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Franchisee Agreement

Franchisee Agreement

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Published by Mohit Malviya

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Published by: Mohit Malviya on Apr 22, 2011
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SHOWBIZ PIZZA TIME, INC.FRANCHISE AGREEMENT-----------------------------------------------------------------[TERRITORY]4441 West Airport FreewayP.O. Box 152077Irving, TX 75062TABLE OF CONTENTSRECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . .11. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . .12. GRANT OF RIGHTS . . . . . . . . . . . . . . . . . . . . . .52.1 Grant. . . . . . . . . . . . . . . . . . . . . . . . .52.2 Exclusivity. . . . . . . . . . . . . . . . . . . . . .52.3 Limitation of Rights . . . . . . . . . . . . . . . . .53. FEES AND CONTRIBUTIONS. . . . . . . . . . . . . . . . . . .53.1 Franchise Fee. . . . . . . . . . . . . . . . . . . . .53.1.1 Termination prior to Site Approval . . . . .63.1.2 Termination after Site Approval. . . . . . .63.1.3 Termination after Construction . . . . . . .63.2 Royalty Fees . . . . . . . . . . . . . . . . . . . . .63.3 Entertainment Fund . . . . . . . . . . . . . . . . . .63.4 Advertising Fund . . . . . . . . . . . . . . . . . . .63.5 Payments and Taxes . . . . . . . . . . . . . . . . . .63.6 Overdue Payments . . . . . . . . . . . . . . . . . . .64. SITE SELECTION. . . . . . . . . . . . . . . . . . . . . . .74.1 Criteria for Site Approval . . . . . . . . . . . . . .74.2 Approval by Franchisor . . . . . . . . . . . . . . . .74.3 Costs of On-Site Evaluation. . . . . . . . . . . . . .74.4 Executed Lease or Purchase Agreement . . . . . . . . .74.5 Extensions . . . . . . . . . . . . . . . . . . . . .74.6 Relocation . . . . . . . . . . . . . . . . . . . . . .85. CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . .85.1 Pre-Construction Approval Criteria . . . . . . . . . .85.2 Pre-Construction Approval. . . . . . . . . . . . . . .95.3 Commencement of Construction and Extensions. . . . . .95.4 Construction . . . . . . . . . . . . . . . . . . . . .95.5 Opening Assistance . . . . . . . . . . . . . . . . . .95.6 Inspection . . . . . . . . . . . . . . . . . . . . . 105.7 Continuing Statements. . . . . . . . . . . . . . . . 105.8 Installation of Animated Entertainment . . . . . . . 105.9 Approval for Opening . . . . . . . . . . . . . . . . 106. TRAINING. . . . . . . . . . . . . . . . . . . . . . . . . 10
 
6.1 Minimum Training . . . . . . . . . . . . . . . . . . 106.2 Location and Expenses. . . . . . . . . . . . . . . . 106.3 Additional Training. . . . . . . . . . . . . . . . . 117. OPERATION . . . . . . . . . . . . . . . . . . . . . . . . 117.1 Operational Policies and Cornerstones. . . . . . . . 117.2 Suppliers. . . . . . . . . . . . . . . . . . . . . . 127.3 General Maintenance. . . . . . . . . . . . . . . . . 127.4 Maintenance of Animated Entertainment. . . . . . . . 137.5 Scheduled Refurbishment. . . . . . . . . . . . . . . 137.6 Inspection . . . . . . . . . . . . . . . . . . . . . 137.6.1 Testing. . . . . . . . . . . . . . . . . . 137.6.2 Recommendations. . . . . . . . . . . . . . 147.6.3 Failure to Correct Deficiencies. . . . . . 147.7 Accounting and Records . . . . . . . . . . . . . . . 147.7.1 General Accounting Principles. . . . . . . 147.7.2 Accounting Statements. . . . . . . . . . . 147.7.3 Inspection of Accounting and Records . . . 147.7.4 Records of Ownership Interests in Franchisee157.7.5 Sales Records. . . . . . . . . . . . . . . 158. ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . 158.1 General Requirements . . . . . . . . . . . . . . . . 158.2 Pre-approved Advertising . . . . . . . . . . . . . . 158.3 New Advertising. . . . . . . . . . . . . . . . . . . 168.4 Minimum Advertising Expenditures . . . . . . . . . . 168.5 Advertising and Entertainment Funds. . . . . . . . . 168.6 Advertising Cooperative. . . . . . . . . . . . . . . 179. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 179.1 Representations, Warranties and Covenants of Franchisee179.1.1 Due Incorporation. . . . . . . . . . . . . 179.1.2 Authorization. . . . . . . . . . . . . . . 189.1.3 Execution and Performance. . . . . . . . . 189.1.4 Corporate Documents. . . . . . . . . . . . 189.1.5 Non-Competition during Term of Agreement . 189.1.6 Non-Competition after Termination orNon-Renewal of Agreement. . . . . . . . .189.1.7 Additional Covenants . . . . . . . . . . . 199.1.8 Guaranty . . . . . . . . . . . . . . . . . 199.2 Representations, Warranties and Covenants of Franchisor . 199.2.1 Due Incorporation. . . . . . . . . . . . . 199.2.2 Authorization. . . . . . . . . . . . . . . 199.2.3 Execution and Performance. . . . . . . . . 1910. PROPRIETARY RIGHTS AND INFORMATION. . . . . . . . . . . . 2010.1 Confidential Information . . . . . . . . . . . . . . 2010.1.1 Confidentiality Agreements . . . . . . . . 2010.1.2 Improvements . . . . . . . . . . . . . . . 2010.2 Proprietary Marks. . . . . . . . . . . . . . . . . . 2010.3 Copyrights . . . . . . . . . . . . . . . . . . . . . 2111. TRANSFER OF INTEREST. . . . . . . . . . . . . . . . . . . 2211.1 Transfer by Franchisor . . . . . . . . . . . . . . . 2211.2. Transfer by Franchisee. . . . . . . . . . . . . 2211.2.1 General Requisites . . . . . . . . . . . . 2211.2.2 Transfer involving Controlling Interest. . 2311.3 Transfer of Interest in Franchisee. . . . . . . . . 2311.4 Transfer upon Death. . . . . . . . . . . . . . . . . 2311.5 Public Offerings . . . . . . . . . . . . . . . . . . 2312. INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . 2412.1 Insurance. . . . . . . . . . . . . . . . . . . . . . 24
 
