SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported) August 28, 1997
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INTERNATIONAL FAST FOOD CORPORATION, INC.
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(Exact name of registrant as specified in its charter)
Florida 0-20203 65-0302338
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(State or other jurisdiction (Commission File (IRS Employer
or incorporation) Number) Identification No.)
1000 Lincoln Road, Suite 200, Miami Beach, Florida 33139
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (305) 531-5800
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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On August 28, 1997, a wholly owned subsidiary of International Fast Food
Corporation ("IFFC"), Krolewska Pizza Sp.z.o.o. ("KP") entered into a New Master
Franchise Agreement with Domino's Pizza International, Inc. ("Domino's"),
granting KP the exclusive right to develop and operate and to sub-license
Domino's Pizza stores and to operate a commissary for the Domino's system and
the use of the Domino's and related marks in the operation of stores in Poland.
Previously, an indirect subsidiary of IFFC and a direct subsidiary of KP held
such rights. The New Master Franchise Agreement contains principally similar
terms to the agreement executed between Domino's and IFFC's indirect subsidiary
except, IFFC has agreed that as a condition to the New Master Franchise
Agreement it shall contribute or cause other entities to contribute equity to KP
in a minimum amount of $2,000,000 by December 31, 1997. IFFC also agreed that
any additional capital required above such amount will also be dedicated to KP
as needed to permit KP to meet its development quotas. The term of the New
Master Franchise Agreement will expire on December 31, 2003, and if KP is in
compliance with all material provisions of the New Master Franchise Agreement,
it may be extended for an addition ten (10) years in accordance with certain
minimum development quotas which KP and Domino's may agree upon by execution of
an amendment to the New Master Franchise Agreement. Under the terms of the New
Master Franchise Agreement, KP shall be obligated to open up one (1) additional
store in 1997, including the four (4) existing stores as of August 28, 1997.
During the next six (6) years, KP shall be obligated to open 5, 6, 7, 8, 9, and
10 stores, respectively, during each year beginning 1998 and ending in the year
2003 for a total of 50 stores. Of such stores, third party franchise stores
shall not exceed 25% of the number of open and operating stores and all stores
located in Warsaw, Poland shall be corporate stores.
During the term of the New Master Franchise Agreement, KP and its
controlling shareholders, including controlling shareholder of IFFC, will not
have any interest as an owner, investor, partner, licensee or in any other
capacity in any business engaged in sit-down, delivery or carry-out pizza or in
any business or entity which franchises or licenses or otherwise grants to
others the right to operate a business engaged in such business which is located
in Poland. The latter restriction shall apply for a period of one (1) year
following the effective date of termination of the New Master Franchise
Agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits:
99.1 Master Franchise Agreement between Domino's and KP dated
August 28, 1997.
99.2 Form of Standard Franchise Agreement of Domino's.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL FAST FOOD CORPORATION
By: /s/ Mitchell Rubinson
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MITCHELL RUBINSON, President
DATED: September 10 , 1997
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DOMINO'S PIZZA INTERNATIONAL, INC.
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MASTER FRANCHISE AGREEMENT
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THIS AGREEMENT is made the 28th day of August, 1997
BETWEEN
DOMINO'S PIZZA INTERNATIONAL, INC., a Delaware Corporation, of 30 Frank Lloyd
Wright Drive, P.O. Box 997, Ann Arbor, Michigan 48106-0997, USA (the
"Franchisor" or "DPII");
AND KROLEWSKA PIZZA SP. Z.O.O. (the "Master Franchisee").
WHEREAS:
A. Domino's Pizza, Inc. a corporation of the State of Michigan, United
States of America ("Domino's") has developed a method of preparing pizza and a
chain of stores known as Domino's Pizza stores which specialize in the sale of
pizza, feature carry-out and delivery services and operate with a uniform
business format, specially designed equipment, recipes, methods, procedures and
designs (the "Domino's System");
B. Domino's owns, uses, promotes and licenses certain trade and
business names, trade and service marks and commercial symbols in connection
with the operation of Domino's Pizza stores, including the mark "DOMINO'S PIZZA"
and those marks and names (the "Marks") more particularly described in the
Schedule One attached hereto;
C. The Domino's System is a comprehensive system for the retailing of a
limited menu of uniform and quality food products, emphasizing prompt and
courteous service in a clean and wholesome atmosphere. The foundation and
essence of the Domino's System is the adherence by franchisees to standards and
policies of Domino's and its related corporations providing for the uniform
operation of all Domino's Pizza stores including, but not limited to, serving
designated food and beverage products; the use of only prescribed equipment and
building layout and designs; and strict adherence to designated food and
beverage specifications and to prescribed standards of quality, service and
cleanliness (the "Domino's Specifications") in store operation. Compliance by
franchisees with the foregoing standards and policies in conjunction with
Domino's trademarks, service marks and trade names provides the basis for the
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valuable goodwill and wide acceptance of the Domino's System. Moreover, the
establishment and maintenance of a close personal working relationship with the
franchisee in the conduct of his Domino's Pizza store business, his
accountability for performance of the obligations contained in this Agreement,
and his adherence to the tenets of the Domino's system constitute the essence of
the franchise provided for herein.
D. Pursuant to a License Agreement dated January 4, 1988 (the
"International Agreement") Domino's has granted the Franchisor the right to
grant franchises for Domino's Pizza stores including the right to license use of
the Marks outside of the United States of America.
E. The Master Franchisee has applied to the Franchisor for a Master
Franchise to develop, operate and to grant sub-franchises of Domino's Pizza
stores.
NOW, THEREFORE, in consideration of the mutual agreements and promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. GRANT OF MASTER FRANCHISE
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1.1 GRANT. Subject to the provisions of this Agreement, the Franchisor
hereby grants to the Master Franchisee the exclusive right (the "Franchise") (a)
during the Development Term, to develop and operate and to sub-license the right
to develop and operate Domino's Pizza Stores (the "Stores") and to use and
sub-license the use of the Domino's System and the Marks in the operation of the
Stores in Poland (the "Territory"). (The foregoing rights shall be called "the
Development Rights.") and (b) during the Agreement Term to maintain its entire
right, title and interest, and all liabilities and obligations, as the party
executing each Franchise Agreement as the Franchisor thereof in accordance with
the terms contained in this Agreement and to use and sub-license the use of the
Domino's System and the Marks in the operation of the Stores in the Territory
("the Operation Rights"). The Master Franchisee acknowledges that the Franchisor
and its related group of companies reserve the right to supply materials to all
the Stores in the Territory through their commissary operations or to separately
grant the Master Franchise or its designee the right to operate a commissary to
serve the Territory as specified in section 1.5 hereof. Operation rights for
each Domino's Pizza delivery store will be granted pursuant to a Franchise
Agreement in accordance with sub-clause 2.3 and clause 3 of their Agreement.
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1.2 TERM. The Agreement Term (the Agreement Term") shall commence on the
date of this Agreement and shall expire on the date on which all franchise
agreements entered into pursuant to this Agreement with either the Master
Franchisee or its sub-franchisees (the "Franchise Agreements") have expired or
been terminated.
The Development Term ("Development Term") shall commence on the date
of this Agreement and shall expire on December 31, 2003. If Franchisor and
Master Franchisee shall have agreed to renew the exclusive development rights
pursuant to Section 1.3 hereof, the "Development Term" shall include each such
Successor Development Term as defined in Section 1.3.
1.3 OPTION TO ACQUIRE ADDITIONAL DEVELOPMENT RIGHTS. If, upon the
expiration of the Development Term, the Master Franchisee is in compliance with
all material provisions of this Agreement, including without limitation, Master
Franchisee's obligations under Section 2.2 hereof, Master Franchise shall have
the option to request additional right to grant franchises for Domino's Pizza
stores ("Additional Development Rights") for an additional development term of
ten (10) years (the "Successor Development Term") in accordance with Minimum
Development Quotas which Master Franchisee and Franchisor may agree upon by
execution of an amendment to this Agreement, as provided below.
Master Franchisee shall give Franchisor written notice ("Renewal
Offer") of its request to acquire Additional Development Rights at least six (6)
months but not more than twelve (12) months prior to the expiration of the then
current Development Term. The Renewal Offer shall contain a proposed amendment
to the Agreement, containing new Minimum Development Quotas for the proposed
Successor Development Term as Master Franchisee in good faith believes to be
consistent with its obligation to promote, enhance and exploit the commercial
potential of Domino's Pizza stores in the Territory ("Renewal Proposal").
Franchisor agrees to consider in good faith the Renewal Proposal and to deliver
to Master Franchisee within ninety (90) days after delivery of the Renewal Offer
a written notice ("Renewal Response"), containing an acceptance or counter-
proposal to the proposal set forth in the Renewal Offer. If the Renewal Response
does not contain an unconditional acceptance, the Renewal Response shall contain
a proposed amendment to this Agreement, containing new Minimum Development
Quotas for the proposed Successor Development Term as Franchisor in good faith
believes to be consistent with Master Franchisee's obligations hereunder
("Renewal Counter-proposal").
Master Franchisee and Franchisor each agrees to negotiate in good
faith, until the expiration of the then-current Development Term, to resolve any
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differences between the Renewal Proposal and Renewal Counter-proposal in order
to renew the development rights granted hereunder on terms that are mutually
beneficial to the parties hereto. If the parties hereto agree upon the terms and
conditions of any Additional Development Rights, the parties shall duly execute
and deliver a mutually acceptable amendment to this Agreement, reflecting the
rights of Master Franchisee to grant Franchises for Domino's Pizza stores in
accordance with this Agreement (as so amended) during such Successor Development
Term.
1.4 RIGHT TO OPERATE ON EXPIRATION OF DEVELOPMENT TERM. After expiration
of a Development Term without renewal in accordance with Section 1.3, (a) Master
Franchisee shall continue to have the rights under Section 1.1(b), including the
right to continue to act as Franchisor with respect to Franchise Agreements
executed prior to and in effect as of the expiration of the Development Term;
(b) Master Franchisee shall have no further right to grant any Franchise or
enter into any Franchise Agreement for a Domino's Pizza store, other than upon
assignment or renewal of a franchise agreement for a Domino's Pizza store open
as of the expiration of the Development Rights; and (c) Franchisor shall have
the right to operate and franchise, or grant to another person the right to
operate and franchise, Domino's Pizza stores within the Territory, subject to
any territorial rights of franchisees under franchise agreements executed with
Master Franchisee.
1.5 COMMISSARY. The Franchisor irrevocably agrees to grant the Master
Franchisee the exclusive right to establish a commissary or commissaries to be
owned and operated by the Master Franchisee, for the purpose of supplying food
products and ingredients, beverage products and other supplies and materials for
sale to consumers, to all the stores in the Territory. The Franchisor shall not
establish a competing commissary to serve the Territory. In connection with this
exclusive right the Franchisor shall provide ongoing support and assistance to
the commissary. To cover administrative costs which the Franchisor shall
experience in connection with the commissary the Franchisor and the Master
Franchisee shall enter into an Agreement to clarify such fees and support in the
form attached hereto as Annexure C.
2. DEVELOPMENT RIGHTS AND OBLIGATIONS
2.1 EXCLUSIVITY. Franchisor shall not during the Development Term
operate nor grant any person any right relating to the operation of a Domino's
Pizza store or the use of the Marks within the Territory otherwise than to the
Master Franchisee and in accordance with this Agreement.
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2.2 GROWTH. Master Franchisee shall open and maintain in operation in
the Territory (whether itself or through sub- franchisees) at least the number
of Stores referred to in Schedule Two ("Minimum Development Quota"). The Master
Franchisee understands and agrees that the Franchisor may terminate the
Development Rights if the Master fails to meet the Minimum Development Quotas,
and the Franchisor thereupon shall have the right to undertake such development
itself or through another party.
2.3 MASTER FRANCHISEE STORES. This Agreement does not authorize the
Master Franchisee to itself open nor to grant any person the right to open any
Store other than pursuant to Franchise Agreement. The Master Franchisee shall
not itself open any Store unless it has been granted the right to open that
Store pursuant to a standard franchise agreement between the Master Franchisee,
as Franchisor, and its subsidiary, affiliate or division that will be operating
the store in the form of the Agreement contained in Annexure "A" hereto or in
such other form as may be agreed by the Franchisor and has delivered an executed
copy of the agreement to the Franchisor together will the certificate set forth
in Annexure B hereto.
Master Franchisee shall submit to Franchisor for its approval, which
approval shall not be unreasonably withheld or delayed, proposed changes to the
franchise agreement attached hereto as Annexure A to conform to local laws and
customs and to enhance the commercial success of Domino's stores in Poland. Such
approved form of franchise agreement shall be deemed "the Franchise Agreement
for purposes of this Agreement".
2.4 CAPITALIZATION REQUIREMENT. The Master Franchisee shall maintain
sufficient capital at all times to meet its obligations hereunder. The Master
Franchisee acknowledges that its failure to maintain sufficient capital shall
constitute a default hereunder. Further, a default of the Shareholders Covenants
attached hereto shall constitute a default hereunder.
3. SUB-FRANCHISES AND AREA AGREEMENTS
3.1 SUB-FRANCHISE/AREA STORES; CRITERIA. The Master Franchisee shall
grant a person ("Sub-Franchisee") the right to open and operate any Store or to
use any Mark only with prior written approval of the Franchisor. Each
Sub-Franchisee shall execute a Franchise Agreement for each Domino's Store. To
provide protection for the Franchisor's industrial and intellectual property
rights and to ensure the common identity and reputation of the Domino's System,
the Franchisor shall have the right to approve all Sub-Franchisees and each
Store to be opened in the Territory, which approval will not be unreasonably
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withheld or delayed. The Master Franchisee shall forward to the Franchisor an
original executed copy of all Franchise Agreements entered into during the term
or any renewal of this Agreement.
3.2 OPENING NOTICE. The Store opening approval (opened by the Master
Franchisee and/or Sub-Franchisees) shall be made pursuant to the certificate as
set out in Annexure "B" or any other form mutually agreed upon.
3.3 UNAPPROVED SUB-FRANCHISEES. In the event that the Master Franchisee
has entered into an agreement with a Sub-Franchisee otherwise than in accordance
with sub-clause 3.1, the Master Franchisee shall, on receipt of the Franchisor's
written request to so do, terminate the agreement with the Sub-Franchisee at its
sole cost and expense.
3.4 STORE OPENING CONSENT. The Master Franchisee shall not enter into
any Franchise Agreement with a proposed Sub-Franchisee without the prior written
consent of the Franchisor in the event that the Master Franchisee is in breach
of this agreement and has received a notice of default hereunder, which default
remains uncured. The Franchisor may provide its consent conditionally upon the
Master Franchisee correcting any such breach.
4. PAYMENTS
4.1 MASTER FRANCHISE FEE. Master Franchisee has paid to Franchisor the
sum of $300,000 as a development fee. This fee is deemed fully earned and is
non-refundable.
4.2 STORE FRANCHISE FEES.
4.2.1 Upon the earlier to occur of the signing of a Franchise
Agreement or the opening of each new Store in the Territory (whether by the
Master Franchisee or by a Sub-Franchisee) the Master Franchisee shall pay the
Franchisor a non-refundable store opening fee of one half (1/2) of the initial
franchise and/or development fee charged by Master Franchisee, up to a maximum
cap of US $5,000, less all applicable withholding taxes paid by Master
Franchisee.
The maximum fee charged by Master Franchise under a Franchise
Agreement shall be Thirty Thousand US Dollars (US $30,000).
The Master Franchisee shall provide the Franchisor relevant
information regarding any development fees or consideration in kind to be paid
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to the Master Franchisee pursuant to Franchise or Area Agreements. The Master
Franchisee acknowledges that any such development fees to be paid by a
Sub-Franchisee shall, in the Master Franchisee's reasonably held opinion, (i) be
reasonable given local market conditions and (ii) not substantially impair the
Sub-Franchisee's ability to perform the relevant Franchise or Area Agreement.
4.3 ROYALTY FEE.
The Master Franchisee shall pay the Franchisor a continuing royalty
fee (the "Royalty Fee") in US Dollars or, at DPII's option, in local currency
equal to the percentage set out below of the Sales of each Store in the
Territory franchised by the Master Franchisee hereunder which shall be payable
and received by the Franchisor in cleared funds by 3:30 p.m. Ann Arbor, Michigan
time on the thirtieth (30th) day of each month on Sales for the preceding month.
For the purposes of this Agreement, the term "Sales" shall mean the total
receipts from all sales by Stores in the Territory of all pizza and beverages
and other approved items offered by the Master Franchisee, but excluding sales
and equivalent taxes and coupon and similar discounts or beverage container
deposits approved by the Franchisor.
4.4 ROYALTY FEE AMOUNT. The percentage Royalty Fee referred to in
sub-clause 4.3 shall be 3% of Sales, less all applicable withholding taxes paid
by Master Franchisee.
4.5 CONVERSION OF PAYMENTS. All fees and all other amounts owed to the
Franchisor in US Dollars will be computed at the telegraphic transfer selling
rate for US Dollars quoted by Bank of America International as quoted in The
Wall Street Journal with respect to the actual currency for the date of payment,
or if that date is not a business day, for the next business day. If the
exchange rate at the time of remittance, as opposed to the exchange rate on the
due date, must be used, you will compensate us for any resulting loss. If at any
time legal restrictions shall be imposed upon the purchase of US Dollars or the
transfer to or credit of a non-resident corporation with payments in such
currency, the Master Franchisee will notify the Franchisor immediately, and both
parties will use their respective best efforts to obtain any consents or
authorizations which may be necessary in order to effect payment. The Franchisor
may direct the Master Franchisee to make the payments in such other currency and
in such other territory or jurisdiction as the Franchisor may select, or (to the
extent permissible by law) to make such payments to a designated account for the
Franchisor's exclusive and sole use and benefit, and the Master Franchisee will
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provide evidence to the Franchisor of such payments. The Franchisor's acceptance
of payment in a currency other than US Dollars will not relieve or release the
Master Franchisee of or from the obligation to make future payments in US
Dollars to the extent permitted by law.
If, despite the parties' best efforts, any such legal restriction
prevents payment to Franchisor in US Dollars for a period of one (1) year or
more, Franchisor shall have the right to terminate this Agreement, effective on
hundred and eighty (180) days after written notice of termination is delivered
to Master Franchisee.
4.6 TAX. The Master Franchisee must pay to the local tax authorities, on
the Franchisor's behalf, withholding payments required by law and provide the
Franchisor with an official receipt for payment of these withholding taxes. The
Master Franchisee may deduct the amount of any of these withholding taxes from
the royalty payments to the Franchisor. If the Master Franchisee fails to pay
withholding taxes, he will indemnify the Franchisor for the full amount of such
taxes, including any losses occasioned by his failure to withhold any taxes
imposed by any local jurisdiction on amounts payable by you pursuant to this
Agreement and the agreements issued pursuant to this Agreement, and for any
liability (including penalties, interest, and expenses) arising from or
concerning the payment of such taxes, whether such withholding taxes were
correctly or legally asserted or not. All other taxes imposed, such as without
limitation turnover taxes, payroll taxes, sales taxes or value-added taxes, if
any, which may be imposed now or in the future, will be the Master Franchisee's
responsibility and will not affect your obligations to make payments as required
under this Agreement.
