to
person or property occurring on Franchisee's premises or arising out of the
operation of Franchisee's business, unless occurring as a result of a breach by
the Company of its obligations set forth in the next succeeding section of this
Agreement.
19. PRODUCT WARRANTY:
Company warrants that all food products sold by it shall be as of the
date of delivery to Franchisee neither adulterated nor misbranded within the
meaning of the Federal Food, Drug and Cosmetic Act, as amended, and the pure
food laws and ordinances of the state or city in which Franchisee is located,
and will be products which are not proscribed from introduction into interstate
commerce under the Federal Food, Drug and Cosmetic Act. Company shall indemnify
Franchisee and save Franchisee harmless and shall defend Franchisee from and
against any and all charges, actions and proceedings, whether instituted by any
government or any private individual or entity, on account of any alleged
adulteration or misbranding which is in violation of the foregoing warranty.
20. PETROLEUM PRODUCTS:
It is an integral part of the style and format of business of
STUCKEY'S PECAN SHOPPES to provide for the sale of petroleum products. Company
shall, during the term hereof, provide specifications and standards to the
Franchisee for the operation of such facilities and shall render such
supervision as to assure compliance therewith. It shall further establish
procedures for the use of appropriate credit cards in the purchase of petroleum
products and shall advise and keep Franchisee informed thereof and furnish
Franchisee with supplies to be used in such credit procedures.
Arrangements for the supply of petroleum products, and all purchases
of petroleum products, shall be through the Company, unless otherwise permitted
by the Company. The Company shall extend its best efforts to procure adequate
supplies of petroleum products meeting its standards and at the best available
prices. It is a principal purpose of this Paragraph that the provision herein
and the comparable provision in other franchise agreements with other Stuckey's,
Inc. franchisees together with purchases made for Company-owned stores, will
enable Company to obtain adequate supplies of petroleum meeting Company's
standards and to obtain such products at prices favorably affected by volume
purchases.
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In the event of shortages of petroleum products, the Company will
endeavor to allocate available supplies in an equitable manner so as not to
favor one franchise store over another franchise store or a Company-owned store
over a franchise store; provided, however, that nothing herein shall affect the
obligation of the Company to comply with any statute or regulation that may at
the time of any allocation pertain to the allocation of petroleum products.
21. TERM OF AGREEMENT AND TERMINATION:
Unless terminated as otherwise herein provided, the term of this
Agreement shall be for ten (10) years from the date hereof, and may be extended
thereafter at the option of the Franchisee for successive terms of five (5)
years upon Franchisee giving at least ninety (90) days' written notice of
extension prior to the end of the term of this Agreement or the end of any
extended term hereof, provided that Franchisee shall not be in default of any
provision of this Agreement, and provided, further, that Franchisee shall
execute Company's then current standard form franchise agreement, which may
include higher percentage royalty and advertising fees than provided for herein.
Notwithstanding the provisions of the foregoing paragraph, Franchisee
may terminate this Agreement at any time by giving Company sixty (60) days'
written notice of termination, and the Company may terminate this Agreement at
any time by giving twelve (12) months' written notice of termination to the
Franchisee or by giving written notice of termination to the Franchisee upon any
of the following conditions:
(a) The filing of a petition in bankruptcy by or against the
Franchisee, or any partner if the Franchise is a partnership;
(b) The making of an assignment for the benefit of creditors or the
institution of any proceeding under any state insolvency law by
the Franchisee, or any partner if the Franchise is a
partnership;
(c) The breach by Franchisee of any obligation of Franchisee under
this Agreement and the failure of the Franchisee to correct
such breach to the satisfaction of the Company upon demand and
within thirty (30) days thereafter.
