Attached files
Exhibit 10.12
Buffalo Wild Wings®
Area Development Agreement
Bearcat Enterprises, Inc.
Franchisee
Franchisee
Effective Date:
12/27/03
(To be completed by Us)
Confidential
©2002 Buffalo Wild Wings International, Inc.
©2002 Buffalo Wild Wings International, Inc.
TABLE OF CONTENTS
SECTION | PAGE | |||
RECITALS |
1 | |||
1. DEFINITIONS |
1 | |||
2. GRANT OF DEVELOPMENT RIGHTS |
2 | |||
3. DEVELOPMENT FEE |
3 | |||
4. DEVELOPMENT SCHEDULE AND MANNER OF EXERCISING OPTIONS |
4 | |||
5. TERM |
5 | |||
6. YOUR DUTIES |
5 | |||
7. DEFAULT AND TERMINATION |
6 | |||
8. RIGHTS AND DUTIES OF PARTIES UPON TERMINATION OR EXPIRATION |
7 | |||
9. TRANSFER |
8 | |||
10. MISCELLANEOUS |
9 |
APPENDICES
A. | DESIGNATED TERRITORY |
|
B. | DEVELOPMENT SCHEDULE |
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BUFFALO WILD WINGS®
AREA DEVELOPMENT AGREEMENT
AREA DEVELOPMENT AGREEMENT
This Area Development Agreement is made this 27th day of December, 2002 between
BUFFALO WILD WINGS INTERNATIONAL, INC., an Ohio corporation with its principal business located at
1600 Utica Avenue South, Suite 700, Minneapolis, Minnesota 55426 (we or us) and Bearcat
Enterprises, Inc, a Michigan corporation whose principal business address is 820 Cherokee Avenue,
Royal Oak, Michigan 49067 (franchisee or you). If the franchisee is a corporation, partnership
or limited liability company, certain provisions of the Agreement also apply to your owners and
will be noted.
RECITALS
A. Our parent company has developed a unique system for operating sports-themed, fast casual
restaurants that feature chicken wings, sandwiches, unique food service and other products,
beverages and services using certain standards and specifications;
B. Many of the food and beverage products are prepared according to specified recipes and
procedures, some of which include proprietary sauces and mixes;
C. Our parent company owns the BUFFALO WILD WINGS® Trademark and other trademarks used in
connection with the Operation of a BUFFALO WILD WINGS restaurant;
D. Our parent company has granted to us the right to sublicense the right to develop and
operate BUFFALO WILD WINGS restaurants;
E. You desire to develop and operate several BUFFALO WILD WINGS restaurants and we, in
reliance on your representations, have approved your franchise application to do so in accordance
with this Agreement.
In consideration of the foregoing and the mutual covenants and consideration below, you and we
agree as follows:
DEFINITIONS
1. For purposes of this Agreement, the terms below have the following definitions:
A. Menu Items means the chicken wings, sandwiches and other products and beverages
prepared according to our specified recipes and procedures, as we may modify and change from
time to time.
B. Principal Owner means any person who directly or indirectly owns a 10% or greater
interest in the franchisee when the franchisee is a corporation, limited liability company or
a similar entity other than a partnership. If the franchisee is a partnership entity, then
each general partner is a Principal Owner, regardless of the percentage ownership interest.
If the franchisee is one or more individuals, each individual is a Principal Owner of the
franchisee. You must have at least one Principal Owner.
C. Restaurants means the BUFFALO WILD WINGS Restaurants you develop and operate
pursuant to this Agreement.
D. System means the BUFFALO WILD WINGS System, which consists of distinctive food and
beverage products prepared according to special and confidential recipes and formulas with
unique storage, preparation, service and delivery procedures and techniques, offered in a
setting of distinctive exterior and interior layout, design and color scheme, signage,
furnishings
and materials and using certain 2 distinctive types of facilities, equipment, supplies,
ingredients, business techniques, methods and procedures together with sales promotion
programs, all of which we may modify and change from time to time.