4.7 ADVERTISING. The Master Franchisee shall collect from each of its
Sub-Franchisees in the manner set out in the relevant provisions of the
Franchise Agreement and shall itself pay in accordance with the relevant
provisions of the Franchise Agreement an advertising fee (the "Advertising Fee")
(as defined therein) of 4% of monthly sales into a separate advertising fund
(the "Advertising Fund"). It is also agreed that the advertising services of an
agency must be approved by the Franchisor, which approval shall not be
unreasonably withheld or delayed.
4.7.1 STANDARDS.
All advertising and promotion by the Master Franchisee or its
Sub-Franchisees shall be completely factual and shall conform to the highest
standards of ethical advertising as defined by the Franchisor from time to time
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and to the policies prescribed from time to time by the Franchisor, including
policies contained in the Franchisor's corporate identity manuals. The Master
Franchisee shall submit to the Franchisor its advertising plans for the Stores
for Franchisor's review and approval and copies of all advertising and
promotional materials and plans to be used by the Master Franchisee or by its
Sub-Franchisees.
4.7.2 ADVERTISING PRACTICES.
The Master Franchisee shall use reasonable efforts to ensure
that the Stores' advertising policies and practices shall be generally
consistent with the Franchisor's advertising practices taking into account the
local rules and practices in the Territory. The Franchisor shall notify the
Master Franchisee of any generally inconsistent advertising practices and permit
the Master Franchisee a reasonable period of time to correct the inconsistency,
failing which the Franchisor shall have the right to direct and administer the
Advertising Fund.
4.7.3 FRANCHISOR OBLIGATIONS.
Notwithstanding the relevant provisions of the Franchise
Agreement, the Franchisor shall not be obligated to formulate, develop, produce
or conduct advertising and promotion programs, films, videos, color separations
or printed materials (collectively, "Ad Materials") for use in the Territory,
provided, however, that the Franchisor shall, to the extent it is legally
permitted to do so, allow the Master Franchisee reasonable access to, and copies
at Master Franchisee's cost, of any Ad Materials developed by the Franchisor for
use elsewhere in the world and provided further that such Ad Materials may not
be used in the Territory unless (i) they reasonably conform to all local laws
and standards and (ii) Franchisor provides its written consent, which consent
shall not be unreasonably withheld.
4.8 SET OFF. The Franchisor shall have the right in its sole discretion
to apply as it sees fit any payment received from the Master Franchisee to any
past indebtedness of the Master Franchisee due to the Franchisor or its related
corporations whether for fees, advertising contributions, purchases, interest or
for any other matter, regardless of how the Master Franchisee may designate a
particular payment to be applied.
4.9 INTEREST ON LATE PAYMENTS. All amounts owed by the Master Franchisee
to the Franchisor under this Agreement or for any other reason whatsoever shall,
in the absence of an agreement to the contrary, be immediately payable on demand
and shall bear interest from the due date to the date of payment at a rate equal
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to two percent above the Corporate Loan Reference Rate (or its replacement) then
quoted by the London Interbank Offered Rate (LIBOR). Payment of any such
interest shall be without prejudice to any other remedy available to the
Franchisor.
4.10 PLACE OF PAYMENT Subject to Section 4.5, all payments required to be
made to the Franchisor pursuant to this Agreement shall be made to the
Franchisor at such address as is notified in writing by the Franchisor to the
Master Franchisee from time to time provided that if such payment is required to
be made to a place other than Poland or the United States of America then the
Franchisor shall bear any additional costs that would or do become payable by
the Franchisee in consequence thereof.
5. MASTER FRANCHISEE'S OBLIGATIONS
5.1 FULL TIME EFFORTS. The Master Franchisee shall, subject to the
approval of the Franchisor, appoint an individual who shall devote his full time
and best endeavors to the development, management and supervision of Stores
within the Territory.
5.2 CONFIDENTIALITY. Upon the Franchisor's request the Master Franchisee
shall advise the Franchisor of the names of all of its management, sales,
purchasing and technical employees and, if requested by the Franchisor, shall
require each such employee who has access to the Franchisor's confidential
information to enter into an agreement in the form reasonably approved by the
Franchisor which shall include provisions relating to confidentiality as
referred to in sub-clause 8.1.
5.3 SUB-FRANCHISEE. The Master Franchisee shall at all times comply with
each provision of this Agreement and shall use its best endeavors to ensure that
each of its Sub-Franchisees complies with their Franchise Agreement and, without
limiting the generality of the foregoing, if in the Franchisor's opinion any
Sub-Franchisee is in breach of its Franchise Agreement, the Master Franchisee
shall take all steps reasonably required by the Franchisor to ensure that each
Sub-Franchisee corrects any such breach.
5.4 INSPECTION. The Franchisor shall have, and the Master Franchisee
shall ensure that Franchisor shall have, the right at any time during business
hours and without prior notice to the Master Franchisee to enter and inspect all
Stores in the Territory and the business records, bookkeeping records, sales
slips, D.O.O.R. sheetmasters, coupons, cash register tapes, purchase orders,
invoices, payroll records, check stubs, sales tax records and returns and other
supporting records and documents of the Stores and the Master Franchisee or its
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Sub-Franchisees, and to take an inventory of the assets of the Stores. Such
inspections shall be made at the Franchisor's expense PROVIDED THAT if, the
Franchisor is required to make two (2) inspections within a period of six (6)
months in connection with the Master Franchisee's or any of its Sub-
Franchisee's repeated or continuing failure to comply with any Franchise
Agreement, the Franchisor shall have the right to charge the Master Franchisee
for the reasonable out-of-pocket costs of making all further inspections in
connection with such failure to comply, including without limitation travel and
accommodation of the Franchisor's employees.
5.5 AUDIT RIGHT. The Franchisor shall have the right to audit or cause
to be audited the Advertising Fund and all sales reports, financial statements
and tax returns which the Master Franchisee is required to submit under clause
5.7 of this Agreement. In the event any such audit shall disclose a discrepancy
in the Advertising Fund or an understatement of the sales of the Stores in the
Territory for any period or periods, the Master Franchisee shall pay to the
Franchisor (or to the Advertising Fund as appropriate), within fifteen (15) days
after receipt of the audit report, the Royalty Fee and the Advertising Fee in
respect of such discrepancy or understatement. In the event that such
understatement for any period or periods shall be five percent (5%) or more of
the sales of the Stores for such period or periods, the Master Franchisee shall
reimburse the Franchisor for the reasonable cost of such audit, including
without limitation the charges of an independent certified public accountant (or
equivalent) and the travel and accommodations expenses of employees of the
Franchisor. The Master Franchisee agrees to cooperate with all personnel
conducting such audit and shall ensure that its Sub-Franchisees co-operate with
all such personnel.
5.6 RECORDKEEPING. The Master Franchisee shall establish a bookkeeping
and record keeping system conforming to the requirements prescribed by the
Franchisor, relating without limitation, to the use and retention of sales
slips, D.O.O.R. sheetmasters, coupons, cash register tapes, purchase orders,
invoices, payroll records, check stubs, bank statements, sales tax records and
returns, cash receipts and disbursements, journals and general ledgers.
5.7 STORE REPORTS. The Master Franchisee shall submit to the Franchisor:
5.7.1 MONTHLY: concurrently with the payment of royalty fees a
monthly report of the sales and products sold by all Stores franchised by the
Master Franchisee hereunder in the Territory for the preceding month and such
other information and supporting records as the Franchisor reasonably requires;
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5.7.2 QUARTERLY UNAUDITED STATEMENTS: within thirty (30) days of the
end of each fiscal quarter, an unaudited balance sheet as at the end of such
month and unaudited statements of profit and loss of the Stores, the Master
Franchisee and the Advertising Fund for the preceding quarter;
5.7.3 ANNUAL UNAUDITED STATEMENTS: within ninety (90) days of the
end of each fiscal year, an unaudited balance sheet as at the end of such year,
unaudited annual statements of profit and loss and financial condition of the
Master Franchisee, the advertising fund and for each of the Stores prepared by
an independent certified public accountant (or the equivalent) in the manner
reasonably prescribed by the Franchisor; and
5.7.4 TAX RETURNS: upon the written request of the Franchisor, exact
copies of the Master Franchisee's income tax returns and sales tax or equivalent
tax returns for any period.
5.7.5 OTHER: such other information as the Franchisor may reasonably
request in order for it to determine the Master Franchisee's compliance with
this Agreement or to assist the Master Franchisee in the operation of the Stores
or to otherwise evaluate the performance of the Stores or the Master Franchisee.
5.8 MASTER FRANCHISEE REPORTS. The Franchisor may require the Master
Franchisee to obtain at his expense and submit to the Franchisor within ninety
(90) days an audited statement of profit and loss and financial condition of the
Stores or the Master Franchisee for any financial year if the Franchisor
reasonably believes that the Master Franchisee has submitted sales reports,
unaudited profit and loss statements or tax returns containing material
inaccuracies. In the event that the said audited statement of profit and loss
and financial condition reveals a discrepancy in any material particular of less
than five percent (5%) the cost of such audit shall be paid by the Franchisor.
5.9 PRODUCTS; SUPPLIES. The Master Franchisee shall not use or approve
for use by its Sub-Franchisees any ingredients, supplies or materials used in
the preparation, packaging and delivery of pizza unless they or their supplier
have been previously approved in writing by the Franchisor which approval shall
not be unreasonably withheld or delayed. The Franchisor shall have the right
from time to time without notice to examine the facilities of any approved
supplier (including the Master Franchisee) and to test or inspect the
ingredients, materials or supplies to determine whether they meet the quality
standards and specifications of the Franchisor. The Franchisor reserves the
right to re-inspect the facilities and products of any approved supplier from
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time to time and to revoke its approval of the supplier upon the failure of the
supplier to meet its quality standards and specifications. The Franchisor shall
have the right to charge the Master Franchisee a reasonable fee for testing and
evaluating proposed and approved suppliers and examining commissary operations.
The Master Franchisee shall not resell to any third party (other than
Sub-Franchisees) any ingredients, products, supplies or materials which bear the
Marks or which have been prepared in accordance with the Domino's Specifications
and which it has purchased or acquired from the Franchisor or its related
corporations or from an approved supplier.
Franchisor acknowledges and agrees that neither Franchisor nor any
of its affiliates shall be entitled to the benefit of any discounts, volume
rebates, administration fees, commissions, advertising allowances or other
similar advantages from any supplier of products or supplies to Master
Franchisee or its franchisees, except as otherwise expressly permitted
hereunder.
5.10 MASTER FRANCHISEE'S OBLIGATIONS ON SUB-FRANCHISING
5.10.1 The Master Franchisee where applicable shall prepare and
issue the sub-franchise agreement based on the terms and conditions of the
Franchise Agreement;
5.10.2 The Master Franchisee shall diligently recruit suitable
sub-franchisee in the Territory;
5.10.3 The Master Franchisee shall adequately staff facilities
to ensure compliance with this agreement and sub- franchise agreements entered
into with sub-franchisees;
5.10.4 The Master Franchisee shall ensure that the Franchise
Agreements are entered into for each store opened within the Territory;
5.10.5 The Master Franchisee shall ensure that all local laws
and regulations are complied with pursuant to this agreement and also franchise
agreements;
5.10.6 The Master Franchisee shall provide adequate training
and support, including a training center, for the sub- franchisees. This support
shall include but not be limited to, store operations training, ongoing support
as well as lease and site selection. The training support provided by the Master
Franchisee to its sub-franchisees shall be similar to training provided for by
the Franchisor in markets where it acts as a Master Franchisee. This training
shall be sufficient and adequate to ensure that proper and adequate operation
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procedures and standards are maintained within each Store. The Master Franchisee
shall also provide to each Store training materials in Polish for initial store
opening operations as well as ongoing support materials as stipulated and
approved by the Franchisor.
5.10.7 The Master Franchisee shall comply with all and its
obligations, as set out in each sub-franchise agreement and/or other related
agreements;
5.10.8 Notwithstanding any provision to the contrary in any
sub-franchise agreement, the Master Franchisee shall not assign any such
agreement without the prior written consent of the Franchisor which written
consent shall not be unreasonably withheld and which shall be given if the
Franchisor agrees to transfer the interest of the Master Franchisee in this
Agreement or agrees to enter a Master Franchise Agreement with any other person
(being the same person as shall be the Assignee as aforesaid) in substitution or
novation of this Agreement.
5.11 TRAINING OF STORE MANAGERS AND EMPLOYEES. The Master Franchisee
shall provide adequate training and support for managers and employees of its
own stores, head office and of any commissary it operates. The Master Franchisee
shall ensure that this training is sufficient and adequate to ensure that proper
and adequate operation procedures and standards are maintained within each Store
and that such training complies with the training to be provided by the Master
Franchisee pursuant to the Franchise Agreements.
5.12 DATA AND VOICE COMMUNICATIONS SYSTEMS
5.12.1 The Master Franchisee acknowledges that efficient data
and voice communications are important to the operation of the Domino's System
and coordination of the respective responsibilities of the Master Franchisee and
the Franchisor. Accordingly, the Master Franchisee agrees that, upon receipt of
a written request from the Franchisor, the Master Franchisee shall immediately
take steps to acquire and shall install or cause to be installed in its head
office within ninety (90) days from the date of such request a communications
systems and necessary peripheral equipment and software which shall permit both
voice and data communications with the Franchisor (the "Communications
Package"). The Franchisor shall not make such a request unless it is
commercially reasonable.
5.12.2 The Franchisor agrees to provide the Master Franchisee
with its hardware and software specifications and requirements and to provide
such other technical information and pricing information as is available to the
Franchisor to assist and facilitate the acquisition, installation and operation
of the Communications Package by the Master Franchisee.
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5.12.3 The Franchisor reserves the right to require the Master
Franchisee to acquire and install a Communications Package meeting certain
specifications and either from the Franchisor or its related corporations or
from an approved supplier. The Master Franchisee agrees that the Communications
Package shall meet the technical specifications supplied by the Franchisor from
time to time, including up-dates, so that such Communications Package shall at
all times be compatible with the communications system employed by the
Franchisor.
5.12.4 It is understood and agreed that the Master Franchisee
shall bear the entire cost and expense of the acquisition, installation and
operation of the Communications Package. The Master Franchisee agrees to execute
such contract and/or proprietary agreements or licenses as may be required by
the Franchisor or the seller of the Communications Package to protect the
proprietary rights of the Franchisor and/or such seller in any aspect of the
Communications Package.
6. FRANCHISOR'S OBLIGATIONS
6.1 US TRAINING. The Franchisor shall provide the Master Franchisee and
its employees and Sub-Franchisees with reasonable access for up to Ten (10)
individuals to Domino's on-going training program in the United States of
America during the first two (2) years of this Agreement, at no additional cost
to the Master Franchisee, save that the Master Franchisee shall bear all travel,
accommodation and living expenses in relation to the training of any such
person;
6.2 Franchisor shall from time to time furnish reasonable guidance to
Master Franchisee, at no additional charge to Master Franchisee, with respect to
the Domino's System, including any new ideas, concepts, methods and techniques
approved by Franchisor for use in the Territory. Such guidance shall, at
Franchisor's discretion, be furnished in the form of the Operating Manual,
bulletins or other written, electronic or audio visual media, consultation by
telephone or in person.
6.3 Upon thirty (30) days prior written notice from Master Franchisee,
Franchisor will make available experienced staff from its various departments,
i.e., architecture, advertising, marketing, franchise, etc., available at
Franchisor's headquarters for consultation with representatives of Master
Franchisee's staff on matters concerning programs and methods used by Franchisor
and DPI.
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6.4 Franchisor shall, at its expense, inspect the Domino's stores and
related staff and training functions as Franchisor may reasonably determine not
less than three (3) times per year (i) to determine if such stores are complying
with this Agreement and the Domino's System, (ii) to offer suggestions on the
operation of the Store, and also suggestions of general application, and (iii)
to consult during such inspections with Master Franchisee on such operational
subjects as Master Franchisee may reasonably request.
6.5 ASSISTANCE WITH POLISH TRAINING PROGRAM. Master Franchisee shall
develop and implement a formal Domino's training program in Poland no later than
the end of the first Agreement Year. Franchisor shall train Master Franchisee's
director of training in the US for a period of time which Franchisor reasonably
deems sufficient to qualify such individual as the chief instructor and provide
reasonable assistance in developing the curriculum and programs for the training
of managers of Domino's stores in Poland. Master Franchisee shall pay the
compensation, travel and other expenses of such Director.
6.6 ADAPTATION OF OPERATING MANUAL. Franchisor shall furnish to Master
Franchisee two (2) copies of all of its manuals (and other materials describing
the Domino's System), containing specifications, standards and operating
procedures prescribed by Franchisor for the development and operation of
Domino's Stores and which comprise the Domino's System. Master Franchisee shall
submit for review and approval by Franchisor any modifications to the Domino's
System that Master Franchisee reasonably believers to be necessary to comply
with legal requirements of Poland or for the commercial success of Domino's
Stores operating in Poland. Franchisor agrees not to unreasonably withhold or
delay its approval of any such proposed modification. Any rejection of any
proposed modification shall specify the reasons for such rejection. The modified
Domino's System developed as herein, provided, shall be reflected in two (2)
official English language manuals, which shall be completely and accurately
translated at Master Franchisee's expense into Polish (herein the "Operating
Manual").
Further suggestions for changes to the Operating Manual may be
made by Master Franchisee from time to time, subject to the prior approval of
Franchisor, which approval will not be unreasonably withheld or delayed. Any
rejection of a proposed modification shall specify the reasons for such
rejection.
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Franchisor shall have the right from time to time to add to,
and otherwise modify, the Operating Manual to reflect changes in authorized
products and services and specifications, standards and operating procedures of
Domino's Stores. In the event a change is proposed by Franchisor, Master
Franchisee must abide by such change, provided that implementation of such
change will not: (a) prevent Master Franchisee from complying with applicable
Polish law; (b) have a materially adverse commercial effect on the operations of
Domino's Stores in Poland; or (c) have a materially adverse effect on Master
Franchisee's fundamental status and rights under this Agreement. In the event
Master Franchisee objects to any change proposed by Franchisor on any of the
grounds listed above, Master Franchisee will specify those grounds, and the
parties agree to negotiate the matter in good faith. If, after presentation of
such objections, the parties are unable to negotiate a mutually acceptable
revision and Franchisor insists upon implementation of the change, the matter
will be submitted to arbitration.
7. NAMES AND MARKS
7.1 USE OF MARKS. The Master Franchisee acknowledges that Domino's is
the owner of all the Marks licensed to the Master Franchisee by this Agreement
and all usage thereof by the Master Franchisee and any goodwill established
thereby shall enure to the exclusive benefit of Domino's.