Waiver, however occurring, by the Company of any specific default by
the Franchisee shall not affect or impair the Company's rights in respect to any
subsequent default whether of the same or a different kind. No delay or omission
of the Company to exercise any right arising from a default shall affect or
impair the Company's rights as to any such default or a future default. In the
event any bankruptcy or insolvency proceeding involves less than all parties
constituting the Franchisee, the Company shall not have the right to terminate
this Agreement as to the parties involved in such bankruptcy or insolvency
proceeding, provided said other parties elect in writing, within a reasonable
period of time after the filing of any such bankruptcy or insolvency proceeding,
to continue the STUCKEY'S PECAN SHOPPE established pursuant hereto and agree to
the terms and provisions of this Agreement for the unexpired term thereof.
22. ASSIGNMENT:
Franchisee shall not sell, transfer or assign this Agreement, or any
interest herein, and shall not sell, transfer, assign, lease or sublet or offer
to sell, transfer, assign or sublet (except as security for indebtedness
incurred in connection with the business being conducted hereunder) any interest
in the premises, or any part thereof, used in the operation of this franchise,
or in the business thereon conducted, or in any equipment or furnishings located
thereon which are standard to STUCKEY'S PECAN SHOPPES, without first offering
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the same to the Company in writing at a stated price and upon stated terms,
which offer the Company may accept within sixty (60) days, and if the Company
does not accept such offer within the sixty day period, then Franchisee may
within the sixty days thereafter, sell, transfer, assign, lease or sublet such
interest as the case may be, but not at a lower price or on more favorable terms
than offered to the Company; provided, however, that no sale, transfer,
assignment, lease or subletting to a third party shall be made without the prior
written consent of the Company, which consent the Company will not unreasonably
withhold, and provided further that it shall not be deemed unreasonable for the
Company to withhold its consent to a sale, transfer, or assignment of this
Agreement, or any interest herein, if the transferee shall not agree in writing
to take subject to the terms and provisions of this Agreement for the unexpired
term hereof. Notwithstanding the foregoing,
(i) If Franchisee hereunder constitutes more than one individual,
corporation, partnership or other entity, and any one thereof
shall have the right to sell, transfer, assign, lease or sublet
any interest in the premises on which the franchise is located,
any interest in the franchise itself, or any interest in the
building, inventory, equipment, furniture or furnishings used
for the business of the franchise to any other individual,
corporation, partnership or other entity who, at the time of
such sale, transfer, assignment, lease or subletting is also
one of the individuals, corporations, partnerships, or other
entities constituting the Franchisee under this Agreement;
(ii) Franchisee, or any individual Franchisee if Franchisee is more
than one person, may, during his lifetime, give to any trust,
person, corporation or other Donee any interest in the premises
on which the franchise is located, any interest in the
franchise itself, or any interest in the building, inventory,
equipment, furniture or furnishings used in the business of the
Franchisee or such individual; provided, however, that the
Donee agrees in writing addressed to Company within a
reasonable period of time after such gift to be bound by the
terms and provisions of this Agreement;
(iii) Any legatee or heir of the Franchisee or individual Franchisee
if Franchisee is more than one person, shall upon the death of
the Franchisee be entitled to all the rights hereunder
previously held by the Franchisee or such member; provided,
however, that such legatee or heir agrees in writing within a
reasonable period of time after receiving any such property to
be bound by the terms and provisions of this Agreement;
(iv) If Franchisee is not a corporation, Franchisee may incorporate
its business and may assign its interest in this Agreement to
such corporation provided that Franchisee shall be the owner of
at least fifty-one percent (51%) of the stock of such
corporation and that the activities of the corporation are
confined exclusively to the operation of the STUCKEY'S PECAN
SHOPPE hereby licensed. In the event Franchisee is a
corporation, or becomes a corporation and assigns this
Agreement to said corporation, then at any time that person(s)
other than Franchisee become directly or indirectly the
owner(s) or controller(s) of said corporation, this Agreement
shall immediately become terminable at the option of Company.
Further, in the event Franchisee is a corporation, it shall not
be deemed a breach of this section for any shareholder in
Franchisee to sell, assign or transfer any shares to a member
of his immediate family.