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E. Trademarks means the BUFFALO WILD WINGS Trademark and Service Mark that have been
registered in the United States and elsewhere and the trademarks, service marks and trade
names set forth in each Franchise Agreement, as we may modify and change from time to time,
and the trade dress and other commercial symbols used in the Restaurants. Trade dress
includes the designs, color schemes and image we authorize you to use in the operation of the
Restaurants from time to time.
GRANT OF DEVELOPMENT RIGHTS
2. The following provisions control with respect to the rights granted hereunder:
A. We grant to you, under the terms and conditions of this Agreement, the right to
develop and operate two (2) BUFFALO WILD WINGS Restaurants (the Restaurants) within the
territory described on Appendix A (Designated Territory).
B. You are bound by the development schedule (Development Schedule) set forth in
Appendix B. Time is of the essence for the development of each Restaurant in accordance with
the Development Schedule. Each Restaurant must be developed and operated pursuant to a
separate Franchise Agreement that you enter into with us pursuant to Section 4.B below.
C. If you are in compliance with the Development Schedule set forth on Appendix B, we
will not develop or operate or grant anyone else a franchise to develop and operate a
BUFFALO WILD WINGS Restaurant business in the Designated Territory prior to the expiration
or termination of this Agreement, except for the Special Sites defined in Section 2.D below
or as otherwise provided in this Agreement.
D. The rights granted under this Agreement are limited to the right to develop and
operate Restaurants located in the Designated Territory, and do not include (i) any right to
sell products and Menu Items identified by the Trademarks at any location or through any
other channels or methods of distribution, including the internet (or any other existing or
future form of electronic commerce), other than at Restaurants within the Designated
Territory, (ii) any right to sell products and Menu Items identified by the Trademarks to
any person or entity for resale or further distribution, or (iii) any right to exclude,
control or impose conditions on our development or operation of franchised, company or
affiliate owned restaurants at any time or at any location outside of the Designated
Territory.
You acknowledge and agree that (i) we and our affiliates have the right outside of the
Designated Territory to grant other franchises or operate company or affiliate owned BUFFALO
WILD WINGS restaurants and offer, sell or distribute any products or services associated
with the System (now or in the future) under the Trademarks or any other trademarks, service
marks or trade names or through any distribution channel or method, all without compensation
to any franchisee; and (ii) we and our affiliates have the right to operate and franchise
others to operate restaurants or any other business within and outside the Designated
Territory under trademarks other than the BUFFALO WILD WINGS Trademarks, without
compensation to any franchisee, except that our operation of, or association or affiliation
with, restaurants (through franchising or otherwise) in the Designated Territory that
compete with BUFFALO WILD WINGS restaurants in the sports-themed, fast casual restaurant
segment will only occur through some form of merger or acquisition with an existing
restaurant chain.
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Although we and our affiliates will not develop, operate or franchise a BUFFALO WILD
WINGS restaurant within the Designated Territory, we and our affiliates have the right to
offer,
sell or distribute, within the Designated Territory, any frozen, pre-packaged items or
other products or services associated with the System (now or in the future) or identified
by the Trademarks, or any other trademarks, service marks or trade names, except for
Prohibited Items (as defined below), through any distribution channels or methods, without
compensation to any franchisee. The distribution channels or methods include, without
limitation, grocery stores, club stores, convenience stores, wholesale or the internet (or
any other existing or future form of electronic commerce). The Prohibited Items are the
following items that we will not sell in the Designated Territory through other distribution
channels or methods: any retail food service Menu Items that are cooked or prepared to be
served to the end user or customer for consumption at the retail location. For example,
chicken wings cooked and served to customers at a grocery store or convenience store would
be a Prohibited Item, but the sale of frozen or pre-packaged chicken wings at a grocery
store or convenience store would be a permitted form of distribution in the Designated
Territory.
Further, you acknowledge that certain locations within the Designated Territory are by
their nature unique and separate in character from sites generally developed as BUFFALO WILD
WINGS restaurants. As a result, you agree that the following locations (Special Sites) are
excluded from the Designated Territory and we have the right, subject to our then-current
Special Sites Impact Policy, to develop or franchise such locations: (1) military bases; (2)
public transportation facilities; (3) sports facilities, including race tracks; (4) student
unions or other similar buildings on college or university campuses; (5) amusement and theme
parks; and (6) community and special events.