The Master Franchisee further agrees to use each of the Marks in
full compliance with the Operating Manual rules prescribed from time to time by
the Franchisor. The Master Franchisee will not directly or indirectly contest
the validity of Domino's ownership of or the Franchisor's right to use and
license the use of the Marks, nor will it attempt to register any Mark or any
derivative thereof. Upon termination or expiration of this Agreement the Master
Franchisee shall not be entitled to any compensation for goodwill associated
with its use of the Domino's System or the Marks. The Master Franchisee shall
not use any of the Marks as part of any corporate name or with any prefix,
suffix or other modifying words, terms, designs or symbols (other than logos
licensed to the Master Franchisee hereunder), nor may the Master Franchisee use
any of the Marks in connection with the sale of any unauthorized product or
service or in any other manner not explicitly authorized in writing by the
Franchisor. The Master Franchisee may with the prior written consent of the
Franchisor which consent shall not be unreasonably withheld, use and register a
business name approved by the Franchisor ("the Business Name") as the sole name
to identify the business carried on by the Master Franchisee pursuant to this
Agreement. The Master Franchisee shall use the Business Name in the manner
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prescribed by the Franchisor from time to time and shall not use any other
business or corporate name or any trade marks other than the Marks in relation
to the business carried on in the Stores. The Master Franchisee shall:
7.1.1 register the Business Name with the relevant government
authority in its State or Territory;
7.1.2 execute and deliver to the Franchisor any documents
which the Franchisor may require, signed but not dated, which may be used by the
Franchisor to transfer or terminate the registration of the Business Name on
termination or expiration of this Agreement. The Master Franchisee irrevocably
appoints each of the directors of the Franchisor from time to time as its
attorney to complete, date and lodge such documents upon the expiration or
termination of this Agreement;
7.1.3 upon the expiration or termination of this Agreement
take all other steps which may be necessary to transfer the Business Name to the
Franchisor or its nominee.
Any forms relating to the transfer or cessation of business names
registered by Sub-Franchisees shall be held by the Master Franchisee on trust
for the Franchisor and shall be executed and delivered to the Franchisor upon
request.
7.2 REGISTERED USER. The Master Franchisee shall upon request by the
Franchisor at Franchisor's expense execute all such documents as the Franchisor
may reasonably require in order to appoint the Master Franchisee as the
registered user of some or all of the Marks in the Territory. The Franchisor
agrees to appoint the Master Franchisee as a registered user if required in the
Territory. Without limiting the generality of the foregoing, the Master
Franchisee shall at the time of execution of any registered user agreement sign
an undated consent to cancellation of its registration as registered user and
hereby irrevocably appoints the Franchisor as its lawful attorney to date,
complete and lodge such consent with the Polish Trade Marks Office.
7.3 INFRINGEMENT; INDEMNIFICATION. The Master Franchisee shall
immediately notify the Franchisor of any infringement of or challenge to the
Master Franchisee's use of any of the Marks or any claim by any person of any
rights in any of the Marks, or any suspected passing-off or unfair competition
involving the Marks or the Domino's System and the Master Franchisee shall not
communicate with any person other than the Franchisor and its counsel in
connection with any such infringement, challenge or claim. The Franchisor shall
have sole discretion to take such action as it deems appropriate. The Franchisor
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hereby agrees to indemnify the Master Franchisee against and to reimburse the
Master Franchisee for all monetary relief for which he is held liable in any
proceeding arising out of the use of any Mark in compliance with this Agreement
and for all costs reasonably incurred by the Master Franchisee in connection
with any such claim brought against him or in any such proceeding in which he is
named as a party. The Master Franchisee hereby agrees to indemnify the
Franchisor against and to reimburse the Franchisor in any proceeding arising out
of the use of any Mark by the Master Franchisee otherwise than in accordance
with this Agreement. The Franchisor shall have the right but not the obligation
to exclusively control any litigation or Patent and Trade Mark Office proceeding
arising out of such infringement, challenge or claim or otherwise relating to
any of the Marks and the Master Franchisee hereby agrees to execute any and all
instruments and documents, render assistance and do such acts and things as may,
in the opinion of the Franchisor's counsel, be necessary or advisable to protect
and maintain the interests of the company in any such litigation or Patent and
Trademark Office proceeding or to otherwise protect and maintain the interest of
the Franchisor in the Marks.
To the extent Domino's or Franchisor or any of its affiliates
obtains any monetary award or payment in connection with any such litigation or
proceeding, or the settlement thereof, that reflects the lost profits or damages
incurred by Master Franchisee or any of its franchisees, Master Franchisee shall
be entitled to such award or payment. If, in the reasonable judgment of the
Franchisor, it becomes advisable at any time due to conflicting trademark rights
(other than identified in Section 7.4) for the Master Franchisee to modify or
discontinue use of any of the Marks and/or use one or more additional or
substitute marks, the Master Franchisee agrees to do so within a reasonable
period of time and the sole obligation of the Franchisor in any such event shall
be to reimburse the Master Franchisee for his tangible costs of complying with
this obligation.
7.4 Franchisor represents and warrants to Master Franchisee that to the
best of its knowledge Domino's owns all rights, title and interests to the Marks
and that Franchisor has fully disclosed rights, title and interests in Poland of
any third party to any of the Marks or any other marks that may be confusingly
similar to any of the Marks. The parties hereto acknowledge that there exists a
prior registration in Poland of the mark "Domino's" by Fast Foods, Inc. ("the
Infringing Registration") and that there is a pizza store in Warsaw unaffiliated
with Franchisor that uses the mark "Domino Pizza" both with and without
Franchisor's distinctive design ("the Infringing Use"). Franchisor agrees as
follows:
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(a) Franchisor shall exert its best efforts to promptly obtain
registration in all pertinent international classifications in Poland of the
marks identified in Exhibit A, attached hereto; and
(b) Prior to the later to occur of Master Franchisee's opening of
its first store or January 1, 1994, Franchisor at its expense shall have
obtained cancellation or acquired all right, title and interest to the
Infringing Registration and shall have obtained cessation of the Infringing Use.
Master Franchisee agrees to reasonably cooperated with Franchisor in connection
with the foregoing. In the event that the Franchisor is unable to obtain the
cancellation or acquisition of the Infringing Registration and cessation of the
Infringing use, as set forth above the Master Franchisees' exclusive remedy for
the franchisor's failure to meet this condition is a return of the One Hundred
Thousand Dollars (US $100,000) development fee. In such an event the Master
Franchisee shall return all materials provided to it by the Franchisor.
8. TRADE SECRETS, NEW PROCESSES, CONCEPTS AND IMPROVEMENTS
8.1 CONFIDENTIAL INFORMATION. The Master Franchisee acknowledges and
agrees that its entire knowledge of the operation of the Domino's System, is and
will be derived from information disclosed to the Master Franchisee by the
Franchisor and that such information is and shall at all times remain
confidential and a trade secret of the Franchisor. The Master Franchisee agrees
that it will maintain the absolute confidentiality of such information during
and after the Term, disclosing same only to the Master Franchisee's employees
(who shall have executed, upon request by the Franchisor, an agreement in the
form satisfactory to the Franchisor agreeing not to divulge or disclose any
trade secret and to keep confidential all proprietary information and that they
will not use such information in any other business or in any manner not
specifically authorized or approved in writing by the Franchisor.
8.2 Notwithstanding anything to the contrary contained in this
Agreement, the restrictions on disclosure and use of any information shall not
apply to: (a) information, processes or techniques which are or become generally
known in the fast food industry or (b) disclosure of Information in judicial or
administrative proceedings, to the extent that Master Franchisee is legally
compelled to disclose such information, provided Master Franchisee shall have
used its best efforts, and shall have afforded Franchisor the opportunity, to
obtain an appropriate protective order or other assurance satisfactory to
Franchisor of confidential treatment for the information required to be so
disclosed.
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8.3 IMPROVEMENTS. The Master Franchisee agrees that if it shall develop
any new concept, process or improvement in relation to the Domino's System, it
shall promptly notify the Franchisor and shall provide the Franchisor with all
necessary information with respect thereto without compensation for it.
Franchisor shall have a non-exclusive right to incorporate same in the Domino's
System for use in all Domino's stores.
9. THE MASTER FRANCHISEE'S COVENANTS NOT TO COMPETE
9.1 IN-TERM COVENANT. The Master Franchisee and its controlling
shareholders covenant and agree that they will not (and shall ensure that its
related corporations shall not) directly or indirectly during the Term without
the prior written approval of the Franchisor have any interest as an owner,
investor, partner, licensee, lender, director, officer, employee, consultant,
representative or agent, or in any other capacity, in any business primarily
engaged in sit-down, delivery or carry-out pizza (except Domino's Pizza stores
operated under franchise agreements heretofore or hereafter entered into between
the Master Franchisee and the Franchisor) or in any business or entity which
franchises or licenses or otherwise grants to others the right to operate a
business primarily engaged in sit-down, delivery or carry-out pizza stores which
is located in the Territory.
9.2 POST-TERM COVENANT. The Master Franchisee and its controlling
shareholders covenant and agree that upon termination of this Agreement by
Franchisor pursuant to Section 13 hereof, (subject, however, to any Franchise or
Sub-Franchise Agreements, which may remain outstanding) it shall not (and shall
ensure that its related corporations shall not) for a period of one (1) year
commencing on the effective date of termination of this Agreement directly or
indirectly, engage as an owner, investor, partner, licensee, lender, director,
officer, employee, consultant, representative or agent, or in any other
capacity, in any business or entity which operates or franchises or licenses or
otherwise grants to others the right to operate a business primarily engaged in
sit-down, delivery or carry-out pizza stores within the Territory, without the
prior written consent of the Franchisor.
9.3 FIVE PERCENT (5%) EXCEPTION. The covenants contained in this Clause
9 shall not apply to the ownership by the Master Franchisee of less than a five
percent (5%) beneficial interest in the securities of any corporation listed on
a recognized stock exchange.
9.4 NO SOLICITATION. The Franchisor and Master Franchisee each
acknowledges and agrees that during the term of this Agreement neither of them
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shall (and shall ensure that its related corporations shall not) directly or
indirectly solicit any person employed by the other or their affiliates, nor
will it induce or attempt to induce any such person to leave their employment
without the other's prior written consent.
10. COMPLIANCE WITH LAWS AND BUSINESS PRACTICES
The Master Franchisee shall secure and maintain in force during the Term
all required licenses, permits and certificates and shall operate its Stores and
shall ensure that its Sub-Franchisees operate their Stores in full compliance
with all applicable laws, ordinances, and regulations, including without
limitation all government regulations relating to occupational health and
safety, consumer protection, unfair and deceptive practices, trade regulation,
workers' compensation, unemployment, insurance and the payment of withholding
and income tax and such other taxes as may be levied in respect of the operation
of Stores by the Master Franchisee or its Sub-Franchisees. The Master Franchisee
shall pay when due all amounts payable pursuant to any provision of this
Agreement or any other agreement or arrangement with the Franchisor or its
related corporations or pursuant to any agreement or arrangement with any other
creditor or supplier of its Stores.
11. PRICES TO BE DETERMINED BY THE MASTER FRANCHISEE
The Franchisor may from time to time offer guidance to the Master
Franchisee in relation to prices for the products and services of the Stores
which in the Franchisor's judgment constitutes good business practice.
Notwithstanding anything herein contained, the Master Franchisee shall have the
sole right to determine the prices to be charged from time to time by its Stores
and its sub-Franchisees shall have the sole right to determine the prices to be
charged from time to time by their Stores and no such guidance shall be deemed
or construed to impose upon the Master Franchisee or any of its Sub-Franchisees
any obligation to charge any fixed minimum or maximum prices for any product or
service offered for sale by the Stores. The Master Franchisee shall and shall
ensure that its Sub-Franchisees shall charge the same price for products offered
by the Stores whether delivered or sold over the counter in the Store. The
Master Franchisee shall not and shall ensure that its Sub-Franchisees shall not
enter into any agreement, arrangement or understanding or engage in any
concerted practice with Domino's Pizza stores or others relating to the prices
at which products or services will be sold by it or by other Domino's Pizza
stores.
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12. TERMINATION BY THE MASTER FRANCHISEE
12.1 If the Franchisor breaches this Agreement and fails to cure such
breach within thirty (30) days after written notice thereof is delivered to the
Franchisor, or such other period as may be reasonable given the nature of the
breach, the Master Franchisee may terminate this Agreement and the Master
Franchise effective ninety (90) days after delivery to the Franchisor of notice
thereof.
12.2 Notwithstanding anything otherwise contained in this Agreement,
Master Franchisee shall have the right to terminate this Agreement, effective
upon notice, upon the occurrence of any one or more of the following events:
12.2.1 if Franchisor ceases or takes material steps to cease
carrying on business, or takes any action to liquidate its assets, if Franchisor
files a voluntary petition in bankruptcy or for arrangement, reorganization or
other relief under any bankruptcy legislation or any similar law, now or
hereafter in effect; or files an answer or other pleading in any proceeding
admitting insolvency, bankruptcy or inability to pay its debts as they mature;
or within thirty (30) days after filing of any involuntary proceedings under any
bankruptcy legislation or similar law, now or here after in effect, such
proceeding shall not have been vacated; or all or a substantial part of it
assets are attached, seized, subjected to a writ or distress warrant, or are
levied upon, unless such attachment, seizure, writ warrant or levy is vacated
within thirty (30) days; or shall be adjudicated a bankrupt; or shall make an
assignment for the benefit or creditors or shall admit in writing its inability
to pay its debts generally as they become due or shall consent to the
appointment of a receiver or trustee or liquidator of all or the substantial
part of its property; or any order appointing a receiver, trustee or liquidator
of Franchisor or any of its shareholders or all or a substantial part of the
property of any of them is not vacated within thirty (30) days resolution passed
for the winding-up or the liquidation of Franchisor or if Franchisor adopts or
takes any corporate proceedings for its dissolution or liquidation;
12.2.2 if the Commissary Agreement is terminated by Master
Franchisee for any reason whatsoever.
13. TERMINATION BY THE FRANCHISOR
13.1 In addition to all other rights of the Franchisor to terminate this
Agreement as provided herein, the Franchisor may terminate this Agreement and
the Master Franchise effective upon delivery of a notice of termination to the
Master Franchisee, if:
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13.1.1 the Master Franchisee makes an assignment for the
benefit of or enters into any arrangement with creditors or stops payment or is
unable to pay its debts within the meaning of the Michigan Company or Insolvency
Code or the relevant law of the Country under which the Master Franchisee was
incorporated or was originated or if the Master Franchisee goes into liquidation
or if an order is made or a resolution is passed for the winding-up of the
Master Franchisee or if the Master Franchisee commits any act of bankruptcy; or
13.1.2 the Master Franchisee on three (3) or more occasions
within any one (l) year period fails to submit when due, sales reports or
financial statements or to pay when due the Royalty Fee, Advertising Fee or
other payments to the Franchisor or its related corporations; or
13.1.3 the Master Franchisee is convicted of any offense or
crime or engages in any conduct which the Franchisor in its reasonable opinion
believes may substantially impair the goodwill associated with the Marks; or
13.1.4 the Master Franchisee has made any material
misrepresentation to the Franchisor in relation to its application for the
Franchise; or
13.1.5 the Master Franchisee intentionally under- reports the
sales of the Store(s) for any period or periods or if an audit by the Franchisor
discloses an understatement of sales by any Stores owned by Master Franchisee
and the Master Franchisee fails to pay the applicable fees to the Franchisor
together with interest due thereon within five (5) days after receipt of the
final audit report; or
13.1.6 the Master Franchisee is in breach of any of the
provisions contained in Clauses 7.1, 8.1, 9.1 or 15 of this Agreement; or
13.1.7 the Master Franchisee fails to properly execute any
documents required by this Agreement or which is reasonably necessary to
properly implement or effect any of the provisions of this Agreement and they
fail to correct such failure within thirty (30) days after written notice is
delivered to them; or
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<PAGE>
13.1.8 the Master Franchisee or any of its related corporations
directly or indirectly contest the validity of the Marks or Domino's ownership
of the Marks or the Franchisor's right to use or to license others to use the
Marks; or
13.1.9 the designated representative ceases to be actively and
substantially engaged in the management and operation of the business of the
Master Franchisee and Master Franchisee fails to replace such designated
representative within 90 days; or
13.1.10 there is any change in the beneficial or legal
shareholding of the controlling ownership interest Master Franchisee without
prior written consent of the Franchisor.
13.2 CURE PERIOD. Without limiting the generality of clause 13.1 hereof,
the Franchisor shall have the further right to terminate this Agreement and the
Franchise, effective upon delivery of a notice of termination to the Master
Franchisee, if the Master Franchisee fails to comply with any other provision of
this Agreement and fails to correct such failure within:
13.2.1 seven (7) days if such failure relates to the use of any
of the Marks or the quality of pizza or any beverage sold by or the cleanliness
or sanitation of any Store owned by Master Franchisee;
13.2.2 thirty (30) days if such failure is to pay any money due
and payable by the Master Franchisee pursuant to any provision of this
Agreement, or any other agreement between the Franchisor or its affiliates or
its subsidiaries; and
13.2.3 If the Master Franchisee breaches this Agreement and
fails to cure such breach within thirty (30) days after written notice thereof
is delivered to the Master Franchisee, or such other period as may be reasonable
given the nature of the breach, the Franchisor may terminate this Agreement and
the Master Franchise effective ninety (90) days after delivery to the Master
Franchisee of notice thereof.
13.3 SUSPENSION OF NEW AGREEMENTS. Effective immediately upon receipt of
notice of termination, the Master Franchisee's right to enter into new franchise
agreements shall be suspended. In addition, the Master Franchisee shall cease
all actions and discussions with sub-franchisees or potential sub-franchisees
regarding new stores or new franchise agreements.
13.4 OPTION TO PURCHASE ASSETS/SHARES. In the event that the Franchisor
terminates this Agreement pursuant to sub-clause 13.1 and requires the Master
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<PAGE>
Franchisee to effect the assignment referred to sub-clause 14.6 the Franchisor
shall have the option (but not the obligation) exercisable within thirty (30)
days of such termination to purchase, at its option, all of the assets of each
Store owned or controlled by the Master Franchisee. Upon execution of the option
of the Franchisor to purchase the assets of each store, the Franchise Agreement
for such store shall be terminated. The purchase price for the assets or the
shares of the Master Franchisee shall be calculated in accordance with the
relevant provisions of the Franchise Agreement.
14. MASTER FRANCHISEE'S OBLIGATIONS UPON TERMINATION OR EXPIRATION
Subject to any Franchise Agreements or other agreements between the
Franchisor and the Master Franchisee which may continue to apply notwithstanding
the termination of expiration of this Agreement:
14.1 PAYMENTS. The Master Franchisee hereby agrees, upon the termination
or expiration of this Agreement and the Franchise, to pay to the Franchisor
within seven (7) days after the effective day of such termination or expiration
any Royalty Fee, Advertising Fee and other charges as have or will thereafter
become due hereunder and are then unpaid together with all damages, costs and
expenses including legal fees incurred by the Franchisor or its related
corporations relating to any breach of this Agreement. The Master Franchisee
hereby further agrees that upon the termination or expiration of the Franchise,
he will immediately return to the Franchisor all copies of the Operating Manual
which have been loaned to him by the Franchisor together with all other records
and correspondence containing confidential information relating to the operation
of its Sub-Franchisees and its Stores, which is acknowledged to be the property
of Domino's or the Franchisor and the Master Franchisee shall not retain any
copy of or extract from any such material;
14.2 NAME REGISTRATIONS. The Master Franchisee hereby agrees that, upon
the termination or expiration of this Agreement and the Franchise, he will take
all such action as may be required to cancel or transfer (at the Franchisor's
option) all business name registered user or other registrations relating to the
use of the Marks and to notify the telephone company and all listing agencies of
the termination or expiration of the Master Franchisee's right to use any of the
Marks in connection with its telephone numbers and all classified and other
directory listings of its Stores;
14.3 TELEPHONE LISTING. The Master Franchisee hereby acknowledges that
the Franchisor has the sole rights to and interest in all registrations relating
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to the use of the Marks, telephone numbers and directory listings associated
with the Marks and its Stores, and hereby irrevocably appoints the Franchisor as
its lawful attorney to direct the telephone company and all listings agencies,
upon any termination of this Agreement by Franchisor in accordance with Section
13 to transfer such numbers and listings to the Franchisor or its nominee and to
sign, complete and lodge all and any documents required to cancel or transfer
(at the Franchisor's option) all registrations relating to the Marks to the
Franchisor or its nominee;
14.4 CONFIDENTIAL INFORMATION AND MARKS. The Master Franchisee agrees
that upon termination or expiration of this Agreement for any reason, it shall
immediately and permanently cease to use or display in any manner whatsoever any
confidential information, trade secrets, or confidential methods, procedures and
techniques associated with the Domino's System, the Marks and all signs,
advertising, material, displays, stationery, forms, products and other articles
displaying the Marks nor will they use any Mark which is confusingly similar to
or a colorable imitation of any of the Marks nor shall they use any designation
of origin or description or representations which may suggest a continuing
association with the Domino's System. In the event that the Master Franchisee
does not immediately and permanently cease to use or display any items including
the Marks, the Franchisor shall be entitled to enter any premises occupied by
the Master Franchisee to remove the Marks from such items or, at its option, to
remove the items containing the Marks from the premises.