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No assignment or transfer permitted by this Section 22 shall be made
without prior written advice thereof to the Company.
23. OBLIGATIONS AFTER TERMINATION:
Upon the sale by Franchisee of the premises to the Company, or to a
third party under the provisions of the preceding section, the obligations and
rights of this Agreement shall terminate, except in regard to the obligations of
Franchisee to take action or to sustain from taking action after the termination
of this Agreement and the payment of all outstanding accounts.
In the event of termination of this Agreement without a concurrent
assumption of Franchisee's obligations hereunder by an assignee or other
successor in interest as permitted by this Agreement, the Company shall purchase
from the Franchisee and the Franchisee shall sell to the Company:
(a) All merchandise of Franchisee that is in a saleable condition
and was manufactured, distributed and/or packed under the
STUCKEY'S name, at Franchisee's net cost, exclusive of
transportation charges;
(b) Electrically lighted STUCKEY'S signs displayed on the building
or elsewhere on the premises that were purchased from the
Company, and the purchase price to be paid by Company shall be
the price originally paid by the Franchisee to the Company less
ten percent (10%) depreciation per year, and with consideration
given to the condition of the sign, with particular regard to
unusual deterioration, if any.
Upon the termination of this Agreement for whatever reason, Franchisee
shall immediately cease to be a STUCKEY'S PECAN SHOPPE. Franchisee shall not
thereafter represent or hold itself out as such; shall discontinue use of the
name STUCKEY'S or any name visually or phonetically similar; and shall
discontinue at the above described premises the use of all trade names,
trademarks, service marks, signs, structures and form of advertising indicative
of a STUCKEY'S PECAN SHOPPE, or the business or products thereof, and in the
event said premises are not purchased by the Company, or are not used with
permission of Company by another in the business of a STUCKEY'S PECAN SHOPPE,
Franchisee shall make such changes in signs or buildings so as effectively to
distinguish it from its former use and from other STUCKEY'S PECAN SHOPPES.
If, upon termination, Franchisee shall remain in possession of the
premises occupied by the STUCKEY'S PECAN SHOPPE covered by this Agreement,
Franchisee shall make reasonable modifications to the exterior and interior
decor thereof as Company deems required to eliminate identification as a
STUCKEY'S PECAN SHOPPE. In the event of Franchisee failing to comply with this
obligation, Company shall have the right to enter upon Franchisee's premises and
made such modification, provided the Company acts in a reasonable manner; and
neither such entry or the making of such modification shall be a trespass or
other illegal act of the Company.
If Franchisee, after termination of this Agreement, shall refuse or
neglect to keep or perform the provisions of this Section, Franchisee shall
reimburse Company for all costs, attorneys' fees, and other expenses incurred in
connection with legal actions to require Franchisee to comply herewith and, in
addition, Franchisee shall pay to Company the sum of $500 per day as damages for
all the time that Franchisee displays the name STUCKEY'S on outdoor advertising
or on a sign at the front of or on the building after thirty (30) days after the
termination date.
-11-
<PAGE>
24. COVENANT NOT TO COMPETE:
While this Agreement is in effect, Franchisee shall not engage in any
business the same as or similar to the business covered by this Agreement
located within the area set forth in Section 3.
25. FRANCHISEE NOT AN AGENT OR LEGAL REPRESENTATIVE OF COMPANY:
This Agreement shall not constitute Franchisee the agent or employee,
or legal representative of the Company for any purpose whatsoever. The Company
and the Franchisee are not and shall not be considered as joint venturers or
partners or as agents of each other. No representations shall be made by either
party that would create an apparent agency, and neither party shall have the
power to bind or obligate the other except as provided in this Agreement.
26. NOTICES:
Any notice required to be given by either party to the other under or
in connection with this Agreement shall be in writing and delivered personally
or by certified or registered mail, return receipt requested, with adequate
postage thereon. Notices to Franchisee shall be directed to Franchisee or his
representative at Franchisee's place of business. Notices to Company shall be
directed to the President, Stuckey's, Inc., 4501 Circle 75 Parkway, Suite 6360,
Atlanta, Georgia 30339.