E. This Agreement is not a Franchise Agreement and you have no right to use in any
manner the Trademarks by virtue of this Agreement. You have no right under this Agreement to
sublicense or subfranchise others to operate a business or restaurant or use the System or
the Trademarks.
DEVELOPMENT FEE
3. You must pay a Development Fee as described below:
A. As consideration for the rights granted in this Agreement, you must pay us a
Development Fee of $20,000.00, representing one-half of the Initial Franchise Fee for each
Restaurant to be developed under this Agreement. The Initial Franchise Fee for the first
Restaurant is $20,000.00. The Initial Franchise Fee for the second Restaurant is $20,000.00.
The Initial Franchise Fee for each subsequent Restaurant is $ N/A.
The Development Fee is consideration for this Agreement and not consideration for any
Franchise Agreement, is fully earned by us upon execution of this Agreement and is
nonrefundable. The part of the Initial Franchise Fee that is included in the Development Fee
is credited against the Initial Franchise Fee payable upon the signing of each individual
Franchise Agreement. The balance of the Initial Franchise Fee for the first Restaurant must
be paid at the time of execution of this Agreement, together with the execution by you of
the Franchise Agreement for the first Restaurant. The total amount to be paid by you at the
time of execution of this Agreement pursuant to this Section, including both the Development
Fee and the balance of the Initial Franchise Fee for your first Restaurant is $30,000.00.
The balance of the Initial Franchise Fee for each subsequent Restaurant is due as specified
in Section 3.B.
B. You must submit a separate application for each Restaurant to be established by you
within the Designated Territory as further described in Section 4. Upon our approval of the
site of your Restaurant, a separate Franchise Agreement must be executed for each such
Restaurant, at which time the balance of the Initial Franchise Fee for that Restaurant is
due and owing. Such payment represents the balance of the appropriate Initial Franchise Fee,
as described
above in Section 3.A. Upon the execution of each Franchise Agreement, the terms and
conditions of the Franchise Agreement control the establishment and operation of such
Restaurant.
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DEVELOPMENT SCHEDULE AND MANNER OF EXERCISING OPTIONS
4. The following provisions control with respect to your development rights and
obligations:
A. You are bound by and strictly must follow the Development Schedule. By the dates set
forth under the Development Schedule, you must enter into Franchise Agreements with us
pursuant to this Agreement for the number of Restaurants described under the Development
Schedule. You also must comply with the Development Schedule requirements regarding (i) the
restaurant type to be developed and the opening date for each Restaurant and (ii) the
cumulative number of Restaurants to be open and continuously operating for business in the
Designated Territory.
B. You may not develop a Restaurant unless you have notified us of your intention to
develop the Restaurant at least 30 days prior to the date set forth in the Development
Schedule by which you must execute a Franchise Agreement for the particular Restaurant and
all of the following conditions have been met (these conditions apply to each Restaurant to
be developed in the Designated Territory):
1. Your Submission of Proposed Site. You must find a proposed site for
the Restaurant which that reasonably believe to conform to our site selection
criteria, as modified by us from time to time, and submit to us a complete site
report (containing such demographic, commercial, and other information and
photographs as we may reasonably require) for such site.
2. Our Approval of Proposed Site. You must receive our written approval
of your proposed site. We agree not to unreasonably withhold approval of a proposed
site. In approving or disapproving any proposed site, we will consider such matters
as we deem material, including demographic characteristics of the proposed site,
traffic patterns, competition, the proximity to other businesses, the nature of
other businesses in proximity to the site, and other commercial characteristics
(including the purchase or lease obligations for the proposed site) and the size of
premises, appearance and other physical characteristics. Our approval of a proposed
site, however, does not in any way constitute a guaranty by us as to the success of
the Restaurant.
3. Your Submission of Information. You must famish to us a franchise
application for the proposed Restaurant, financial statements and other information
regarding you, the operation of any of your other Restaurants within the Designated
Territory, and the development and operation of the proposed Restaurant (including,
without limitation, investment and financing plans for the proposed Restaurant) as
we may reasonably require.