14.5 SURVIVAL. Any provisions of this Agreement which refer to periods
after the termination or expiration of this Agreement (which shall be deemed to
include, without limitation, Clauses 8, 9, 10 and 14) shall survive the
termination or expiration of this Agreement.
14.6 ASSIGNMENT OF FRANCHISE AGREEMENTS. Upon any termination of this
Agreement by Franchisor in accordance with Section 13.1 of this Agreement,
Franchisor shall have the right to have a determination made of the "Fair Market
Value" (as defined below) of master Franchisee's rights and interests, as
sub-franchisor, in all Franchise Agreements, exercisable by delivering written
notice thereof to Master Franchisee ("Appraisal Notice") within (10) days after
such termination.
Upon delivery of the Appraisal Notice, Master Franchisee shall give
Franchisor (or its designated agents) and the "Appraiser" (as defined below)
full access to all of Master Franchisee's books and records relating to its
business operated hereunder at any time during customary business hours in order
to determine the purchase price for the Franchise Agreements.
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<PAGE>
The Fair Market Value shall be the amount that an arm's length
purchaser would be willing to pay for the Franchise Agreements, as mutually
agreed upon by Franchisor and Master Franchisee; provided, however, that if
Franchisor and Master Franchisee are unable to agree on the Fair market Value of
the Franchise Agreements within thirty (30) days after delivery of the Appraisal
Notice, then Fair Market Value shall be determined by one (1) person with
experience in the valuation of fast food or restaurant franchise businesses in
Poland or Eastern Europe who is a member of an internationally recognized
accounting firm (the "Appraiser"). Franchisor shall notify Master Franchisee of
the identity of one (1) proposed Appraiser concurrently with the Appraisal
Notice, and Master Franchisee shall have the right to select a second Appraiser
and notify Franchisor thereof within thirty (30) days after the date of the
Appraisal Notice.
Within ten (10) days after Master Franchisee's notice of selection
of an Appraiser, both Appraisers shall select and agree upon a third proposed
Appraiser and deliver a notice to both Franchisor and Master Franchisee with the
identity of the third proposed Appraiser. Within five (5) days of the notice of
the third proposed Appraiser, Master Franchisee shall dismiss one of the
proposed Appraisers and notify Franchisor thereof, and within five (5) days
thereafter Franchisor shall do likewise. The remaining proposed Appraiser shall
act as Appraiser hereunder.
The Appraiser shall make his determination of Fair Market Value,
which shall be final and binding on the parties, and submit a written report
thereof ("Appraisal Report") to Franchisor and Master Franchisee as soon as
practicable, but in no event more than sixty (60) days after his appointment.
Each party may submit in writing to the Appraiser its judgment of Fair Market
Value (together with its reasons therefor); however, the Appraiser shall not be
limited to these submissions and may make such independent investigations as he
determines to be necessary. The Appraiser's fees and costs shall be borne
equally by the Franchisor and Master Franchisee.
Franchisor shall have the option, exercisable by delivering written
notice thereof within thirty (30) days after submission of the Appraisal Report
(or the date on which the parties agree, without the use of an Appraiser, to the
Fair Market Value of the Franchise Agreements), to purchase the Franchise
Agreements at the Fair Market Value.
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<PAGE>
The closing of the purchase of the Franchise Agreements shall occur
at the place, time and date designated by Franchisor but no later than sixty
(60) days after Franchisor's exercise of its option to purchase the Franchise
Agreements. At the closing (a) Master Franchisee shall duly execute and deliver
to Franchisor (or its designee) an assignment agreement, containing such terms
and conditions as Franchisor may reasonably require, transferring Master
Franchisee's entire right, title and interest (free and clear of all liens,
encumbrances and restrictions) under the Franchise Agreements to Franchisor (or
its designee); (b) Master Franchisee shall deliver the original of each
Agreement and copies of all files, correspondence and memoranda and other
materials regarding each Franchisee under each such Agreement as Franchisor may
reasonably request, including applications, inspection reports and financial
information; and (c) upon receipt of such assignment agreement, documents and
files, Franchisor (or its designee) shall pay Master Franchisee the Purchase
Price in US Dollars. Thereupon, Master Franchisee shall have no further right,
title or interest as Franchisor under any of the Franchise Agreements.
In the event there are any unresolved issues in connection with the
closing of the purchase of the Franchise Agreements, the closing may at
Franchisor's option be accomplished through an escrow on such terms and
conditions as Franchisor deems reasonably appropriate (including the making of
payments, deductible from the purchase price, directly to third parties claiming
an interest in the Franchise Agreements) in order to obtain clear title to the
Franchise Agreements.
14.7 STORE FRANCHISE AGREEMENTS. Upon the expiration or termination of
this Agreement, each Franchise Agreement then in force (unless terminated
pursuant to Section 13.5 hereof) with respect to Domino's Pizza Stores owned or
controlled by the Master Franchisee shall remain in force and effect in
accordance with its provisions.
14.8 OPERATING MANUAL The Master Franchisee hereby further agrees that
upon the termination or expiration of the Franchise, it will immediately return
to the Franchisor all copies of the Operating Manual which have been loaned to
it by the Franchisor together with all other records and correspondence
containing confidential information relating to the operation of its
Sub-Franchisees and its Stores, which is acknowledged to be the property of
Domino's or the Franchisor and the Master Franchisee shall not retain any copy
of or extract from any such material;
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<PAGE>
15. ASSIGNMENTS
15.1 BY DPII. This Agreement is fully assignable by the Franchisor at any
time by written notice to the Master Franchisee and shall enure to the benefit
of any assignee or other legal successor to the interests of the Franchisor
herein. In the event that the Franchisor assigns this Agreement, the Franchisor
shall use its best efforts to ensure that the assignee agrees to observe and
perform all the terms and conditions on the part of the Franchisor contained in
this Agreement.
15.2 BY MASTER FRANCHISEE. This Agreement and the Master Franchise are
personal to the Master Franchisee and neither this Agreement, the Franchise, nor
any part of the direct or indirect controlling ownership interest of the Master
Franchisee (which shall mean and include voting shares and securities
convertible thereto, in the Master Franchisee) may be (and the Master Franchisee
shall ensure that they are not) voluntarily, involuntarily, directly or
indirectly assigned or otherwise transferred or encumbered by the Master
Franchisee without the consent of Franchisor, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, Master
Franchisee shall be permitted to transfer this Agreement to an affiliate
controlled by Master Franchisee so long as applicable withholding taxes does not
exceed Ten percent (10%) with respect to all fees and royalties due and payable
under this Agreement. Any purported assignment, transfer or encumbrance in
violation of this Agreement shall be void and shall constitute a breach of this
Agreement.
16. INDEPENDENT CONTRACTORS/INDEMNIFICATION
16.1 NO AGENCY. The parties hereto are independent contractors and the
Master Franchisee is not and shall in no event hold itself out as an agent of
the Franchisor for any purpose.
16.2 COSTS. The Franchisor shall not be obligated by any agreements,
representations or warranties made by the Master Franchisee nor shall the
Franchisor be obligated for any costs, claims, demands, penalties or damages to
any person or property directly or indirectly arising out of any act or omission
by the Master Franchisee under or relating to this Agreement caused by the
Master Franchisee's negligent or willful action or failure to act. The Master
Franchisee hereby agrees to indemnify the Franchisor against and to reimburse
the Franchisor for all such obligations, costs, claims, penalties and damages
for which it is held liable and for all costs incurred by it in the defense of
any such claim brought against it or in any action in which it is named as a
party, including without limitation legal fees, costs of investigation and proof
of facts, court costs, other litigation expenses and travel and living expenses.
The Franchisor shall have the right to defend any such claim.
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<PAGE>
16.3 COSTS. Master Franchisee shall not be obligated by any agreements,
representations or warranties made by the Franchisor nor shall the Master
Franchisee be obligated for any costs, claims, demands, penalties or damages to
any person or property directly or indirectly arising out of any act or omission
by the Franchisor under or relating to this Agreement caused by the Franchisor's
negligent or willful action or failure to act. The Franchisor hereby agrees to
indemnify the Master Franchisee against and to reimburse the Master Franchisee
for all such obligations, costs, claims, penalties and damages for which it is
held liable and for all costs incurred by it in the defense of any such claim
brought against it or in any action in which it is named as a party, including
without limitation, legal fees, costs of investigation and proof of facts, sour
costs, other litigation expenses and travel and living expenses. The Master
Franchisee shall have the right to defend any such claim.
17. GOVERNING LAW; ARBITRATION
This Agreement shall be governed by the laws of the state of
Michigan. All claims arising out of, or relating to, this agreement shall, on
demand of either party, be submitted for arbitration to, and conducted at, the
office of the American Arbitration Association located in Washington D.C. Such
arbitration proceedings shall be heard by one arbitrator in accordance with the
then current commercial arbitration rules of the American Arbitration
Association. The arbitrator shall have the right to include in his award any
relief which he deems proper in the circumstances, including, without
limitation, money damages (with interest on unpaid amounts for the due date),
specific performance, injunctive relief and attorneys' fees and costs. The award
and decision of the arbitrator shall be conclusive and binding upon all parties
to the arbitration proceeding, and judgment upon the award may be entered in any
court of competent jurisdiction. Each party to the arbitration proceeding agrees
to contest any such award only in the district in which the arbitration award
was entered. This agreement to arbitrate shall continue in full force and effect
subsequent to and notwithstanding the expiration or termination of this
agreement.
18. Franchisor shall not unreasonably withhold or delay any written request
for consent or approval and any such withholding or approval of consent shall
specify the reason therefor and shall be delivered within thirty (30) days after
the written request. If Franchisor shall have failed to consent to any request
within thirty (30) days of a written request by Master Franchisee, Franchisor
will be deemed to have approved the request.
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<PAGE>
19. A general covenant of good faith and fair dealing shall be applicable to
this Agreement, requiring both parties to this Agreement to act reasonably and
in good faith toward each other. Additionally, Franchisor agrees not to act
arbitrarily or capriciously with respect to Master Franchisee when compared to
Franchisor's actions in other similar circumstances.
20. The party prevailing in a judicial or arbitration proceeding or appeal
thereof shall be awarded its costs and expenses including, but not limited to,
reasonable accounting, paralegal, legal, expert witness, attorneys' fees and
arbitrators' fees, whether incurred prior to, in preparation for or in
contemplation of the filing of any written demand, claim, action, hearing or
proceeding to enforce the obligations of this Agreement.
21. BINDING EFFECT
This Agreement is binding upon the parties hereto and their respective
heirs, assigns and successors in interest.
22. NO WAIVER
No delay or omission by the Franchisor or Master Franchisee to exercise
any right or power arising from any default shall impair any right or power or
shall be construed to be a waiver of any right or any such default by the other
under this Agreement or acquiescence therein. No waiver of any breach of any of
the covenants of this Agreement shall be construed, taken or held to be a waiver
of any other breach or waiver, acquiescence in or consent to any further or
succeeding breach of the same covenant. Neither the rights herein given to
receive, collect, sue for or distrain for any fees, moneys or payments or to
enforce the terms, provisions and conditions of this Agreement or to prevent the
breach or non- observance thereof or the exercise of any such right or of any
other right or remedy hereunder or otherwise granted or arising shall impair the
right or power of the Franchisor to declare the Term ended and to terminate this
Agreement because of any default in or breach of any of the covenants,
provisions or conditions of this Agreement.
23. ACCORD AND SATISFACTION
No payment by the Master Franchisee or any third party or receipt by the
Franchisor of a lesser amount than any fee payable hereunder shall be deemed to
be other than on account of such fee nor shall any endorsement or statement on
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<PAGE>
any check or any letter accompanying any check or payment be deemed an accord
and satisfaction. The Franchisor may accept such check or payment without
prejudice or its rights to recover the balance of such fee or pursue any other
remedy provided for in this Agreement.
24. FORCE MAJEURE
Neither party shall be in default of its delay in performance or failure
to perform any of its obligations hereunder, when and if the delay or failure
arises from a cause which is beyond the control of the party failing to perform.
Such force majeure (which includes, inter alia, strikes, acts of God, acts of
war, laws and regulations) would suspend the fulfillment of the obligations
under this Agreement until it is over. If the force majeure lasts more than one
(1) year, the party adversely affected by such force majeure shall have the
right to terminate this Agreement.
25. COSTS
The Master Franchisee shall bear all legal and other costs and expenses of
preparing, stamping and registering this Agreement and any lease, license,
security arrangement or other agreement entered into in connection with this
Agreement. Such costs and expenses shall be deemed to include any fines and/or
penalties imposed for failure to stamp or adequately stamp or stamp within
prescribed time limits the document or documents concerned.
26. INTERPRETATION
26.1 REFERENCES. In this Agreement unless the context otherwise requires:
26.1.1 a reference to one gender shall include a reference to
the other gender;
26.1.2 a reference to a person shall include a reference to
that person's successors and permitted assigns;
26.1.3 a reference to the singular shall include a reference to
the plural and vice versa;
26.1.4 a reference to a person includes a reference to a
company, corporation, partnership, joint venture or trust or other entity and
vice versa;
26.1.5 a reference to a related company or corporation shall
mean a related corporation as defined by Michigan Corporations Act;
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<PAGE>
26.1.6 a reference to any legislation shall include a reference
to any amendments, modifications or re-enactments or replacements thereof.
26.2 ENTIRE AGREEMENT; HEADINGS. The preamble, recitals, schedule and
annexures hereto and other documents expressly incorporated herein are a part of
this Agreement, which along with the Commissary Agreement constitutes the entire
agreement between the parties hereto and there are no other oral or written
understandings or agreements between the Franchisor and Master Franchisee
relating to the subject matter of this Agreement. The headings of the clauses
hereof are for convenience only and do not define, limit or construe the
contents of such paragraphs.
26.3 SEVERABILITY. The language of all provisions of this Agreement shall
be construed simply according to its fair meaning and not strictly against the
Franchisor or the Master Franchisee. It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible. Accordingly, if any part of this Agreement for any reason shall be
declared invalid and unenforceable, such provision shall be severed (and this
shall not affect the validity of the remaining provisions) or, if possible,
modified to best preserve the intentions of the parties and this Agreement, so
modified, shall remain in full force and effect. If any applicable law or rule
requires a greater prior notice of the termination of or election not to renew
this Agreement, or the taking of some other action hereunder, than is required
hereunder, the prior notice or other requirements required by such law or rule
shall be substituted for the notice requirements hereof.
26.4 AMENDMENTS. This Agreement may not be amended except in writing
signed by an authorized representative of the Franchisor and the Master
Franchisee.
26.5 REMEDIES. No right or remedy herein conferred upon or reserved to
the Franchisor or Master Franchisee is exclusive of any other right or remedy
provided or permitted to it by law or equity.
27. NOTICES
Any notices or other communications to be given under this Agreement shall
be in writing, delivered by hand, telegram, certified or registered mail,
facsimile or courier service to the following address (which may be changed by
written notice):
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<PAGE>
To DPII: Domino's Pizza International, Inc.
30 Frank Lloyd Wright Drive
P.O. Box 997
Ann Arbor, Michigan 48106-0997 USA
Attn.: Legal Department
Facsimile: 313-930-5499
To Master Franchisee: Krolewska Pizza Sp. z.o.o.
Klineman Rose Wolf - Poland
ul. Krakpwskie Przedmiescie 4/5, #115
Warsaw 00-333, Poland
Attn.: Tomasz Barylski, Esquire
Facsimile No.: (48-22) 826 40 54
AND
International Fast Food Corporation
1000 Lincoln Rd
Miami Beach, FL 33139
Attn.: Mitchell Rubinson
Facsimile No.: 305-538-5037
Notice by mail shall be deemed received upon actual receipt.
28. ACKNOWLEDGEMENT
28.1 The Master Franchisee acknowledges and agrees that it has read this
Agreement and that it has been given the opportunity to clarify any provision
and information that it did not understand and to consult with a solicitor or
other professional adviser. The Master Franchisee further acknowledges that it
understands the terms, conditions and obligations of this Agreement and the
Master Franchise and agrees to be bound thereby.
28.2 The Master Franchisee acknowledges that it has conducted an
independent investigation of the business contemplated by this Agreement and
recognize that it involves business risks making the success of the venture
largely dependent upon the business abilities of the Master Franchisee. The
Franchisor expressly disclaims the making of and the Master Franchisee
acknowledges it has not received or relied upon any warranty or guarantee
expressed or implied as to the potential volume, profits or success of the
business venture contemplated by this Agreement.
29. GOVERNMENT APPROVALS
The Master Franchisee shall be solely responsible for obtaining all
governmental approvals and consents, if any, required in respect to this
Agreement or the matters contemplated by this Agreement. Certified copies of all
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<PAGE>
such approvals and consents shall be furnished by Master Franchisee to
Franchisor on request. The Master Franchisee's failure to obtain and maintain
any approval or consent necessary to carry out the matters contemplated by this
Agreement in accordance with their terms shall constitute a material breach of
this Agreement, entitling the Franchisor to terminate this Agreement upon
immediate written notice to the Master Franchisee.
30. CONTROLLING LANGUAGE
The parties hereto confirm that it is their wish that this Agreement, as
well as all other documents relating hereto, including notices, shall be drawn
up in the English language only. This Agreement may be translated; in case of
any difference between the two versions, the English version shall control. All
costs in connection with the translation shall be borne by the Master
Franchisee.
31. COUNTERPARTS
This agreement may be signed in counterparts.
IN WITNESS WHEREOF, the parties hereto set their hands and seals the day and
year first hereinbefore written.
DOMINO'S PIZZA INTERNATIONAL, INC. KROLEWSKA PIZZA SP. Z.O.O.
/s/ Michael Curran /s/ James F. Martin
- ----------------------------------- --------------------------------
By: Michael C. Curran By: James F. Martin
Its: Senior Vice President Its: Authorized Signer
and General Counsel
Date: Aug 28, 1997 Date: 8/28/97
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<PAGE>
COVENANTS OF SHAREHOLDERS
The undersigned individual represents and warrants that he is the
controlling shareholder of International Fast Food Corporation which has direct
control over the Master Franchisee. Accordingly, to induce the Franchisor to
enter into this Agreement and grant the master franchise to the Master
Franchisee, the undersigned individual hereby agrees to be bound by, and
personally liable for his breach of, the provisions of Sections 9 and 15 of this
Agreement.