27. SEVERABILITY:
If any provision of this Agreement shall be construed to be illegal or
invalid, the validity of the remaining portions of this Agreement shall not be
affected thereby.
28. ARBITRATION:
The Company encourages the existence of a franchise association and,
with Franchisee, acknowledges the existence of the Franchise Advisory Board
(F.A.B.) as the franchise association of Stuckey's franchises as of the date of
this Agreement. The parties desire to submit, hear and resolve through
arbitration, certain matters which may become issues of controversy with the
assistance of the F.A.B. Accordingly, in the event of any controversy between
Company and Franchisee regarding alleged violations of Company standards of
operations and service, including store standards, image, condition of premises
and demeanor of store personnel, the parties agree to submit the controversy to
arbitration before an Arbitration Committee. The Arbitration Committee shall
consist of five persons, two franchisees appointed by the F.A.B. and two
appointed officials of the Company appointed by the Company, and the President
of the Company or his designee from the Company.
The party initiating the arbitration proceedings shall give written
notice to the other party indicating such party's desire to arbitrate, the issue
in dispute, and the reasons therefor. The two arbitrators selected shall within
ten (10) days select a chairman and the chairman shall within a reasonable
period of time select a site located in the area set forth in Section 3 for a
hearing. Except as otherwise expressly provided, the proceedings shall be
conducted in accordance with the rules then prevailing of the American
Arbitration Association.
Judgment upon an award of a majority of the arbitrators shall be
binding and may be entered in any court having jurisdiction thereof. The
Franchisee and the Company shall bear equally all expenses of the arbitration
proceeding.
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<PAGE>
29. REBATES:
In the event the Company purchases product on behalf of Franchisee and
receives any rebate or discount in respect to the purchase, Company will pass
through the full amount of such rebate or discount to the Franchisee.
30. GENERAL:
This Agreement cancels and supersedes any and all other agreements,
oral or written, among the parties with respect to any subject matter hereof and
contains all covenants and agreements between the parties with respect thereto.
No change in, addition to or erasure of any printed portion of this
Agreement (except filling in blank lines) shall be valid or binding upon the
Company unless the same is approved in writing by the President of the Company.
No agreement between the parties which is at variance with any of the
provisions of this Agreement or which imposes definite obligations upon either
party not specifically imposed by this Agreement or which is intended to be
effective or performed following the expiration or the termination of this
Agreement and imposes obligations or extends the time for performance thereof
other than as provided in this Agreement shall be binding upon either party
unless executed by Franchisee and the President or Vice President of Company.
STUCKEY'S, INC.
By /s/ Don Barnes
----------------------------------
Don Barnes, President
STATE OF GEORGIA )
) ss
COUNTY OF COBB )
Before me on this 3rd day of August, 1982, personally appeared Don Barnes
to me known to be the persons who executed the foregoing instrument and
acknowledged same to be their free act and deed.
/s/ Janice Wingham
----------------------------------------
Notary Public
My Commission Expires: 10-25-85
BOWLIN'S, INC.
/s/ Michael L. Bowlin, Exec. V.P.
------------------------------------
MICHAEL L. BOWLIN
Monica A. Bowlin, Secretary
------------------------------------
MONICA A. BOWLIN
-13-
<PAGE>
STATE OF NEW MEXICO )
) ss
COUNTY OF BERNALILLO )
Before me on this 14th day of July, 1982, personally appeared M.L.
Bowlin, Ex. V.P. & Moncia A. Bowlin, Secretary to me known to be the persons who
executed the foregoing instrument and acknowledged same to be their free act and
deed.