4. Your Compliance with Our Then-Current Standards for Franchisees. You
must receive written confirmation from us that you meet our then-current standards
for franchisees, including financial capability criteria for the development of a
new Restaurant. You acknowledge and agree that this requirement is necessary to
ensure the proper development and operation of your Restaurants, and preserve and
enhance the reputation and goodwill of all BUFFALO WILD WINGS restaurants and the
goodwill of the Trademarks. Our confirmation that you meet our then-current
standards for the development of a new Restaurant, however, does not in any way
constitute a guaranty by us as to your success.
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5. Good Standing. You must not be in default of this Agreement, any
Franchise Agreement entered into pursuant to this Agreement or any other agreement
between you and us or any of our affiliates. You also must have satisfied on a
timely basis all monetary and material obligations under the Franchise Agreements
for all existing Restaurants.
6. Execution of Franchise Agreement. You and we must enter into our
then current form of Franchise Agreement for the proposed Restaurant. You understand
that we may modify the then-current form of Franchise Agreement from time to time
and that it may be different than the current form of Franchise Agreement, including
different fees and obligations. You understand and agree that any and all Franchise
Agreements will be construed and exist independently of this Agreement. The
continued existence of each Franchise Agreement will be determined by the terms and
conditions of such Franchise Agreement. Except as specifically set forth in this
Agreement, the establishment and operation of each Restaurant must be in accordance
with the terms of the applicable Franchise Agreement.
C. You acknowledge that you have conducted an independent investigation of the
prospects for the establishment of Restaurants within the Designated Territory, and
recognize that the business venture contemplated by this Agreement involves business and
economic risks and that your financial and business success will be primarily dependent upon
the personal efforts of you and your management and employees. We expressly disclaim the
making of, and you acknowledge that you have not received, any estimates, projections,
warranties or guaranties, express or implied, regarding potential gross sales, profits,
earnings or the financial success of the Restaurants you develop within the Designated
Territory.
D. You recognize and acknowledge that this Agreement requires you to open Restaurants
in the future pursuant to the Development Schedule. You further acknowledge that the
estimated expenses and investment requirements set forth in Items 6 and 7 of our Uniform
Franchise Offering Circular are subject to increase over time, and that future Restaurants
likely will involve greater initial investment and operating capital requirements than those
stated in the Uniform Franchise Offering Circular provided to you prior to the execution of
this Agreement.
TERM
5. Unless sooner terminated in accordance with Section 7 of this Agreement, the term of this
Agreement and all rights granted to you will expire on the date that your last BUFFALO WILD WINGS
Restaurant is scheduled to be opened under the Development Schedule.
YOUR DUTIES
6. You must perform the following obligations:
A. You must comply with all of the terms and conditions of each Franchise Agreement,
including the operating requirements specified in each Franchise Agreement.
B. You and your owners, officers, directors, shareholders, partners, members and
managers (if any) acknowledge that your entire knowledge of the operation of a BUFFALO WILD
WINGS Restaurant and the System, including the knowledge or know-how regarding the
specifications, standards and operating procedures of the services and activities, is
derived from information we disclose to you and that certain information is proprietary,
confidential and constitutes our trade secrets. The term trade secrets refers to the whole
or any portion of know-how, knowledge, methods, specifications, processes, procedures and/or
improvements regarding the business that is valuable and secret in the sense that it is not
generally known to our competitors. You and your owners, officers, directors, shareholders,
partners, members and managers (if any),
jointly and severally, agree that at all times during and after the term of this
Agreement, you will maintain the absolute confidentiality of all such proprietary
information and will not disclose, copy, reproduce, sell or use any such information in any
other business or in any manner not specifically authorized or approved in advance in
writing by us. We may require that you obtain nondisclosure and confidentiality agreements
in a form satisfactory to us from the individuals identified in the first sentence of this
paragraph and other key employees.
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C. You must comply with all requirements of federal, state and local laws, rules and
regulations.