/s/ Mitchell Rubinson
- -----------------------------
Mitchell Rubinson
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<PAGE>
COVENANTS OF SHAREHOLDERS
The undersigned represents and warrants that International Fast Food
Corporation has direct control over the Master Franchisee. Accordingly, to
ensure that adequate capital is available to the Master Franchisee, the
undersigned shall have contributed, or shall ensure that other entities have
contributed equity to the Master Franchisee in a minimum amount of the US Dollar
equivalent of 2,000,000.00 by 12/31/97. Any additional capital required over and
above that two million dollar amount will also be dedicated to Krowleska Pizza,
Sp.zo.o. as needed to allow it to meet the growth requirements referenced in
Schedule Two of this Agreement. A default of this covenant shall constitute a
default of this Agreement.
INTERNATIONAL FAST FOOD CORPORATION
/s/ Mitchell Rubinson
- ---------------------------
By: Mitchell Rubinson
- ---------------------------
Its: President
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<PAGE>
SCHEDULE ONE
------------
MARKS
DPI has filed for the registration of its marks in Poland.
MARK CLASS REGISTRATION NO.
---- ----- ----------------
DOMINO'S PIZZA 30 & 42 #2-110-560
DOMINO'S PIZZA &
DOMINO DESIGN 30 & 42 #2-110-559
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<PAGE>
SCHEDULE TWO
------------
(Clause 2.2)
YEAR END, DEC. 31: ADDITIONAL STORES TOTAL STORES
------------------ ----------------- ------------
1997 1 5*
1998 5 10
1999 6 16
2000 7 23
2001 8 31
2002 9 40
2003 10 50
*includes 4 Stores existing on the date of this agreement
A. All stores in Warsaw shall be corporate stores.
B. Franchise Stores shall not exceed 25% of the number of opened and
operating stores.
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<PAGE>
ANNEXURE "B"
STORE CERTIFICATION AGREEMENT
This Store Certification Agreement is made effective ___________, the opening
date of the Domino's Pizza Store (hereinafter "Store") No. __________ located in
_________________, by and between Domino's Pizza International, Inc., a
corporation having a principal place of business at 30 Frank Lloyd Wright Drive,
Ann Arbor, Michigan, 48106, USA (hereinafter referred to as "Franchisor"), and
Krolewska Pizza Sp Z o.o., corporation organized under the laws of Poland,
having its principal place of business at
_____________________________________(hereinafter referred to as "Master
Franchisee").
1. FRANCHISEE:
Name:
Corporation:
Address:
2. STORE LOCATION:
City:
Street Address:
Building Type and Description:
3. AGREEMENT:
Term: 10 Years (subject to renewal), commencing on _______________, the
date of the Standard Franchise Agreement to be attached hereto upon execution by
the Franchisee.
4. SUBMISSION AND CERTIFICATION:
Master Franchisee hereby requests and Franchisor hereby acknowledges,
accepts and certifies the location referred to above in Section 2 as being the
authorized location for Store No.___________. By executing this certificate, the
Master Franchisee certifies that the Franchisee of the proposed store has met
all of the requirements and submitted all paperwork necessary to ensure the
Franchisee is able and prepared both legally and financially to open such store,
in accordance with the standard store opening process including, specifically,
the items on the attached list.
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For Submission: For Acceptance and Certification:
- --------------- ---------------------------------
Franchisee: Krolewska Pizza Sp Z o.o.: Franchisor: Domino's Pizza
International, Inc.
/s/ Michael Curran
--------------------------------
By: By: Michael C. Curran
Title: Title: Senior Vice President
Date: Date: Aug 28, 1997
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MASTER FRANCHISE
STORE OPENING CHECKLIST
To open a store a franchisee must be current on its royalties and must submit
the following documentation to DPII for approval:
- Three (3) area delivery maps outlining store location, area of primary
responsibility and delivery area, MUST BE SIGNED AND DATED by you and your
Operations Representative.
- Site Approval form, must be filled out by Operations Representative.
- Floor Plan, MUST BE SIGNED AND DATED by you and your Operations
Representative.
- Executed Lease (with required Lease provisions)
- Insurance Certificate (with appropriate Domino's Pizza entity named
as additional insured)
- Store information including: store address and phone number and
manager's name.
- Grand Opening Plans
- Certificate of Good Standing for your corporation
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ANNEXURE "A"
Note: Amendments to be mutually agreed upon for use in Poland
06\09\93 -44- POLAND MFA
DOMINO'S PIZZA INTERNATIONAL, INC.
STANDARD FRANCHISE AGREEMENT
This Franchise Agreement (this "Agreement") is being entered into between
Domino's Pizza International, Inc., a Delaware corporation ("we" "DPII" or "us"
in this Agreement), and_________________________________________________________
_________________________________________________________("you" or "Franchisee"
in this Agreement). If you are a corporation or partnership, or if this
Agreement is transferred to a corporation or partnership, the term "Owners" in
this Agreement refers to all of the shareholders of such corporation or partners
of such partnership. Unless otherwise approved by DPII, the term "Controlling
Shareholder or Partner" refers to the person or legal entity designated by us as
the controlling shareholder if you are a corporation, or controlling partner if
you are a partnership.
1. INTRODUCTION
Domino's Pizza, Inc. ("DPI"), the parent company of DPII, has developed
and operates retail outlets specializing in the sale of pizza and featuring
carry-out and delivery services. These outlets are known as "DOMINO'S PIZZA
Stores" and conduct business under a uniform business format, specially designed
equipment and specifications for the preparation and sale of pizza and other
authorized food products (the "Domino's System"). DPI also owns, uses, promotes
and licenses certain valuable trademarks, service marks and commercial symbols
in connection with the operation of DOMINO'S PIZZA Stores including the mark
"DOMINO'S PIZZA" (the "Marks"). DPI has granted DPII the right to grant
franchises for DOMINO'S PIZZA Stores, including the right to license use of the
Marks as provided herein outside of the United States. A listing of the Marks
relevant to the operation of your Store is available upon your request.
You have applied to DPII for a franchise to operate a DOMINO'S PIZZA Store
utilizing the Domino's System and the Marks at the location identified in this
Agreement. Your application has been approved by DPII in reliance upon all of
the representations made in your application including those concerning your
financial resources and the manner in which the franchise will be owned and
operated. It is understood and agreed that the Pizzazz concept, the Pizzazz type
unit (store) and the "PIZZAZZ" mark are not within the scope of this Agreement.
You acknowledge that you have read this Agreement and been given an
opportunity to obtain clarification of any provision that you did not
understand. You also understand and agree that the terms and conditions
contained in this Agreement are necessary to maintain DPII's high standards of
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quality and service and the uniformity of those standards at all DOMINO'S PIZZA
Stores and thereby to protect and preserve the goodwill of the Marks.
2. GRANT AND TERM OF FRANCHISE
2.1 GRANT. Subject to the terms of this Agreement, DPII grants to you a
franchise (the "Franchise") to operate a DOMINO'S PIZZA delivery store (the
"Store") under the Domino's System and a license to use the Marks in the
operation of the Store located at the following location:
________________________________________________________________________
________________________________________________________________________
2.2 TERM OF FRANCHISE. The term of this Agreement shall be for a period
of ten (10) years, beginning on the effective date of this Agreement as defined
in Section 22.12.
3. RENEWAL OF FRANCHISE
3.1 OPTION TO RENEW. You may, at your option, renew the Franchise for
one additional ten (10) year term at the end of the initial term, provided at
the time of renewal you are not in default of any material provision of this
Agreement or any other agreement with us or our subsidiaries or affiliates or
any other creditor or supplier of the Store.
3.2 MANNER OF RENEWAL. In connection with a renewal of the Franchise,
you must execute our then current form of standard franchise agreement and all
other agreements customarily used by us in the grant of franchises. The renewal
will be subject to your obtaining all required governmental approvals. You
understand that the renewal franchise agreement may provide for higher royalty
fees and greater expenditures for advertising and promotion than are provided
for in this Agreement and may contain other terms materially different from the
terms of this Agreement, however, such fees, expenditures and terms will be the
same as are generally used by us on a system-wide basis at that time. However,
there will be no initial franchise or similar fee charged upon a renewal of the
Franchise. The renewed franchise agreement is subject to further renewal in
accordance with the terms contained therein.
3.3 NOTIFICATION OF EXPIRATION. We will send all agreements relating to
renewal of the Franchise for your review and execution approximately six (6)
months prior to the expiration of this Agreement along with a notification of
the expiration of this Agreement. Your failure to return these to us, executed
by you, within thirty (30) days of receipt will be deemed an election by you not
to renew this Agreement. Our notice will also state what actions, if any, you
must take to correct the deficiencies in your operation of the Store and will
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specify the time period in which these deficiencies must be corrected. Renewal
of the franchise will be conditional on your continued compliance with all the
terms and conditions of this Agreement and all other agreements with us and our
affiliates and subsidiaries and all other creditors and suppliers of the Store
up to the date of expiration.
4. AREA OF PRIMARY RESPONSIBILITY
4.1 DEFINED. The following geographic territory will be your Area of
Primary Responsibility:
As defined on the map attached hereto.
4.2 PROTECTED AREA. Provided you are in compliance with the terms of
this Agreement, we will not operate or grant a franchise for the operation of a
DOMINO'S PIZZA Store during the term of this Agreement whose area of primary
responsibility significantly overlaps your Area of Primary Responsibility as
determined by us.
5. INITIAL PAYMENTS
5.1 FRANCHISE FEE. Prior to your execution of this Agreement, you shall
to pay us or our designee, to a bank account designated by us, or at our
offices, a franchise fee in the amount of US $_____________ or, at our sole
option, in the local currency equivalent.
5.2 OPENING ADVERTISING AND PROMOTION FEE. You agree to provide us with
opening advertising and promotion plans for our approval prior to opening the
Store and additionally, to expend the local currency equivalent of US $3,000.00
in opening advertising and promotion, and to provide to us, upon our request,
copies of all records evidencing said expenditures.
5.3 NON-REFUNDABILITY OF FEES. The fees payable under this Section 5 are
fully earned and are not refundable under any circumstances.
6. ROYALTY FEE AND OTHER CHARGES
6.1 AMOUNT AND PAYMENT. During the term of the Franchise, you agree to
pay us a royalty fee in U.S. Dollars or, at DPII's option, its local currency on
the date of payment of ______________________of the weekly Royalty Sales of the
Store. This fee must be postmarked or wire transferred, if requested by DPII
pursuant to subsection 15.4 hereof, on Monday and paid by Wednesday of each week
on royalty sales for the week ending on the preceding Sunday. Any and all
governmental and/or administrative approvals which may be required to permit the
payment of the foregoing fees to DPII outside of the country in which the Store
is located shall be obtained by Franchisee at its sole expense.
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6.2 DEFINITION OF ROYALTY SALES. The term "Royalty Sales" means the
total receipts from all sales at or from the Store, excluding sales and
equivalent taxes and coupons and similar discounts or beverage container
deposits approved by us in advance. Premium items or similar items must be
included in computing Royalty Sales unless these items have been sold at or
below cost by the Store.
6.3 INTEREST ON LATE PAYMENTS. All royalty fees, advertising
contributions and all other amounts owed to us pursuant to this Agreement will
bear interest after the due date at a rate which is two percent (2%) above the
one-month London Interbank Offered Rate (LIBOR) for U.S. Dollars for the date on
which payment was due, or if that date is not a business day, for the next
business day. Entitlement to such interest shall be in addition to any other
remedies we may have.
6.4 APPLICATION OF PAYMENTS. When we receive a payment from you, we have
the right in our sole discretion to apply it as we see fit to any past due
indebtedness of yours due to us or our affiliates, whether for royalties,
advertising contributions, purchases, interest, or for any other reason,
regardless of how you may designate a particular payment to be applied.
6.5 CONVERSION OF PAYMENTS. All fees, advertising contributions, and all
other amounts owed to us in U.S. Dollars will be computed at the telegraphic
transfer selling rate for U.S. Dollars quoted by Bank of America International
as quoted in The Wall Street Journal with respect to the local currency for the
date of payment, or if that date is not a business day, for the next business
day. If the exchange rate at the time of remittance, as opposed to the exchange
rate on the due date, must be used, you will compensate us for any resulting
loss. If at any time legal restrictions shall be imposed upon the purchase of
U.S. Dollars or the transfer to or credit of a non-resident corporation with
payments in such currency, you will notify us immediately, and use your best
efforts to obtain any consents or authorizations which may be necessary in order
to effect payment. We may direct you to make payments to us in such other
currency and in such other territory or jurisdiction as we may select, or (to
the extent permissible by law) to make such payments to a designated account for
our exclusive and sole use and benefit, and you will provide evidence to us of
such payments. Our acceptance of payment in a currency other than U.S. Dollars
will not relieve or release you of or from your obligation to make future
payments in U.S. Dollars to the extent permitted by law.
6.6 PAYMENT OF TAXES. You must pay to the local tax authorities, on our
behalf, withholding payments required by law and provide us with an official
receipt for payment of these withholding taxes. You may deduct the amount of any
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of these withholding taxes from the royalty payments to us. If you fail to pay
these withholding taxes, you will indemnify us for the full amount of such
taxes, including any losses occasioned by your failure to withhold any taxes
imposed by any local jurisdiction on amounts payable by you pursuant to Sections
5 and 6, and for any liability (including penalties, interest, and expenses)
arising from or concerning the payment of such taxes, whether such withholding
taxes were correctly or legally asserted or not. All other taxes imposed, such
as turnover taxes, value-added taxes, or sales taxes, which may be imposed now
or in the future, will be your responsibility and will not affect your
obligations to make payments as required under this Agreement.
7. STORE LOCATION
7.1 STORE LEASES. Concurrently with the execution of this Agreement, you
will execute a sublease or lease agreement pursuant to which you will sublease
or the premises of the Store at the location specified in Section 2.1. You will
not execute a lease or sublease with a third party lessor for the Store, or any
food preparation center ("Commissary") operated by you in connection with the
Store, which has not been approved by us or which does not contain the terms we
require in all such leases.
7.2 REQUIRED LEASE PROVISIONS. The lease for the premises of the Store
shall contain provisions to the effect that: (i) the lease is entered into by
and between you and the lessor upon the express understanding that you are a
licensed Franchisee and that the premises are to be used during the term of the
lease solely as a franchised business. DPII, as Franchisor, is a third-party
beneficiary of the lease agreement and is entitled to enforce on its own behalf
the rights given to it in the agreement; (ii) upon termination or expiration of
this Franchise for any reason, DPII shall have the right, but shall not be
obligated, to assume your status and replace you as lessee, and you, upon
exercise of that right by us, shall be fully released and discharged from all
liability for future rent and other lease charges (except for liability for
unpaid rent or other lease charges for the period of your occupancy or any other
then existing liability to the lessor under such lease). DPII shall further have
the right to assign the lease to another Franchisee upon 30 days notice to the
lessor. You and the lessor shall complete any required documents and/or
formalities to achieve this result; (iii) the lessor shall send us a copy of all
notices of default which it sends to you; and (iv) upon termination of the lease
or of the Franchise Agreement, the lessee shall remove all identifying signs and
trademarks from the premises. If the lessee fails to do so within five (5)
calendar days of its last day of active business or of the termination of the
lease, whichever is sooner, Franchisor may remove such signs or marks itself.
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7.3 LOCATION AND USE. You may operate the Store only at the location
specified in Section 2.1, and you may not relocate the Store except with our
prior written consent. The Store may only be used for the operation of a
DOMINO'S PIZZA Store and other related activities approved by us in writing. You
shall not allow the premises of the Store to be used for any immoral or illegal
purpose.
7.4 RELOCATION. If your lease expires or terminates without your fault,
or if the site is condemned, destroyed or rendered unusable, we will grant
permission for relocation of the Store to a new location to be approved or
determined by us, for which you will execute a lease or sublease with us, our
local subsidiary, or with a third party lessor, as we shall determine. Any
relocation will be at your sole expense. In the event of relocation of the
Store, you will pay us our reasonable expenses incurred in connection with any
such relocation. We will not, however, charge you more than the sum of One
Thousand U.S. Dollars (US $1,000.00) for the administrative expenses incurred by
us in connection with such relocation.
7.5 LOCATION AND OPERATION OF COMMISSARY. Any Commissary operated by you
in connection with the Store may be located only at the premises of the Store or
other premises approved by us. Such Commissary must be operated by you and your
employees exclusively for the benefit of the Store or other Domino's Pizza
Stores operated by you and may not be operated by any other person or entity
without our prior written consent.
7.6 TERMINATION OR ASSUMPTION OF LEASE. If you have leased or subleased
the Store and/or the Commissary from us, or our local subsidiary then, upon the
termination or expiration of the Franchise for any reason, such lease(s) and/or
sublease(s) shall terminate. If you have leased or subleased the Store and/or
the commissary from a third party lessor, upon the termination or expiration of
the Franchise for any reason, we shall have the right to assume your status and
replace you as a lessee or sublessee. Upon exercise of that right by us, you
will be fully released and discharged from all liability for rent and all other
future liability under the lease (although not from any liability for unpaid
rent or any other then existing liability to the lessor under the lease). If we
exercise our right to assume your lease, we will indemnify you and hold you
harmless against any claim made for future rent or other future liability under
the lease or sublease.
8. STORE DEVELOPMENT
8.1 INITIAL DEVELOPMENT AND CONSTRUCTION. You agree that promptly after
obtaining possession of the site for the Store you will:
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(a) cause to be prepared and submit for approval by us a site plan and
any modifications to our basic architectural plans and specifications for the
Store, including requirements for dimensions, exterior design, materials,
interior layout, equipment, fixtures, furniture, signs, and decorating. You
understand that you may modify our basic plans and specifications only to the
extent required to comply with applicable ordinances, building codes, and permit
requirements and only with our prior written approval;
(b) obtain all required zoning changes; all required building, driveway,
utility, health, sanitation, and sign permits and any other required permits;
(c) purchase or lease equipment, fixtures, furniture and signs meeting
our specifications and requirements;
(d) complete the construction and/or remodeling, equipment, fixture,
furniture and sign installation and decorating of the Store in full and strict
compliance with plans and specifications approved by us and all applicable
ordinances, building codes and permit requirements; and
(e) if applicable, obtain all customary contractors' sworn statements
and partial and final waivers of lien for construction, remodeling, decorating
and installation services provided for the Store.
8.2 STORE OPENING. You agree to complete development of the Store and
have the Store ready to open within a reasonable time after obtaining possession
of the site for the Store. If you do not open the Store and have it operating
within (6) months from the effective date of this Agreement, we will have the
option to terminate this Agreement upon the giving of written notice to you.
9. STORE REFURBISHING
You agree to refurbish the Store (in addition to regular maintenance and
repair), within six (6) months of receipt of written notice from us, as we may
from time to time reasonably require to maintain or improve the appearance and
efficient operation of the Store, to increase its sales potential, or to comply
with our standards and identity. Refurbishing may include:
(a) replacement of worn out or obsolete equipment, fixtures, furniture,
and signs;
(b) the substitution or addition of new or improved equipment, fixtures,
furniture, and signs;
(c) redecorating;
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(d) repair of the interior and exterior of the premises and repair and
resurfacing of parking facilities;
(e) structural modifications and remodeling of the premises; and
(f) repair or replacement of delivery and related motor vehicles.