/s/ Nina Pratz
----------------------------------------
Notary Public
My Commission Expires: 6/30/83
-14-
<PAGE>
[STUCKEY'S LETTERHEAD]
Date: September 8, 1982 cc: Ron Fox
Subject: Addendum to Franchise Agreement
From: Don Barnes
To: Mike Bowlin
The Addendum to the Stuckey's Franchise Agreement has been received; which
includes the interpretations and comments on that particular document that you
have asked me to sign in connection with the Edgewood, New Mexico store. Subject
to the following remarks, I am returning that document to you executed on behalf
of Stuckey's, Inc.
As the caption to the document sets forth, it is acknowledged that it is a
statement of interpretation and comment on certain provisions in the franchise
agreement. They are reflective of the conversations we had on March 24 and July
6, 1982. Paragraphs 3, 4 and 6 are acknowledged as amendments and paragraph 7 as
a direction instructs to whom notices are to be sent when sent to Bowlin's
Incorporated.
I would like to expand somewhat on your paragraph 3 by simply stating that a
principal purpose of Article 7 of the franchise agreement is to maintain general
uniformity in the image of a Stuckey's Pecan Shoppe as perceived by the public.
That is a principal reason behind the standard agreement requiring approval of
products for marketing in Stuckey's Pecan Shoppes which are other than those
offered by the company. Products totally foreign to the business of Stuckey's
may adversely affect its image in the public and therefore, its goodwill, which
Stuckey's, Inc. must protect against. With this concept in mind, in addition to
what you say in your paragraph, I have no objections to the modification as
included in your paragraph 3.
If you have any questions or need further assistance with understanding the
spirit and intent of our agreement, I'd welcome the opportunity to discuss them.
/s/ DB
DB/rw
Enc.
-15-
<PAGE>
ADDENDUM TO FRANCHISE AGREEMENT
INTERPRETATION AND COMMENT ON CERTAIN PROVISIONS
IN STUCKEY'S, INC., FRANCHISE AGREEMENT AS DISCUSSED
AND AGREED UPON IN TWO (2) TELEPHONE CONVERSATIONS
BETWEEN FRANCHISEE AND COMPANY HELD ON MARCH 24, 1982,
AND ON JULY 6, 1982.
1. Page 3, Article 4, FRANCHISE CONSIDERATION, describes the terms of payment
by Franchisee of the Franchise Fee. On July 6, 1982, the Company and the
Franchisee discussed this provision of the agreement at some length, a
summary of that discussion follows: The Franchisee informed the Company
that it was the intent of the Franchisee to continue to dispense Texaco
gasoline products at the Edgewood, New Mexico, Stuckey's Store. The Company
agreed to allow the Franchisee to continue to dispense Texaco products at
that location, and the Company further agreed to pay to the Franchisee the
rebate of $0.0355 per gallon of Texaco gasoline products dispensed by the
Franchisee at that location: The Company also agreed that this rebate shall
be paid monthly, by the Company, within a reasonable time following the
receipt of the rebate for the preceding month by the Company from Texaco:
Further, the Company emphasized that, as provided by the Franchise
Agreement on Page 15, Article 29, Rebates, the Company shall pass through
to the Franchisee the Texaco rebate and any and all additional rebates or
discounts as they are received.
2. Page 4, Article 5, ADVERTISING FEE, provides for the payment by the
Franchisee of five tenths of one percent (.5%) of the monthly gross sales
to the Company as an advertising fee. Again, referencing the discussion of
July 6, 1982, between the Company and the Franchisee, the Company suggested
that at some future date, one-half of this advertising fee may be returned
to the Franchisee to be used to improve the outdoor advertising program
that the Franchisee utilizes: The Franchisee acknowledges that no
commitment was made by the Company concerning this fee, but the Franchisee
encourages the Company to return a portion of this fee in the belief that
doing so would be in the best interests of the organization.