12.2 Insurance Prior to Commencement. . . . . . . . . . . 2412.3 Indemnities. . . . . . . . . . . . . . . . . . . . . 2512.2.1 Indemnification. . . . . . . . . . . . . . . 2512.2.2. Notice and Counsel . . . . . . . . . . . . 2612.2.3 Settlement and Remedial Actions. . . . . . 2612.2.4 Expenses . . . . . . . . . . . . . . . . . 2612.2.5 Third Party Recovery . . . . . . . . . . . 2612.2.6 Survival . . . . . . . . . . . . . . . . . 2613. TERM, RENEWAL AND TERMINATION . . . . . . . . . . . . . . 2713.1 Term . . . . . . . . . . . . . . . . . . . . . . . . 2713.2 Renewal. . . . . . . . . . . . . . . . . . . . . . . 2713.3 Termination. . . . . . . . . . . . . . . . . . . . . 2713.3.1 Termination without Notice . . . . . . . . 2713.3.2 Termination with Ten Day Notice. . . . . . 2813.3.3 Termination with Thirty Day Notice . . . 2813.4 Obligations upon Termination or Expiration . . . . . 2813.5 Option to Purchase . . . . . . . . . . . . . . . . . 2914. REMEDIES AND LIQUIDATED DAMAGES . . . . . . . . . . . . . 3014.1 Remedies . . . . . . . . . . . . . . . . . . . . . . 3014.1.1 Cure . . . . . . . . . . . . . . . . . . . 3014.1.2 Specific Enforcement . . . . . . . . . . . 3014.2 Liquidated Damages . . . . . . . . . . . . . . . . . 3015. DUE DILIGENCE AND ASSUMPTION OF RISK. . . . . . . . . . . 3016. DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . 3116.1 Mediation. . . . . . . . . . . . . . . . . . . . . . 3116.2 Applicable Law . . . . . . . . . . . . . . . . . . . 3116.3 Jurisdiction and Venue . . . . . . . . . . . . . . . 3117. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 3217.1 Independent Contractors. . . . . . . . . . . . . . . 3217.2 Entire Agreement . . . . . . . . . . . . . . . . . . 3217.3 No Waiver. . . . . . . . . . . . . . . . . . . . . . 3217.4 Severability . . . . . . . . . . . . . . . . . . . . 3217.5 Notice . . . . . . . . . . . . . . . . . . . . . . . 3217.6 Counterparts . . . . . . . . . . . . . . . . . . . . 3317.7 Headings . . . . . . . . . . . . . . . . . . . . . . 3317.8 Further Assurances . . . . . . . . . . . . . . . . . 3317.9 Compliance with Laws . . . . . . . . . . . . . . . . 33Schedule 1.15 - Schedule of Franchisee's Principals. . . . . . 37Attachment A - Cornerstones. . . . . . . . . . . . . . . . . . 38Attachment B - Operational Policies. . . . . . . . . . . . . . 39Attachment C - Site Approval Form. . . . . . . . . . . . . . . 40Attachment D - Lease Rider . . . . . . . . . . . . . . . . . . 41Attachment E - Advertising Cooperative Agreement . . . . . . . 42Attachment F - Guaranty Agreement. . . . . . . . . . . . . . . 43Attachment G - Principal's Confidentiality Agreement . . . . . 44Attachment H - Employee's Confidentiality Agreement. . . . . . 45SHOWBIZ PIZZA TIME, INC.

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