D. If you at some time in the future desire to make either a public or a private
offering of your securities, prior to such offering and sale, and prior to the public
release of any statements, data, or other information of any kind relating to the proposed
offering of your securities, you must secure our written approval, which approval will not
be unreasonably withheld. You must secure our prior written approval of any and all press
releases, news releases and any and all other publicity, the primary purpose of which is to
generate interest in your offering. Only after we have given our written approval may you
proceed to file, publish, issue, and release and make public any said data, material and
information regarding the securities offering. It is specifically understood that any review
by us is solely for our own information, and our approval does not constitute any kind of
authorization, acceptance, agreement, endorsement, approval, or ratification of the same,
either expressly or implied. You may make no oral or written notice of any kind whatsoever
indicating or implying that we and/or our affiliates have any interest in the relationship
whatsoever to the proposed offering other than acting as Franchisor. You agree to indemnify,
defend, and hold us and our affiliates harmless, and our affiliates directors, officers,
successors and assigns harmless from all claims, demands, costs, fees, charges, liability or
expense (including attorneys fees) of any kind whatsoever arising from your offering of
information published or communicated in actions taken in that regard.
E. If neither you, your Principal Owner, nor any other person in your organization
possesses, in our judgment, adequate experience and skills to allow you to locate, obtain
and develop prime locations in the Designated Territory to allow you to meet your
development obligations under this Agreement, we can require that you hire or engage a
person with those necessary skills.
DEFAULT AND TERMINATION
7. The following provisions apply with respect to default and termination:
A. The rights and territorial protection granted to you in this Agreement have been
granted in reliance on your representations and warranties, and strictly on the conditions
set forth in Sections 2, 4 and 6 of this Agreement, including the condition that you comply
strictly with the Development Schedule.
B. You will be deemed in default under this Agreement if you breach any of the terms of
this Agreement, including the failure to meet the Development Schedule, or the terms of any
Franchise Agreement or any other agreements between you and us or our affiliates. All rights
granted in this Agreement immediately terminate upon written notice without opportunity to
cure if: (i) you become insolvent, commit any affirmative action of insolvency or file any
action or petition of insolvency, (ii) a receiver (permanent or temporary) of your property
is appointed by a court of competent authority, (iii) you make a general assignment or other
similar arrangement for the benefit of your creditors, (iv) a final judgment remains
unsatisfied of record for 30 days or longer (unless supersedeas bond is filed), (v)
execution is levied against your business or property, (vi) suit to foreclose any lien or
mortgage against his premises or equipment is instituted against you and not dismissed
within 30 days, or is not in the process of being dismissed, (vii) you fail to
meet your development obligations set forth in the Development Schedule attached as
Appendix B, (viii) you fail to comply with any other provision of this Agreement and do not
correct the failure within 30 days after written notice of that failure is delivered to you,
or (ix) we have delivered to you a notice of termination of a Franchise Agreement in
accordance with its terms and conditions.
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RIGHTS AND DUTIES OF PARTIES UPON TERMINATION OR EXPIRATION
8. Upon termination or expiration of this Agreement, all rights granted to you will
automatically terminate, and:
A. All remaining rights granted to you to develop Restaurants under this Agreement will
automatically be revoked and will be null and void. You will not be entitled to any refund
of any fees. You will have no right to develop or operate any business for which a Franchise
Agreement has not been executed by us. We will be entitled to develop and operate, or to
franchise others to develop and operate, BUFFALO WILD WINGS restaurants in the Designated
Territory, except as may be otherwise provided under any Franchise Agreement has been
executed between us and you and that has not been terminated.
B. You must immediately cease to operate your business under this Agreement and must
not thereafter, directly or indirectly, represent to the public or hold yourself out as a
present or former developer of ours.
C. You must take such action as may be necessary to cancel or assign to us or our
designee, at our option, any assumed name or equivalent registration that contains the name
or words BUFFALO WILD WINGS or any other Trademark of ours, and you must furnish us with
evidence satisfactory to us of compliance with this obligation within 30 days after
termination or expiration of this Agreement.
D. You must assign to us or our designee all your right, title, and interest in and to
your telephone numbers and must notify the telephone company and all listing agencies of the
termination or expiration of your right to use any telephone number in any regular,
classified or other telephone directory listing associated with the Trademarks and to
authorize transfer of same at our direction.