You will not be required to make aggregate expenditures for refurbishing
of the Store in excess of one and one-half percent (1 1/2%) of the Royalty Sales
of the Store from the date of its opening to the date of any required
refurbishing or from the date of that refurbishing to the date of any subsequent
refurbishing on those occasions when a subsequent refurbishing is required.
10. TRAINING
10.1 INITIAL TRAINING. You (or the Controlling Shareholder or Partner if
you are a corporation or partnership and, if so, the Controlling Shareholder or
Partner may substitute a designated individual) must enroll and complete all
training programs and classes which we require for the operation of a DOMINO'S
PIZZA Store. These training programs and classes will be furnished in the
English language, at such times and places as we designate. There will be no
separate charge for these training programs or classes. All training programs
and classes must be completed to our satisfaction. You will be responsible for
the travel, living expenses, and compensation of you or your employees incurred
during these training programs and classes, and for the expenses of an
interpreter, if necessary.
10.2 TRAINING OF EMPLOYEES. You agree to implement a training program for
employees of the Store in accordance with training standards and procedures
prescribed by us from time to time. You also agree to purchase from us and
utilize all training aids which we may require from time to time (e.g., films,
videotapes or printed materials). You agree not to employ any person who is
required by us to complete a training program but who fails or refuses to do so.
10.3 ADDITIONAL TRAINING. We may also, at our option, require you (or the
Controlling Shareholder or Partner if you are a corporation or partnership and,
if so, the Controlling Shareholder or Partner may substitute a designated
individual) to attend supplemental or additional training programs which may be
offered from time to time by us during the term of the Franchise. You will be
responsible for the reasonable costs of such programs and for the travel and
living expenses and compensation of you and your employees incurred during these
programs.
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11. OPERATING ASSISTANCE
11.1 ADVICE AND GUIDANCE. We will furnish you with such reasonable
operating assistance as we determine from time to time to be necessary for the
operation of the Store. Operating assistance will include advice and guidance
regarding:
(a) methods of pizza preparation, packaging, and sale;
(b) hiring and training employees;
(c) formulating and implementing advertising and promotional programs;
and
(d) the establishment of administrative, bookkeeping, accounting,
inventory control, and general operating procedures.
You understand that the assistance provided to you under this Section 11
does not obligate us to operate the Store on your behalf at any time during the
term of the Franchise or to provide the accounting or bookkeeping services
required for the operation of the Store.
11.2 OPERATING PROBLEMS. We will advise you from time to time of
operating problems of the Store disclosed by reports submitted to or inspections
made by us. We will make no separate charge for operating assistance except that
we may make reasonable charges for forms and other materials supplied to you and
for operating assistance made necessary in our judgment as a result of your
failure to comply with any provision of this Agreement or for operating
assistance requested by you in excess of that normally provided by us.
12. STORE PRODUCTS AND SERVICE
12.1 STORE MENU. You agree that you will offer for sale and sell at or
from the Store all pizza and beverage products and the carry-out and delivery
services that we from time to time authorize. You also agree that you will not
offer for sale or sell at or from the Store any products or services not
authorized by us in writing.
12.2 DELIVERY SERVICE. You agree that the Store will at all times during
approved hours of operation offer delivery service to all customers located
within your Area of Primary Responsibility. You further agree that in order to
maintain the quality of pizza, the Store will not offer delivery service to any
customer whose order cannot be delivered within thirty (30) minutes of the time
when such order is placed, taking into consideration the least favorable driving
conditions and your strict compliance with all laws, regulations and rules of
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the road and due care and caution in the operation of delivery vehicles. We
shall have the right to prescribe from time to time the boundaries beyond which
the Store may not offer delivery service. You further understand that in
revising these boundaries we may in our discretion make adjustments to the size
of your delivery and service area to account for, among other things, changing
market conditions, population changes and other relevant considerations.
12.3 SUPPLIES, EQUIPMENT AND MATERIALS.
(a) All pizza and beverage preparation, dispensing, storage and display
equipment; delivery and related motor vehicles; equipment, fixtures, furniture
and exterior and interior signs and decorations required for the Store; pizza
ingredients, beverage products and cooking materials; containers, packaging
materials and other paper and plastic products; utensils, uniforms, menus, forms
and cleaning and sanitation materials; and other supplies and materials used in
the operation of the Store must conform to the specifications and quality
standards established by us from time to time.
(b) You must use in the operation of the Store boxes, containers and
other paper or plastic products imprinted with the Marks as prescribed from time
to time by us.
(c) You will purchase ingredients, supplies, equipment, and materials
used in the preparation, packaging, and delivery of pizza from us, DPI, or any
of its subsidiaries, or from approved suppliers or distributors. If you propose
to purchase or lease items or equipment not previously approved by us as meeting
our specifications, you must first notify us and we may require submission of
sufficient specifications, photographs, drawings and/or other information and
samples to determine whether any such items meet our specifications. We will
advise you within a reasonable time whether any proposed item meets our
specifications.
(d) Any ingredient, supply or material not previously approved by us as
conforming to our specifications and quality standards must be submitted for
examination and/or testing prior to use. We reserve the right from time to time
to examine the facilities of any approved supplier or distributor, including the
Commissary, if any, operated by you, and to conduct reasonable testing and
inspection of the ingredients, materials or supplies to determine whether they
meet our standards and specifications.
(e) We also reserve the right to charge fees for testing and evaluating
any proposed item or equipment submitted by you and any proposed suppliers or
distributors and examining commissary operations and to impose reasonable
limitations on the number of approved suppliers or distributors of any product.
Approval of a supplier or distributor may be conditioned on requirements
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relating to frequency of delivery, standards of service including prompt
attention to complaints and the ability to service and supply DOMINO'S PIZZA
Stores within areas designated by us.
(f) You agree not to resell to any third party any of the foregoing
ingredients, supplies or materials which you have purchased or acquired from us,
DPI or any of its subsidiaries, or from any suppliers or distributors.
(g) We reserve the right to reinspect the facilities and products of any
such approved suppliers or distributors from time to time, and to revoke our
approval upon the failure of the supplier or distributor to meet our standards
and specifications.
(h) At the time the Store opens for business, you will stock the initial
inventory of supplies, equipment and materials prescribed by us. Thereafter, you
will stock and maintain all types of supplies, equipment and materials which we
prescribe, in quantities sufficient to meet reasonably anticipated customer
demand.
13. ADVERTISING AND PROMOTION
13.1 ADVERTISING FUND. You will be obligated to pay a minimum of four
percent (4%) of the weekly Royalty Sales of the Store to a separate fund
administered by you (the "Advertising Fund"). You will submit to us upon request
an annual accounting of the receipts and disbursements of the Advertising Fund.
It is also agreed that the advertising services of an agency must be approved by
the Franchisor. [OPTION: YOU SHALL HOLD, DIRECT AND ADMINISTER THE ADVERTISING
FUND, AND ACKNOWLEDGE AND AGREE THAT 25% OF THE ADVERTISING FUND MAY BE
ALLOCATED BY US AS WE DIRECT IN ORDER TO FURTHER GENERAL PUBLIC RECOGNITION IN
THE COUNTRY COMMUNITY FOR THE PURPOSE OF PROMOTING SALES IN THE TERRITORY.]
13.2 STANDARDS. All advertising and promotion by you shall be completely
factual and shall conform to the highest standards of ethical advertising as
defined by DPII from time to time and to the policies prescribed from time to
time by DPII, including policies contained in DPII's corporate identity manuals.
You shall submit to us your advertising plans for the Stores for our review and
approval and copies of such advertising and promotional material as to be
mutually agreed upon for use by you.
14. RECORDS AND REPORTS
14.1 BOOKKEEPING AND RECORDKEEPING. You agree to establish a bookkeeping
and recordkeeping system conforming to the requirements prescribed by us,
relating, without limitation, to the use and retention of franchise
documentation, daily sales slips, Domino's Original Order Right ("D.O.O.R.")
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sheet masters, coupons, purchase orders, purchase invoices, payroll records,
check stubs, bank statements, value added tax records and returns, cash receipts
and disbursements, journals and general ledgers, as well as any bookkeeping and
recordkeeping systems required by applicable law.
14.2 SALES REPORTS AND FINANCIAL STATEMENTS. You agree to submit to us,
in the English language:
(a) with the royalty fee due, a weekly report of the sales of the Store
and all other information and supporting records as we may require;
(b) within twenty (20) days of the end of each month, an unaudited
balance sheet as of the end of the preceding month and an unaudited statement of
profit and loss of the Store and, if you are a corporation or partnership, of
the corporation or partnership, for such month;
(c) within sixty (60) days of the end of each fiscal year of the Store
ending December 31, an unaudited balance sheet as of the end of the year and an
unaudited annual statement of profit and loss and financial condition of the
Store prepared in accordance with the local generally accepted accounting
principles by an independent certified public accountant in the manner
prescribed by us or, if you do not regularly employ an independent certified
public accountant, by the person charged with the performance of financial
recordkeeping for the Store;
(d) upon our written request, exact copies of any and all tax filings
required by any agency and/or taxing authority for any period; and
(e) such other information as we may reasonably require to determine you
and your owners' compliance with this Agreement or to assist you in the
operation of the Store or to otherwise evaluate the performance of the Store.
14.3 RIGHT TO REQUIRE AUDIT. We reserve the right to audit or cause to be
audited the sales reports, financial statements and tax returns you are required
to submit to us. In the event any audit discloses an understatement of the
Royalty Sales of the Store for any period or periods, you must immediately pay
on the amount of such understatement the required royalty fee, the required
advertising contribution, and the amount, if any, required to be paid to your
local or regional cooperative as provided in this Agreement, plus interest due.
Further, in the event such understatement for any period or periods shall be two
percent (2%) or more of the Royalty Sales of the Store, you will be obligated to
reimburse us for the cost of the audit, including the charges of any independent
certified public accountant used and the travel expenses, room and board and
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compensation of our certified public accountant, its employees, and our
employees. In the event you dispute the results of any audit conducted by us or
our representatives, we will give you the right to have the results verified by
an independent certified public accounting firm selected by our outside
accounting firm. The expense of this audit shall be borne by you unless this
further audit discloses that no deficiency is due in which case we will be
obligated to pay for the audit. This audit shall be commenced within ten (10)
days after completion of our initial audit. You agree to cooperate with all
personnel conducting the audit. The results shall be binding upon the parties.
You agree to pay any deficiencies within five (5) days after receipt of the
final audit.
15. OPERATING REQUIREMENTS
15.1 OPERATING PROCEDURES. You agree to fully comply with all
specifications, standards and operating procedures and rules from time to time
prescribed for the Store, including, but not limited to, specifications,
standards and operating procedures and rules relating to:
(a) the safety, maintenance, cleanliness, sanitation, function and
appearance of the Store premises and its equipment, fixtures, furniture, decor
and signs;
(b) qualifications, dress, grooming, general appearance and demeanor of
you and your employees;
(c) quality, taste, portion control and uniformity, and manner of
preparation and sale, of all pizza and beverage products sold by the Store and
of all ingredients, supplies and materials used in the preparation, packaging
and sale of these items;
(d) methods and procedures relating to receiving, preparing and
delivering customer orders;
(e) minimum and maximum distances for which delivery service shall be
offered;
(f) the hours during which the Store will be open for business;
(g) advertising and promotion;
(h) use of standard forms;
(i) use and illumination of exterior and interior signs, posters,
displays, menu boards and similar items;
(j) the handling of customer complaints;
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(k) compliance with our identity programs, as exist from time to time;
and
(l) the vehicles and related equipment used for delivery.
15.2 COMPLIANCE WITH LAWS AND OTHER BUSINESS PRACTICES. You agree to
secure and maintain in force all required licenses, permits and certificates and
operate the Store in full compliance with all applicable laws, ordinances and
regulations. You also agree to pay when due all amounts payable pursuant to any
provision of this Agreement or any other agreement with us or our affiliates or
subsidiaries or pursuant to any agreement with any other creditor or supplier of
the Store.
15.3 DATA AND VOICE COMMUNICATIONS SYSTEMS. DPII and Franchisee agree
that efficient data and voice communications are important to the operation of
the Domino's System and coordination of the respective responsibilities of DPII
and Franchisee. Accordingly, Franchisee agrees that, upon receipt of a written
request therefor from DPII, Franchisee will immediately take steps to acquire
and will install or cause to be installed in its Store within ninety (90) days
from the date of such request a communications system and necessary peripheral
equipment and software which will permit both voice and data communications with
DPII (the "Communications Package"). DPII agrees to provide Franchisee with its
hardware and software specifications and requirements and to provide such other
technical information and pricing information as is available to DPII to assist
and facilitate the acquisition, installation and operation of the Communications
Package by Franchisee. DPII expressly reserves the right to require Franchisee
to acquire and install a particular specified Communications Package. Franchisee
agrees that the Communications Package will meet the technical specifications
supplied by DPII from time to time, including updates thereof, so that such
Communications Package will at all times be compatible with the communications
system employed by DPII. It is understood and agreed that Franchisee shall bear
the entire cost and expense of the acquisition, installation and operation of
the Communications Package. In connection therewith, Franchisee agrees to
execute such contracts and/or proprietary agreements or licenses as may be
required by Domino's or the seller of the Communications Package to protect the
proprietary rights of Domino's and/or said seller in any aspect of the
Communications Package.
15.4 ELECTRONIC FUNDS TRANSFER. DPII and Franchisee agree that it may
become desirable to have available the means to electronically transfer royalty
fee payments, advertising payments and the like from Franchisee's bank account
directly to DPII's bank account, if possible. Accordingly, you hereby agree that
at the request of DPII, you will execute such documents as may be necessary to
permit and facilitate the electronic transfer of funds as contemplated herein,
at your cost and expense.
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15.5 PRICES TO BE DETERMINED BY FRANCHISEE. We may from time to time
offer guidance to you relative to prices for the products and services of the
Store that in our judgment constitute good business practice. You will have the
sole right to determine the prices to be charged from time to time by the Store.
No such guidance shall be deemed or construed to impose upon you any obligation
to charge any fixed, minimum or maximum prices for any product or service
offered for sale by the Store. A fundamental feature of our operation is the
prompt delivery of fresh hot products to the address or choice of the customer
without additional cost. Accordingly, in order that our identity and reputation
is maintained you will not makes any charges for delivery of products. You will
not enter into any agreement or engage in any concerted practice with DOMINO'S
PIZZA Stores or others relating to the prices at which products or services will
be sold by you or by other DOMINO'S PIZZA Stores.
15.6 OPERATING MANUAL. We will loan to you during the term of this
Agreement one or more copies of an operating manual, operational bulletins,
similar materials ("Operating Manual") containing proprietary know-how,
mandatory and suggested specifications, standards and operating procedures and
the rules prescribed from time to time by us, and information relative to the
operation of the Store. You will conduct all your operations under this
Agreement in accordance with the Operating Manual. The entire contents of the
Operating Manual will remain confidential and our property. You will not
duplicate, photocopy or otherwise reproduce the Operating Manual, either in
whole or in part, without our written permission. If we require, you agree to
translate the Operating Manual at your cost and expense, and provide us with a
copy of the translation for our approval. All translated copies of the Operating
Manual will be our property. We have the right to use the translation for any
use we require.
We shall have the right to add to and otherwise modify the Operating
Manual from time to time, if deemed necessary by us, to improve the standards of
service or product quality or the efficient operation of a Store, to protect or
maintain the goodwill associated with the Marks or to meet competition. You may
propose changes in the Operating Manual to conform it to the laws and customs
of, and market characteristics in, the Area of Primary Responsibility, and we
will determine, in our sole discretion, whether to change the Operating Manual
as proposed by you. Our approval of such changes must be in writing.
The provisions of the Operating Manual as modified from time to time and
the mandatory specifications, standards and operating procedures and rules
prescribed from time to time by us and communicated to you in writing, will
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constitute provisions of this Agreement as if contained in this Agreement. You
acknowledge the necessity and importance of all specifications and standards for
the overall performance of the obligations set forth herein. You agree to use
and apply the Domino's System as described herein and as set forth in the
Operating Manual and any specifications, standards, rules and procedures. You
will ensure that the Operating Manual is kept current and up-to-date. In the
event of any dispute as to the contents of the Operating Manual, the provisions
of the master copy of the Operating Manual (in the English language), maintained
at our home office, will be controlling.
15.7 TRADE SECRETS. In addition to maintaining the confidentiality of all
information received by you or your Owners in conjunction with your operation of
a Store as a franchisee, you hereby agree that you: (i) will maintain the
absolute confidentiality of all information and methods provided by us with
respect to the discharging of your responsibilities under this Agreement
inclusive of, but not limited to, the Operating Manual; (ii) shall disclose such
confidential information to your employees only to the extent necessary for your
performance under this Agreement; and (iii) shall not use any such information
in any other business or in any manner not specifically authorized or approved
in writing by us.
15.8 NEW CONCEPTS. If you develop any new concept, process or improvement
in the operation or promotion of the Store, you agree to promptly notify us and
provide us with all necessary information without compensation. You acknowledge
that any such concept, process or improvement shall become our property and that
we may utilize or disclose this information to other franchisees, without
compensation to you.
15.9 FRANCHISEE MUST DIRECTLY SUPERVISE STORE. The Store shall at all
times be under the direct, on-premises supervision of you or your designee (or
the Controlling Shareholder or Partner if you are a corporation or partnership
and, if so, the Controlling Shareholder or partnership may substitute a
designated individual). You or your designee (or the Controlling Shareholder or
Partner if you are a corporation or partnership and, if so, the Controlling
Shareholder or Partner may substitute a designated individual) must devote your
full time and efforts (excluding reasonable vacation periods) as manager of the
Store or to the management of other DOMINO'S PIZZA Stores (or other related
activities approved by us in accordance with Section 7.2 of this Agreement). If
you own more than one (1) Store, each Store owned must be under the direct,
on-premises supervision of a manager:
(a) who has completed, to our satisfaction, such training as we specify;
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(b) whose identity has been disclosed to us; and
(c) who shall have executed, upon our request, an agreement in the form
approved by us agreeing not to divulge any trade secret or confidential or
proprietary information, including the contents of the Operating Manual, or to
engage in or have any interest in any other fast food business, including
without limitation, sit-down, carry-out or delivery pizza business for the
period of employment and one (1) year thereafter.
15.10 INSURANCE. You shall at all times during the term of the Franchise
maintain in force at your sole expense general liability insurance with a
minimum limit approved by DPII (including, but not limited to, coverage for
personal injury, products and contractual liability), motor vehicle liability
insurance with a minimum limit approved by DPII (including, but not limited to,
hired and non-owned coverage), property insurance (including, but not limited
to, fire, extended coverage, vandalism and malicious mischief), workmen's
compensation insurance as required by applicable law, an umbrella policy, if
available at reasonable cost to Franchisee with a minimum limit approved by
DPII, and any other insurance required under applicable law or which we require,
under one or more policies of insurance containing coverage and limits, from
time to time prescribed by us. All insurance policies must be issued by an
insurance carrier (a) having the highest possible rating under the rating
system, if any, generally in use in the country in which the Store is located,
and (b) if requested, approved by DPII. All general liability and motor vehicle
liability insurance policies must name us and the subsidiaries and affiliates
which we designate as additional insureds and provide that we receive thirty
(30) days prior written notice of termination, expiration, cancellation,
modification or reduction in coverage or limits of any such policy and that we
receive prompt notice from the carrier of any claim filed under the policy. You
must submit to us annually within fifteen (15) days of issuance a copy of the
certificate of or evidence of the renewal or extension of each such insurance
policy or any modifications to any such insurance policies. If at any time you
fail or refuse to maintain in effect any insurance coverage required by us, or
to furnish satisfactory evidence of such insurance, we may, at our option and in
addition to any other rights and remedies we may have, obtain insurance coverage
on your behalf, and you agree to promptly execute any applications or other
forms or instruments required to obtain any such insurance and pay to us on
demand any costs and premiums incurred by us. Your obligation to obtain and
maintain the insurance described in this Agreement shall not be limited in any
way by reason of any insurance maintained by us.