3. Page 6, Article 7, PURCHASE OF TRADEMARK PRODUCTS, states, in part, that a
Franchisee desiring to sell products other than those offered by the
Company must submit samples and allow forty-five (45) days for Company
approval. After a discussion held on March 24, 1982, concerning a similar
provision in another franchise agreement, it was mutually agreed that this
requirement be waived. Franchisee asks Company to waive this provision
also, subject to the following: Both Franchisee and Company acknowledge
that the intent of this section is to prevent the introduction of directly
competing products that are otherwise identical to the trademarked products
supplied by the Company. Further, Franchisee hereby agrees not to introduce
such identical products or business format not consistent with a Stuckey's
Pecan Shoppe without approval of the Company.
4. Page 7, Article 13, BUILDING, CONSTRUCTION, AND MAINTENANCE, states, in
part, that no alteration of an existing Stuckey's Pecan Shoppe structure
shall be undertaken without written approval of the Company. As a result of
the discussion mentioned above in Item 3 of this Addendum, it was mutually
agreed that written approval is not needed for the changing or altering of
the display sales areas of the store as long as such alterations do not
involve the relocating of fixed partitions or walls, or other substantial
structural changes. Franchisee asks Company to also accept this provision
for this Addendum.
5. Page 9, Article 20, PETROLEUM PRODUCTS, states, in part, that Company shall
attempt to supply adequate supplies of gasoline products to Franchisee.
Franchisee merely desires to remind Company that Franchisee intends to
-16-
<PAGE>
continue to dispense Texaco gasoline products as supplied by Company and
expects any discount or rebate that the Company may receive from Texaco for
such products to be passed on to the Franchisee.
6. Page 13, Article 24, COVENANT NOT TO COMPETE, states that, Franchisee shall
not engage in any similar business covered by the Agreement within an area
set forth in Article 3 of the Franchise Agreement. The area covered by
Article 3 of the Franchise Agreement includes a store location at which the
Franchisee presently operates a similar business. The store and its
location are: Bowlin's Flying "C" Ranch, which is located approximately 48
miles East of the Edgewood Stuckey's Store on Interstate 40. Franchisee
expects that the Company, by being hereby informed of the existence of the
above mentioned competing business owned by the Franchisee, shall
acknowledge that the existence of this similar and competing business shall
not violate Article 24, or any other provisions of the Franchise Agreement,
and further, that any "covenants not to compete" contained in the Franchise
Agreement are hereby waived with respect to the business mentioned herein.
7. Page 14, Article 26, NOTICES, states, in part, that notices shall be
directed to Franchisee at his place of business. For purposes of this
Agreement, the primary place of business for the Franchisee is the
corporation office in Albuquerque, New Mexico. All notices and
communication of any kind must be sent to: Bowlin's Incorporated, 136
Louisiana N.E., Albuquerque, NM 87108.
8. Page 15, Article 29, REBATES, provides that any rebates or discounts
received by the Company for products purchased on behalf of the Franchisee
shall be passed through to the Franchisee. Franchisee again desires to
remind the Company that the Franchisee intends to continue to dispense
Texaco gasoline products, and the Franchisee expects to receive any and all
rebates or discounts in full.
9. Page 15, Article 30, GENERAL, states that no changes in, or additions to,
the Franchise Agreement shall be binding upon either party unless executed
in writing by both the Franchisee and the President or Vice President of
the Company. Franchisee therefore requests that Company sign this Addendum
to Franchise Agreement and that this Addendum shall be attached to, and
become part of, that Agreement. Further, that no other changes in this
agreement shall be binding unless acknowledged in writing and signed by
both parties.
STUCKEY'S BOWLIN'S INCORPORATED
By /s/ Don Barnes By /s/ Michael L. Bowlin
--------------------------------- -------------------------------------
DON BARNES, PRESIDENT MICHAEL L. BOWLIN
EXECUTIVE VICE PRESIDENT
-17-
<PAGE>
STATE OF GEORGIA )
) ss
COUNTY OF COBB )
Before me on this 8th day of September, 1982, personally appeared DON
BARNES to me known to be the persons who executed the foregoing instrument and
acknowledged same to be their free act and deed.