E. You must within 30 days of the termination or expiration pay all sums owing to us
and our affiliates, including the balance of the Initial Franchise Fees that we would have
received had you developed all of the Restaurants set forth in the Development Schedule. In
addition to the Initial Franchise Fees for undeveloped Restaurants, you agree to pay as fair
and reasonable liquidated damages (but not as a penalty) an amount equal to $50,000 for each
undeveloped Restaurant. You agree that this amount is for lost revenues from Continuing Fees
and other amounts payable to us, including the fact that you were holding the development
rights for those Restaurants and precluding the development of certain Restaurants in the
Designated Territory, and that it would be difficult to calculate with certainty the amount
of damage we will incur. Notwithstanding your agreement, if a court determines that this
liquidated damages payment is unenforceable, then we may pursue all other available
remedies, including consequential damages.
All unpaid amounts will bear interest at the rate of 18% per annum or the maximum
contract rate of interest permitted by governing law, whichever is less, from and after the
date of accrual. In the event of termination for any default by you, the sums due will
include all damages, costs, and expenses, including reasonable attorneys fees and expenses,
incurred by us as a result of the default. You also must pay to us all damages, costs and
expenses, including reasonable attorneys fees and expenses, that we incur subsequent to the
termination or expiration of
this Agreement in obtaining injunctive or other relief for the enforcement of any
provisions of this Agreement.
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F. If this Agreement is terminated solely for your failure to meet the Development
Schedule and for no other reason whatsoever, and you have opened at least 50% of the total
number of Restaurants provided for in the Development Schedule, you may continue to operate
those existing Restaurants under the terms of the separate Franchise Agreement for each
Restaurant. On the other hand, if this Agreement is terminated under any other circumstance,
we have the option to purchase from you all the assets used in the Restaurants that have
been developed prior to the termination of this Agreement. Assets include leasehold
improvements, equipment, furniture, fixtures, signs, inventory, liquor licenses and other
transferable licenses and permits for the Restaurants.
We have the unrestricted right to assign this option to purchase. We or our assignee
will be entitled to all customary warranties and representations given by the seller of a
business including, without limitation, representations and warranties as to (i) ownership,
condition and title to assets; (ii) liens and encumbrances relating to the assets; and (iii)
validity of contracts and liabilities, inuring to us or affecting the assets, contingent or
otherwise. The purchase price for the assets of the Restaurants will be determined in
accordance with the post-termination purchase option provision in the individual Franchise
Agreement for each Restaurant (with the purchase price to include the value of any goodwill
of the business attributable to your operation of the Restaurant if you are in compliance
with the terms and conditions of the Franchise Agreement for that Restaurant). The purchase
price must be paid in cash at the closing of the purchase, which must take place no later
than 90 days after your receipt of notice of exercise of this option to purchase, at which
time you must deliver instruments transferring to us or our assignee: (i) good and
merchantable title to the assets purchased, free and clear of all liens and encumbrances
(other than liens and security interests acceptable to us or our assignee), with all sales
and other transfer taxes paid by you; and (ii) all licenses and permits of the Restaurants
that may be assigned or transferred. If you cannot deliver clear title to all of the
purchased assets, or in the event there are other unresolved issues, the closing of the sale
will be accomplished through an escrow. We have the right to set off against and reduce the
purchase price by any and all amounts owed by you to us, and the amount of any encumbrances
or liens against the assets or any obligations assumed by us. You and each holder of an
interest in you must indemnify us and our affiliates against all liabilities not so assumed.
You must maintain in force all insurance policies required pursuant to the applicable
Franchise Agreement until the closing on the sale.
G. All of our and your obligations that expressly or by their nature survive the
expiration or termination of this Agreement will continue in full force and effect
subsequent to and notwithstanding its expiration or termination and until they are satisfied
or by their nature expire.
TRANSFER
9. The following provisions govern any transfer:
A. We have the right to transfer all or any part of our rights or obligations under
this Agreement to any person or legal entity.
B. This Agreement is entered into by us with specific reliance upon your personal
experience, skills and managerial and financial qualifications. Consequently, this
Agreement, and your rights and obligations under it, are and will remain personal to you.