15.11 IDENTIFICATION AS FRANCHISEE. You agree to exhibit (a) on the Store
premises and (b) on all delivery vehicles (or on car top signs on all delivery
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vehicles) signs of sufficient prominence and wording as we may prescribe from
time to time so as to advise the public that the Store is owned, operated and
maintained solely by you and that each such delivery vehicle is owned, operated
and maintained by you or the driver of the vehicle, as the case may be.
16. MARKS
16.1 USAGE. You acknowledge that DPI is the owner of all Marks licensed
to you by this Agreement and that all usage of the Marks and any goodwill
established shall inure to DPI's exclusive benefit. You further acknowledge that
DPI has licensed DPII to grant licenses for the use of the Marks outside of the
United States. You shall use the Marks in full compliance with rules prescribed
from time to time by DPII. You will execute such form of Registered User
Agreement of the Marks or its equivalent in ____________ as may be required by
DPII from time to time and reimburse DPII for the cost of registering such
document with the Trade Mark Office. You agree that in case you directly or
indirectly contest the validity of our rights or ownership of the Marks, we may
terminate this Agreement. You shall not attempt to register any Mark or
derivative thereof, shall not use any Mark as part of any corporate name or with
any prefix, suffix or other modifying words, terms, designs or symbols nor may
you use any Mark in connection with the sale of any unauthorized product or
service or in any other manner not explicitly authorized in writing by us or by
DPI. Upon expiration or termination of this Agreement, no monetary amount shall
be assigned or attributable to any goodwill associated with your use of the
Domino's System or the Marks.
16.2 INFRINGEMENTS. You agree to immediately notify us of any
infringement of or challenge to your or our use of any Mark or claim by any
person of any rights in any mark or any suspected passing-off or unfair
competition involving the Marks or the Domino's System. You agree that you will
not communicate with any person other than us, DPI and our counsel in connection
with any such infringement, challenge or claim. Unless you have an independent
cause of action pursuant to applicable law, we and DPI will have sole discretion
to take such action as we deem appropriate and the right to exclusively control
any litigation or Patent and Trademark Office proceeding (or proceedings of the
equivalent office, agency or ministry in the country in which the Store is
located) or other proceeding arising out of any infringement, challenge or claim
or otherwise relating to any Mark. You agree to execute any and all instruments
and documents, render such assistance and do such acts and things as may, in the
opinion of our counsel, be necessary or advisable to protect and maintain our
interests in any such litigation, Patent and Trademark Office proceedings, or
other proceeding or to otherwise protect and maintain DPI's interest in the
Marks.
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16.3 INDEMNIFICATION. You will promptly notify us of any unauthorized use
of the Marks, any challenge to the validity of the Marks, or any challenge to
our ownership of, our right to use and to license others to use, or your right
to use, the Marks. You acknowledge that we have the right to direct and control
any administrative proceeding or litigation involving the Marks, including any
settlement thereof. We will defend you against any third-party claim, suit, or
demand arising out of your use of the Marks. If we, in our sole discretion,
determine that you have used the Marks in accordance with this Agreement, the
cost of such defense, including the cost of any judgment or settlement, will be
borne by us. If we, in our sole discretion, determine that you have not used the
Marks in accordance with this Agreement, the cost of such defense, including the
cost of any judgment or settlement, will be borne by you. In the event of any
litigation relating to your use of the Marks, you will execute any and all
documents and do such acts as may, in our opinion, be necessary to carry out
such defense or prosecution, including, but not limited to, becoming a nominal
party to any legal action. Except to the extent that such litigation is the
result of your use of the Marks in a manner inconsistent with the terms of this
Agreement, we agree to reimburse you for your out-of-pocket costs in doing such
acts.
17. INSPECTIONS
We will have the right at any time during business hours and without prior
notice to conduct reasonable inspections of the Store and the Commissary, if
any, operated by you. We will have the right to audit any business records and
to take a physical inventory of the assets of any such Store or Commissary.
Inspections of any such Store will be made at our expense unless we are required
to make any additional inspections in connection with your failure to comply
with this Agreement. In such event, we will have the right to charge you for the
costs of making all additional inspections in connection with your failure to
comply, including without limitation travel expenses, hotel accommodations,
meals and compensation of our employees.
18. TERMINATION AND EXPIRATION
18.1 TERMINATION BY FRANCHISEE. If you are in compliance with this
Agreement and we breach this Agreement and fail to cure any breach within thirty
(30) days after written notice is delivered to us, you may terminate this
Agreement and the Franchise effective ninety (90) days after delivery of notice
to us. A termination of this Agreement and the Franchise by you without
complying with these requirements or for any reason other than our breach of
these requirements or for any reason other than our breach of this Agreement and
our failure to cure the breach within thirty (30) days after receipt of written
notice from you shall be deemed a termination by you without cause and not in
accordance with the provisions of this Agreement.
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18.2 BY DPII. In addition to any other grounds for termination, we shall
have the right to terminate this Agreement effective upon delivery of notice of
termination to you, if:
(a) you or any of your Owners have made any material misrepresentation
on your application for the Franchise which is not cured within a reasonable
period of time;
(b) you do not open the Store within six (6) months from the effective
date of this Agreement;
(c) you are judged bankrupt, become insolvent, or make an assignment for
the benefit of creditors, or a petition under any bankruptcy law, which is not
dismissed within one hundred twenty (120) days, is filed against you or a
receiver or other custodian is appointed for a substantial part of the assets of
the Store;
(d) you abandon or fail to continuously and actively operate the Store;
(e) the lease or sublease for the Store is terminated or canceled or you
are unable to renew or extend the lease or sublease or you fail to maintain
possession of the Store premises unless you are permitted to relocate the Store
under Section 7 of this Agreement in which case this paragraph will not apply;
(f) you or any of your Owners are convicted of a felony or a crime which
substantially impairs the goodwill associated with the Marks, or you or any of
your Owners engage in any conduct which adversely affects the reputation of the
Store or the goodwill associated with the Marks as conclusively determined by
us;
(g) you intentionally underreport the Royalty Sales of the Store for any
period or periods;
(h) you or any of your Owners violates any of the restrictions contained
in Sections 20 or 21 of this Agreement;
(i) you fail to comply with any material provision of this Agreement or
any specification, standard or operating procedure or rule prescribed by us
which relates to the use of any Mark or the quality of pizza or any beverage
sold by you or the cleanliness and sanitation of the Store and you do not
correct this failure within seven (7) calendar days after written notice is
delivered to you;
(j) you fail to pay when due any amount owed to us, our affiliates or
subsidiaries, or tax authorities, or any creditor or supplier of the Store
(other than amounts being bona fide disputed through appropriate proceedings)
and you do not correct such failure within fifteen (15) calendar days after
written notice is delivered to you;
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(k) you fail to obtain or maintain insurance required by us and you do
not correct this failure within forty-eight (48) hours after written notice is
delivered to you;
(l) an audit by us discloses an understatement of Royalty Sales and you
fail to pay to us the applicable royalty fee and advertising contribution and
interest due within five (5) calendar days after receipt of the final audit
report;
(m) the interest of a deceased or permanently disabled person is not
disposed of in accordance with the terms of this Agreement;
(n) you or any of your Owners fail on three (3) or more occasions during
any one (1) year period to comply with any one or more material provisions of
this Agreement including, without limitation, your obligation to submit when due
sales reports or financial statements, to pay when due the royalty fees,
advertising contributions or other payments to us or our affiliates or
subsidiaries or any other creditors or suppliers of the Store whether or not
such failure to comply is corrected after notice is delivered to you;
(o) you or any of your Owners fail to comply with any other material
provisions of this Agreement or any specification, standard or operating
procedure, and you fail to correct this failure within thirty (30) calendar days
after written notice is delivered to you; (p) you fail to properly execute any
document required by this Agreement or in connection with the operation of the
Store or which is necessary to properly implement or effectuate any of the
provisions of this Agreement or to record this Agreement or any document
executed hereunder or in connection herewith, and you fail to correct such
failure within thirty (30) calendar days after written notice thereof is
delivered to you;
(q) you directly or indirectly contest the validity of DPI's ownership
of the Marks or our right to use or to license others to use the Marks;
(r) you are in breach of any other agreements between you and DPII or
any of our affiliates or subsidiaries and you fail to cure such breach within
fifteen (15) days after written notice is delivered to you; or
(s) you or your Owners are involved in any act or conduct which impairs
our reputation and the goodwill associated with the marks and the system as
conclusively determined by us.
18.3 OBLIGATIONS UPON TERMINATION OR EXPIRATION. Upon termination or
expiration of this Agreement, all rights granted to you under this Agreement
shall forthwith terminate, and:
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(a) You will immediately cease to operate the Store, and will not
thereafter, directly or indirectly, represent to the public or hold yourself out
as a present or former franchisee of DPII;
(b) You will immediately and permanently cease to use, in any manner
whatsoever, any confidential methods, procedures and techniques associated with
the Domino's System; the Mark "DOMINO'S PIZZA"; and all other Marks and
distinctive forms, slogans, signs, symbols and devices associated with the
Domino's System. In particular, you will cease to use, without limitation, all
signs, advertising materials, displays, stationery, forms, products and any
other articles which display the Marks;
(c) You will take such action as may be necessary to cancel any assumed
name registration or equivalent registration obtained by you which contains the
mark "DOMINO'S PIZZA" or any other Marks, and you will furnish us with evidence
of compliance with this obligation within five (5) days after termination or
expiration of this Agreement;
(d) You will, in the event you continue to operate or subsequently begin
to operate any other business, not use any reproduction, counterfeit, copy or
colorable imitation of the Marks, either in connection with such other business
or the promotion thereof, which, in our sole discretion, is likely to cause
confusion, mistake or deception, or which, in our sole discretion, is likely to
dilute our rights in and to the Marks. You further agree not to utilize any
designation of origin or description or representation which, in our sole
discretion, falsely suggests or represents an association or connection with the
Domino's System constituting unfair competition;
(e) You will promptly pay all sums owing to us or our affiliates. In the
event of termination for any default by you, such sums shall include all
damages, costs and expenses, including reasonable attorneys fees, incurred by us
as a result of the default, which obligation shall give rise to and remain,
until paid-in-full, a lien in our favor against any and all of the personal
property, furnishing, equipment, signs, fixtures and inventory owned by you and
on the Store premises at the time of default;
(f) You will pay to us all damages, costs and expenses, including
reasonable attorneys' fees, incurred by us subsequent to the termination or
expiration of this Agreement in obtaining injunctive or other relief for the
enforcement of any provisions of this Section 18;
(g) You will immediately deliver to us the Operating Manual and all
other records, correspondence and instructions containing confidential
information relating to the operation of the Store, all of which are
acknowledged to be our property, and you will not retain any copy or record of
any of the foregoing;
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(h) You will notify the telephone company and all listing agencies of
the termination or expiration of your right to use all telephone numbers and all
classified and other directory listings relating to the Store and to authorize
transfer of these to us or our franchisee or designee. You acknowledge that we
have the sole rights to and interest in all telephone numbers and directory
listings relating to any Mark, and you authorize us to direct the telephone
company and all listing agencies to transfer all telephone numbers and directory
listings to us, our franchisee or designee. If you fail or refuse to do so, by
execution of this Agreement, you irrevocably appoint us as your lawful
attorney-in-fact with full power and authority to direct the telephone company
and all listing agencies to transfer all telephone numbers and directory
listings to us or our designee;
(i) You will make the Store accessible and available to us to operate
pursuant to Section 19.9 of this Agreement, if we elect to do so.
19. OPTION TO PURCHASE STORE
19.1 OPTION. Upon the termination or expiration of this Agreement, we or
any party we designate shall have the option, but not the obligation,
exercisable for thirty (30) days, to purchase the Assets of the Store. For
purposes of Section 19, the term "Assets" shall mean the equipment, inventory,
leasehold interests and improvements and favorable rights and covenants of the
Store, but exclusive of delivery vehicles except as provided below.
19.2 FORMULA PRICE. The purchase price for these assets and the covenants
shall be equal to twenty-five percent (25%) of the first Three Hundred Thousand
Dollars (U.S. $300,000) of Royalty Sales ("Base Amount") of the Store during the
twelve (12) calendar months immediately preceding the date of termination or
expiration plus thirty-five percent (35%) of the Royalty Sales in excess of the
Base Amount during this period. The purchase price shall be allocated among the
Assets and covenants in the manner prescribed by us.
If the Store has been in operation less than twelve (12) months, the
option price shall be the Cost of the Store plus ten percent (10%). The term
"Cost" shall be defined as your documented expenditures for the equipment,
inventory and leasehold improvements of the Store, but shall not include any
charges for labor performed by you or your family members in connection with the
development of the Store.
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19.3 DELIVERY VEHICLE. In the event we exercise our option to purchase
the Assets of the Store, we will also agree to purchase one (1) properly marked
and operable delivery vehicle, if any, owned by the Store. The purchase price
for this vehicle will be its wholesale value. If we are unable to agree on the
wholesale value of this vehicle, the wholesale value will, if possible, be
determined in accordance with the wholesale values for automobiles contained in
a nationally recognized publication for the month in which we exercise our
option to purchase the Assets of the Store.
19.4 PURCHASE OF COMMISSARY. In the event you operate a Commissary in
connection with the Store, we shall also have the option to purchase the Assets
of the Commissary. The Purchase price for the Assets of the Commissary will be
the net book value (based upon a seven year depreciation schedule).
19.5 DEDUCTIONS FROM PURCHASE PRICE. In the event we exercise our option
to purchase the Assets of the Store, the purchase price will be reduced by:
(a) the total current and long term liabilities of the Store assumed by
us as described below, and
(b) the amount necessary to upgrade and renovate the Store to meet our
then current standards for a DOMINO'S PIZZA Store.
We will assume all current and long term liabilities (except liabilities
to you or your Owners or secured by or relating to delivery vehicles which we
are not purchasing) up to the amount of the purchase price subject, however, to
all defenses available to you. Further, the amount we charge for upgrading and
renovating the Store will not exceed one and one-half percent (1- 1/2%) of the
Royalty Sales of the Store from the date of opening to the date of termination
or expiration reduced by an amount equal to the total expenditures made by you
for renovation and upgrading of the Store at our request up to the date of
termination or expiration.
19.6 PAYMENT OF PURCHASE PRICE. The balance of the purchase price, after
deductions described above will be payable as follows: ten percent (10%) of the
balance at the time of closing and the remainder in sixty (60) equal monthly
installments of principal plus interest at a rate of interest per annum equal to
the one month London Interbank Offering Rate (LIBOR) for U.S. Dollars determined
as of the closing date with annual adjustments based on said Rate as in effect
on each anniversary date. The first payment will be due on the first day of the
second succeeding calendar month following closing and the remaining payments on
the first day of each month thereafter. On the first payment date, interest from
the date of closing shall also be paid. We shall pay you all such payments in
U.S. Dollars or, at our option, its local currency equivalent on the date of
payment, to a bank account designated by you, or at your offices. We will have
the right to set off from the purchase price any amounts you owe us or any
related corporation or entities as of the date of payment.
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19.7 REAL PROPERTY. In the event you own the real property on which the
Store or Commissary is located, we or any third party we designate (the
"Designee") will also have the option to purchase this property for a period of
thirty (30) days following expiration or termination of this Agreement. The
purchase price pursuant to this option will be the fair market value as
determined by an independent appraiser selected by both of us. If we cannot
agree on an independent appraiser, we each shall select an independent appraiser
who shall select a third independent appraiser. The independent appraiser
selected by our appraisers shall determine the fair market value of the real
property and his determination shall be final and binding on the parties. The
purchase price will be payable in full at the closing minus customary prorations
including the pay-off of existing mortgage liens. If we or our Designee do not
elect to purchase the real property, we or our Designee will have the option to
enter into a lease approved by us for the premises and you will use your best
efforts to secure such a lease for us.
19.8 CLOSING. The closing shall occur within thirty (30) days after we
exercise our option or our Designee's to purchase the Assets and/or real
property or such later date as may be necessary to comply with applicable bulk
sales or similar laws, if any. At the closing, we both agree to execute and
deliver all documents necessary to vest title in the purchased Assets and/or
real property in us free and clear of all liens and encumbrances, except those
assumed by us or our Designee, and/or to effectuate the lease of the Store
premises. You also agree to provide us with all information necessary to close
the transaction. We or our Designee reserve the right to assign our option to
purchase the Store or Commissary, if any, operated in connection with the Store
(and the real property to the extent applicable) or designate a substitute
purchaser for the Store. We or our Designee agree, however, to be responsible
for and shall guarantee payment of any deferred portion of the purchase price as
provided in Section 19.6 of this Agreement in the event our Designee purchases
the Assets of the Store. If you do not execute and deliver any documents
required, by execution of this Agreement you irrevocably appoint us as your
lawful attorney-in-fact with full power and authority to execute and deliver in
your name all these documents. You also agree to ratify and confirm all of our
acts as your lawful attorney-in-fact and to indemnify and hold us harmless from
all claims, liabilities, losses, or damages suffered by us in so doing.
19.9 OPERATION DURING OPTION PERIOD. We will have the right, upon written
notice to you, to manage the Store during the period in which we have or our
Designee has the option to purchase the Store upon termination or expiration of
this Agreement and for the period following the exercise of our option and prior
to the closing on the same terms and conditions as described in Section 21.7.
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19.10 FORMULA PRICE. The parties agree that the formula price described in
Section 19.2 is the agreed upon method of arriving at a price for the assets of
the Store in the event we or our Designee exercise the option contained in this
Section 19 and is not to be deemed a conclusive indication of the value of the
Store under other circumstances.
20. RESTRICTIVE COVENANTS
20.1 IN-TERM COVENANT. You and your Owners agree that during the term of
this Agreement neither you nor your Owners will, directly or indirectly for the
benefit of you or your Owners, or through or on behalf of or in conjunction with
any other person, partnership or corporation, engage in, be employed by, advise
or assist, invest in, franchise, make loans to, or have any interest in any fast
food business, including but not limited to sit-down, carry-out or fast food
delivery business or acquire any financial interest in the capital of such
business which might provide the power to influence the economic conduct of such
business (except for DOMINO'S PIZZA Stores operated under franchise agreements
entered into with us or other DOMINO'S PIZZA Stores in which you or your Owners
have an ownership interest).