/s/ Marilyn Ann Lank
----------------------------------------
Notary Public
My Commission Expires: Notary Public, Georgia, State at large
My Commission Expires October 28, 1985
STATE OF NEW MEXICO )
) ss
COUNTY OF BERNALILLO )
Before me on this 14th day of July, 1982, personally appeared Michael L.
Bowlin, Exec. V. P. to me known to be the persons who executed the foregoing
instrument and acknowledged same to be their free act and deed.
/s/ Nina J. Pratz
----------------------------------------
Notary Public
My Commission Expires: 6/30/83
-18-
<PAGE>
PERSONAL GUARANTY AND INDEMNITY
THIS GUARANTY AND INDEMNITY is made by MICHAEL L. BOWLIN and MONICA A.
BOWLIN of 136 LOUISIANA NE, ALBUQUERQUE, NEW MEXICO, 87108, hereinafter referred
to individually and collectively as "Guarantors";
As an inducement for Stuckey's Inc., a Delaware corporation, herein
referred to as "Stuckey's", to extend credit to _________________________ herein
referred to as "Franchisee", in the course of selling supplies and making
purchases of petroleum products and other materials for the Franchisee's
account, Guarantors represent, warrant, and agree as follows:
1. Guarantors do hereby absolutely and unconditionally guarantee the full
and complete performance by Franchisee of all the terms, covenants and
conditions of the Franchise Agreement between Stuckey's and Franchisee, whether
entered into contemporaneously with this Guaranty or not, and do further
guarantee the payment of all amounts due Stuckey's from Franchisee.
2. Guarantors do agree to indemnify and hold Stuckey's harmless from and
against all liability, losses, damages, costs and expenses (including reasonable
attorneys' fees) suffered or incurred by Stuckey's arising out of the
Franchisee's failure to pay any and all amounts due third parties.
3. Guarantors within ten days of receipt of written demand from Stuckey's,
shall pay to Stuckey's any and all losses, damages, costs and expenses
(including reasonable attorneys' fees) suffered or incurred by Stuckey's as a
result of any default by Franchisee or the breach of any agreement by
Franchisee. Stuckey's shall not be required to exhaust its legal remedies
against Franchisee before making written demand of Guarantors. If there is more
than one Guarantor, each makes this Guaranty both jointly and severally.
4. Execution of this Guaranty and performance of its terms shall not result
in the breach of any term or provision, or constitute a default under, any
indenture, mortgage, deed of trust, security agreement, financial agreement or
contract to which Guarantors are a party or are otherwise bound.
5. In the event the Guarantors shall pay to Stuckey's any obligation of
Franchisee as provided herein, Guarantors shall be subrogated to Stuckey's right
of recovery against Franchisee to the extent of any such payment made by
Guarantors.
6. This Guaranty shall inure to the benefit of Stuckey's, its parent
company, Pet Incorporated, their successors and assigns, and shall be binding
upon Guarantors, their successors, assigns, heirs and legal representatives.
7. Guarantors expressly agree that this Guaranty and its provisions shall
not be modified, amended or waived in any manner except by written instrument
signed by Stuckey's.
-19-
<PAGE>
IN WITNESS WHEREOF, Guarantors have executed and delivered this Guaranty
this 14th day of July, 19___________.
GUARANTORS:
MICHAEL L. BOLWIN /s/ Michael L. Bowlin
----------------------------------- ----------------------------------------
(Signature of Guarantor)
MONICA A. BOWLIN /s/ Monica A. Bowlin
----------------------------------- ----------------------------------------
(Signature of Guarantor's Spouse)
STATE OF NEW MEXICO )
) ss
COUNTY OF BERNALILLO )
Before me on this 14th day of July, 1982, personally appeared MICHAEL L.
AND MONICA A. BOLWIN to me known to be the persons who executed the foregoing
instrument and acknowledged same to be their free act and deed.
/s/ Nina J. Pratz
----------------------------------------
Notary Public
My Commission Expires: 6/30/83
-20-