20.2 POST-TERM COVENANT. You and your Owners agree that for a period of
one (1) year after termination or expiration of this Agreement, or the date on
which you cease to operate the Store, whichever is later, neither you nor your
Owners will, directly or indirectly for the benefit of you or your Owners, or
through or on behalf of or in conjunction with any other person, partnership or
corporation, own, engage in, be employed by, advise, assist, invest in,
franchise, make loans to, or have any interest in any pizza business, including
but not limited to, sit-down, carry-out or pizza delivery business located at
the premises of the Store or within ten (10) miles of the premises of the Store
(except for other DOMINO'S PIZZA Stores operated under franchise agreements with
us or other DOMINO'S PIZZA Stores in which you or your Owners shall have an
ownership interest).
20.3 OWNERSHIP OF PUBLIC COMPANIES. The covenants contained in this
Section 20 shall not apply to ownership by you or your Owners of less than a
five percent (5%) beneficial interest in the outstanding equity securities of
any corporation whose stock is publicly traded.
20.4 SOLICITATION OF EMPLOYEES. You and your owners agree that during the
term of this Agreement neither you nor your Owners will directly or indirectly
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solicit or employ any person who is employed by us, nor will you or your Owners
induce or attempt to induce any of these people to leave their employment
without our prior written consent and the consent of their employers.
20.5 CONFIDENTIALITY. You and your Owners agree to maintain the absolute
confidentiality of the Operating Manual and all other information concerning the
Domino's System during and after the term of the Franchise, disclosing this
information to the other employees of the Store only to the extent necessary for
the operation of the Store in accordance with this Agreement, and that you and
your Owners will not use the Operating Manual or such other information in any
other business or in any manner not specifically authorized or approved by us in
writing. You shall take all steps necessary to ensure that all staff personnel
having access to any confidential information are aware of the obligation to
keep the information confidential and comply herewith.
20.6 OWNERS OF CORPORATION OR PARTNERSHIP. If you are a corporation or
partnership, the Owners, by executing this Agreement, shall be bound
individually, jointly and severally, by the provisions contained in this
Agreement, including the restrictions set forth in this Section 20. Further, a
violation of any of the provisions of this Agreement, including the covenants
contained in this Section 20, by any Owner shall also constitute a violation by
you of your obligations under this Agreement.
21. ASSIGNMENT
21.1 BY DPII. We shall have the right to transfer or assign this
Agreement and all or any part of our rights or obligations under this Agreement
to any individual or legal entity, and you agree to release us from all
liability to you for performance under this Agreement subsequent to any such
assignment.
21.2 BY FRANCHISEE. This Agreement is personal to you and your Owners.
Accordingly, neither you nor any of your Owners may assign or transfer this
Agreement, any direct or indirect interest in this Agreement (including any
interest in the assets of the Store) and, if you are a corporation or
partnership, any interest in the corporation or partnership, except with our
prior written approval and as specifically authorized under this Agreement. Any
attempted assignment or transfer that we have not previously approved in writing
and which was not made in accordance with this Agreement shall have no effect
and shall constitute a breach of this Agreement.
21.3 ASSIGNMENT TO CORPORATION OR PARTNERSHIP. We will not withhold our
consent if you propose to assign this Agreement to a corporation or partnership
for the convenience of ownership of the Store, provided:
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(a) the corporation or partnership conducts no business other than the
operation of the Store or other DOMINO'S PIZZA Stores (or other related
activities authorized under this Agreement);
(b) the corporation or partnership is actively managed by you;
(c) the person designated as the Controlling Shareholder or Partner
retains a controlling interest in the partnership or the equity and voting power
of all issued and outstanding capital stock of the corporation; and
(d) all shareholders and investors meet our requirements as established
from time to time and agree to guarantee the obligations of the corporation or
partnership under this Agreement and to be bound by the terms of this Agreement
in the manner prescribed by us.
If you are a corporation or partnership or if this Agreement is assigned
to a corporation or partnership, you must comply with the requirements set forth
in this Section 21.3 throughout the term of this Agreement. Unless prohibited by
local law, the articles of incorporation and by-laws of any corporation or the
organization documents of any partnership owning the Franchise, including all
stock certificates, shall recite that they are subject to all restrictions
contained in this Agreement. We shall also have the right to require, as a
condition of any assignment of this Agreement to a corporation or partnership or
the operation of the Franchise by a corporation or partnership, that the
shareholders or partners enter into a buy/sell agreement among themselves in a
form and containing such terms as we prescribe for transfers of ownership
interests in such corporation or partnership. You shall provide us with all
documents to be executed in connection with any such assignment and we shall use
our reasonable efforts to approve or disapprove these within thirty (30) days
after receipt. You hereby irrevocably appoint us as your attorney to do all acts
and things and to give instructions to third parties as we may consider
necessary in order to perform the foregoing.
21.4 ASSIGNMENT OR TRANSFER TO OTHERS. We will not unreasonably withhold
our consent if you propose to sell, transfer or assign this Agreement or, if you
are a corporation or partnership, an ownership interest in the corporation or
partnership, to others, provided:
(a) you and your Owners are not in default under this Agreement or any
other agreement with us or our subsidiaries or affiliates or any other creditor
or supplier of the Store;
(b) the proposed transferee or assignee and its Controlling Shareholder
or Partner and all other owners if it is a corporation or partnership meets our
then applicable standards for franchisees or Owners;
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(c) the proposed transferee or assignee and its Owners if it is a
corporation or partnership is not operating any other fast-food business,
including but not limited to, sit-down, carry-out or pizza delivery business
except other DOMINO'S PIZZA Stores;
(d) the proposed transferee or assignee and its Owners if it is a
corporation or partnership signs our then current form of standard franchise
agreement for a term equal to the remaining term of this Agreement or, at our
election, the then current term under the standard franchise agreement,
whichever is longer;
(e) the proposed transferee or assignee or the person designated by us
must complete all required training to the extent required by us; and
(f) the proposed transferee or assignee pays us a transfer fee of the
local currency equivalent of (US $1,500).
The provisions of (d), (e) and (f) above shall not apply to an approved
sale, transfer or assignment by a shareholder or partner that does not convey a
controlling interest in the corporation or partnership except that the proposed
transferee or assignee must guarantee the performance by Franchisee of its
obligations under this Agreement and agree to be bound by all of the provisions
of this Agreement in the form prescribed by us. You must provide us with all
documents to be executed by you and/or your Owners and the proposed purchasers
in connection with any transfer or assignment at least thirty (30) days prior to
signing.
21.5 ASSIGNMENT UPON DEATH, MENTAL INCAPACITY OR PERMANENT DISABILITY.
Upon the death, mental incapacity or permanent disability of any person with an
interest in this Agreement or in the Franchisee, the executor, administrator or
personal representative of such person shall transfer such interest to a third
party approved by us within six (6) months after such death, permanent
disability or mental incapacity. Such transfers, including, without limitation,
transfers by devise or inheritance, will be subject to the same condition as any
inter vivos transfer. In the case of transfer by devise or inheritance, if the
heirs or beneficiaries of any such person are unable to meet the conditions of
this Section, the executor, administrator or personal representative of the
decedent shall transfer the decedent's interest to another party approved by us
within a reasonable time, which disposition will be subject to all the terms and
conditions for transfers contained in this Agreement.
21.6 DEFINITION OF PERMANENT DISABILITY. You or your Owners will be
deemed to have a "Permanent Disability" if your or your Owners' usual, active
participation in the Store as contemplated by this Agreement is for any reason
curtailed for a continuous period of six (6) months or more.
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21.7 OPERATION BY DPII AFTER DEATH OR PERMANENT DISABILITY. We shall have
the right to appoint a manager for the Store if in our judgment the Store is not
being managed properly after your death or Permanent Disability or the death or
permanent disability of an owner. All funds from the operation of the Store
during the management by our appointed manager will be kept in a separate fund,
and all expenses of the Store including compensation, other costs, and travel
and living expenses of our manager will be charged to this fund. We will charge
a weekly management fee of five and one-half percent (5.5%) of the weekly
Royalty Sales of the Store (in addition to the royalty fee and advertising
contributions payable under this Agreement) during the period in which we manage
the Store on your behalf. In managing the Store, our obligation will be to use
our reasonable efforts and we will not be liable for any debts, losses or
obligations of the Store, to any of your creditors for any products, materials,
supplies or services purchased by the Store prior to or during the time of
management by our manager. If the fund which we maintain is insufficient to pay
the expenses of the Store, we will notify you or your executor, administrator,
conservator, guardian or other personal representative and this person must
deposit in the fund within five (5) business days, any amount required by us to
attain a reasonable balance in the fund.
21.8 RIGHT OF FIRST REFUSAL OF DPII. If you or your Owners propose to
sell the Store (or its Assets) or, if you are a corporation or partnership, any
ownership interest in the corporation or partnership and you or your Owners
obtain a bona fide, executed written offer to purchase this interest, you or
your Owners are obligated to deliver a copy of the bona fide offer to us along
with all documents to be executed by you or your Owners and the proposed
assignee or transferee. We or our Designee will, for a period of thirty (30)
days from the date of delivery of this offer to us, have the right, exercisable
by written notice to you or your Owners, to purchase the Store (or its Assets)
or such ownership interest for the price and on the terms and conditions
contained in the offer. We or our Designee may substitute equivalent cash for
any form of payment proposed in such offer or designate a substitute purchaser
for the Store (or the Assets) or the ownership interest being offered, provided
that we will assume responsibility for the performance of our Designee. If we or
our Designee do not exercise this right of first refusal, the offer may be
accepted by you or your Owners, subject to our prior written approval as
provided in this Agreement. If the offer is not accepted within sixty (60) days,
we or our Designee will again have the right of first refusal to purchase the
Store as described above. This section will not apply to transfers made in
accordance with Section 21.3 of this Agreement.
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22. CONTRACT INTERPRETATION AND ENFORCEMENT
22.1 EFFECT OF WAIVERS. No waiver by us of any breach or a series of
breaches of this Agreement shall constitute a waiver of any subsequent breach or
waiver of the performance of any of your obligations under this Agreement. Our
acceptance of any payment from you or the failure, refusal or neglect by us or
you to exercise any right under this Agreement or to insist upon full compliance
with our or your obligations under this Agreement or with any specification,
standard or operating procedure or rule will not constitute a waiver of any
provision of this Agreement.
22.2 COST OF ENFORCEMENT. If we institute any legal or equitable action
against you to secure or protect our rights under or to enforce the terms of
this Agreement, in addition to any judgment entered in our favor, we shall be
entitled to recover such reasonable attorneys fees as we may have incurred
together with court costs and expenses of litigation.
22.3 INDEMNIFICATION OF DPII AND DPI. If we, DPI or any of either of our
subsidiary or affiliated companies (collectively the "Domino's Companies") are
subjected to any claim, demand or penalty or become a party to any suit or other
judicial or administrative proceeding by reason of any claimed act or omission
by you, your employees or agents, or by reason of any act occurring on the Store
premises, or by reason of an omission with respect to the business or operation
of the Store including, but not limited to, making a delivery or returning from
making a delivery, you shall indemnify and hold the Domino's Companies and each
of them harmless against all judgments, settlements, penalties and expenses,
including attorneys fees, court costs and other expenses of litigation or
administrative proceeding incurred by or imposed on any of them in connection
with the investigation or defense relating to such claim or litigation or
administrative proceeding.
22.4 CONSTRUCTION AND SEVERABILITY. All references in this Agreement to
the singular shall include the plural where applicable, and all references to
the masculine shall include the feminine and vice-versa. If any part of this
Agreement for any reason shall be declared invalid and unenforceable, such
provision shall be severed (and this shall not affect the validity of the
remaining provisions) or, if possible, modified to best preserve the intentions
of the parties and this Agreement, so modified, shall remain in full force and
effect. Moreover, any provision not provided for herein, however mandatory
pursuant to applicable law, shall be deemed to be part of this Agreement and
enforceable.
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22.5 INTEGRATION AND MODIFICATION. This Agreement constitutes the entire
agreement between the parties and supersedes all prior and contemporaneous
agreements or understandings of the parties, oral or written, regarding the
subject matter of this Agreement. The covenants of shareholders/partners form a
part of this Agreement. No modification, waiver, termination, rescission,
discharge or cancellation of this Agreement shall affect the right of any party
to enforce any claim or right under this Agreement, whether or not liquidated,
which occurred prior to the date of such modification, waiver, termination,
rescission, discharge or cancellation. This Agreement may not be modified,
except in writing, and signed by the authorized representative of the parties.
The parties hereto agree to make any amendment/modification required to bring
this Agreement in compliance with applicable antitrust laws.
22.6 APPLICABLE LAW; ARBITRATION.
(a) This Agreement will be interpreted and construed under the laws of
the State of Michigan. In the event of any conflict of law, the laws of Michigan
will prevail, without regard to the application of Michigan conflict-of-law
rules. Nothing in this Section is intended by the parties to subject this
Agreement to any franchise or similar statute, rule or regulation of the State
of Michigan to which it would not otherwise be subject.
(b) Any claim or controversy arising out of or related to this
Agreement, or the making, performance or interpretation of this Agreement, will
be finally settled by arbitration pursuant to the then prevailing rules of the
American Arbitration Association, by one arbitrator appointed in accordance with
such rules. All arbitration proceedings will take place in Ann Arbor, Michigan.
The award of the arbitrator will be the sole and exclusive remedy between the
parties regarding any claims, counterclaims, issues or accountings presented or
pled to the arbitrator; will be promptly paid free of any tax, deduction or
offset; and any costs, fees or taxes incident to enforcing the award will, to
the maximum extent permitted by law, be charged against the party resisting such
enforcement. Judgment upon the award of the arbitration may be entered in the
court having jurisdiction thereof, or application may be made to such court for
a judicial acceptance of the award or an order of enforcement.
(c) Nothing herein contained shall bar our right to obtain injunctive
relief against threatened conduct that will cause us loss or damage, under the
usual equity rules, including the applicable rules for obtaining specific
performance, restraining orders, and preliminary injunctions; and you agree to
pay all court costs and reasonable attorneys fees incurred by us in obtaining
such relief.
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22.7 NOTICES. Any notices or other communications to be given under this
Agreement shall be in writing, delivered by hand, telegram, certified or
registered mail, facsimile or courier service to the following address (which
may be changed by written notice):
To DPII: Domino's Pizza International, Inc.
30 Frank Lloyd Wright Drive
P.O. Box 997
Ann Arbor, Michigan 48106-0997 U.S.A.
Attn: Legal Department
Facsimile No.: (313) 930-5499
To Franchisee:
Attn:
Facsimile No.:
Notice by mail shall be deemed received on the fifth business day after
mailing or upon actual receipt, whichever is earlier.
22.8 INDEPENDENT CONTRACTORS. The parties to this Agreement are
independent contractors and no training, assistance or supervision which we may
give or offer to you shall be deemed to negate such independence. We shall not
be liable for any damages to any person or property arising directly or
indirectly out of the operation of the Store, including but not limited to those
damages which may occur while your employees are making or returning from making
deliveries. Nor shall we have any liability for any taxes levied upon you, your
business, or the Store. The parties further acknowledge and agree the
relationship created by this Agreement and the relationship between us and the
relationship between DPI and your employees is not a fiduciary relationship nor
one of principal and agent.
22.9 STANDARD OF REASONABLENESS. Unless otherwise stated in this
Agreement, we agree to exercise reasonable judgment with respect to all
determinations to be made by us under the terms of this Agreement.
22.10 ACKNOWLEDGEMENT. You acknowledge that you have conducted an
independent investigation of the business contemplated by this Agreement and
recognize that it involves business risks making the success of the venture
largely dependent upon your business abilities. We expressly disclaim the making
of, and you acknowledge that you have not received or relied upon, any warranty,
assurance or guarantee, express or implied, as to the potential volume, profits
or success of the business venture contemplated by this Agreement.
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22.11 BINDING EFFECT. This Agreement is binding upon the parties and their
heirs, approved assigns and successors in interest.
22.12 EFFECTIVE DATE OF THIS AGREEMENT. This Agreement shall be effective
as of __________________.
22.13 CONTROLLING LANGUAGE. The parties hereto confirm that it is their
wish that this Agreement, as well as all other documents relating hereto,
including notices, shall be drawn up in the English language only. This
Agreement may be translated; in case of any difference between the two versions,
the English version shall control. All costs in connection with the translation
shall be borne by you.
22.14 GOVERNMENTAL APPROVALS. Franchisee shall be solely responsible for
obtaining all governmental approvals and consents, if any, with respect to this
Agreement, including, without limitation, approval(s) of the amount or frequency
of franchise and advertising fees payable hereunder, consent(s) to the payment
of such fees in United States Dollars and consent(s) to the wire transfer or
other transfer of such fees to an account located outside of the Country in
which the Store is located, together with such other approvals or consents as
may be necessary with respect to any other provision or provisions of this
Agreement. Certified copies of all such approvals and/or consents shall be
furnished by Franchisee to us immediately upon their issuance. Franchisee's
failure to obtain any such approval or consent and to continue any such approval
or consent in full force and effect during the term of this Agreement shall
constitute a material breach of this Agreement, entitling us to all of the
rights and remedies provided herein upon breach of this Agreement by Franchisee.
22.15 LIMITATION UPON COMMENCEMENT OF ACTIONS. Any and all claims and
actions arising out of or relating to this Agreement or the relationship of the
parties to this Agreement, brought by any party against the other, will be
commenced within one (1) year from the occurrence of the facts giving rise to
such claim or action, or such claim or action shall be barred.
22.16 LIMITATION OF CLAIMS. Each party to this Agreement irrevocably
waives to the fullest extent permitted by law any right to, or claim of, any
punitive or exemplary damages against the other party, and agrees that in the
event of a dispute between the parties each will be limited to the recovery of
any actual damages sustained by it.
22.17 NONEXCLUSIVITY OF REMEDIES. No right or remedy herein conferred upon
or reserved to us is exclusive of any other right or remedy provided or
permitted by law or equity.
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23. FORCE MAJEURE
Neither party shall be in default of its delay in performance or failure
to perform any of its obligations hereunder, when and if the delay or failure
arises from a cause which is beyond the control of the party failing to perform.
Such force majeure (which includes, inter alia, strikes, acts of God, acts of
war, laws and regulations) would suspend the fulfillment of the obligations
under this Agreement until it is over. If the force majeure lasts more than one
(1) year, DPII shall have the right to terminate this Agreement.
DOMINO'S PIZZA INTERNATIONAL, INC. COMPANY NAME.:
/s/ Richard Curran
- -----------------------------------
By: Richard Curran By:
Its: Managing Director Its:
Date: Aug 28, 1997 Date:
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COVENANTS OF SHAREHOLDERS/PARTNERS
----------------------------------
The undersigned represent and warrant that they are all of the
shareholders or partners of Franchisee or otherwise have a direct or indirect
beneficial interest in the success of Franchisee. Accordingly, to induce DPII to
enter into this Agreement and grant the franchise to Franchisee, each of the
undersigned hereby jointly and severally guarantees the performance by
Franchisee of its obligations under this Agreement and each of the undersigned
hereby jointly and severally agrees to be bound by, and personally liable for
the breach of, all of the provisions of this Agreement including without
limitation the restrictions contained in Sections 20 and 21 of this Agreement.
KROLEWSKA PIZZA INTERNATIONAL FAST FOOD
CORPORATION
/S/ /s/ Mitchell Rubinson
- --------------------------------------- --------------------------------
Controlling Shareholder/Partner Shareholder/Partner
- --------------------------------------- --------------------------------
Shareholder/Partner Shareholder/Partner
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