You may only Transfer your rights and interests under this Agreement if you obtain our prior
written consent and you transfer all of your rights and interests under all
Franchise Agreements for Restaurants in the Designated Territory. Accordingly, the
assignment terms and conditions of the Franchise
Agreements shall apply to any Transfer of your rights and interests under this
Agreement. As used in this Agreement, the term Transfer means any sale, assignment, gift,
pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial
order, merger, consolidation, share exchange, transfer by operation of law or otherwise,
whether direct or indirect, voluntary or involuntary, of this Agreement or any interest in
it, or any rights or obligations arising under it, or of any material portion of your
assets, or of any interest in you.
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MISCELLANEOUS
10. The parties agree to the following provisions:
A. You agree to indemnify, defend, and hold us, our affiliates and our officers,
directors, shareholders and employees harmless from and against any and all claims, losses,
damages and liabilities, however caused, arising directly or indirectly from, as a result
of, or in connection with, the development, use and operation of your Restaurants, as well
as the costs, including attorneys fees, of defending against them (Franchise Claims).
Franchise Claims include, but are not limited to, those arising from any death, personal
injury or property damage (whether caused wholly or in part through our or our affiliates
active or passive negligence), latent or other defects in any Restaurant, or your employment
practices. In the event a Franchise Claim is made against us or our affiliates, we reserve
the right in our sole judgment to select our own legal counsel to represent our interests,
at your cost.
B. Should one or more clauses of this Agreement be held void or unenforceable for any
reason by any court of competent jurisdiction, such clause or clauses will be deemed to be
separable in such jurisdiction and the remainder of this Agreement is valid and in full
force and effect and the terms of this Agreement must be equitably adjusted so as to
compensate the appropriate party for any consideration lost because of the elimination of
such clause or clauses.
C. No waiver by us of any breach by you, nor any delay or failure by us to enforce any
provision of this Agreement, may be deemed to be a waiver of any other or subsequent breach
or be deemed an estoppel to enforce our rights with respect to that or any other or
subsequent breach. This Agreement may not be waived, altered or rescinded, in whole or in
part, except by a writing signed by you and us. This Agreement together with the application
form executed by you requesting us to enter into this Agreement constitute the sole
agreement between the parties with respect to the entire subject matter of this Agreement
and embody all prior agreements and negotiations with respect to the business. You
acknowledge and agree that you have not received any warranty or guarantee, express or
implied, as to the potential volume, profits or success of your business. There are no
representations or warranties of any kind, express or implied, except as contained in this
Agreement.
D. Except as otherwise provided in this Agreement, any notice, demand or communication
provided for must be in writing and signed by the party serving the same and either
delivered personally or by a reputable overnight service or deposited in the United States
mail, service or postage prepaid, and if such notice is a notice of default or of
termination, by registered or certified mail, and addressed as follows:
1. If intended for us, addressed to General Counsel, BUFFALO WILD WINGS
International, Inc., 1600 Utica Avenue South, Suite 700, Minneapolis, Minnesota
55416;
2. If intended for you, addressed to you at 820 Cherokee Avenue, Royal Oak,
Michigan 48067 or,
in either case, to such other address as may have been designated by notice to the
other party. Notices for purposes of this Agreement will be deemed to have been
received if
mailed or delivered as provided in this subparagraph.
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E. Any modification, consent, approval, authorization or waiver granted in this
Agreement required to be effective by signature will be valid only if in writing executed by
the Principal Owner or, if on behalf of us, in writing executed by our President or one of
our authorized Vice Presidents.
F. The following provisions apply to and govern the interpretation of this Agreement,
the parties rights under this Agreement, and the relationship between the parties:
1. Applicable Law and Waiver. Subject to our rights under federal
trademark laws, the parties rights under this Agreement, and the relationship
between the parties, is governed by, and will be interpreted in accordance with, the
laws (statutory and otherwise) of the state in which your first Restaurant is
located. You waive, to the fullest extent permitted by law, the rights and
protections that might be provided through the laws of any state relating to
franchises or business opportunities, other than those of the state in which your
first Restaurant is located.
2. Our Rights. Whenever this Agreement provides that we have a certain
right, that right is absolute and the parties intend that our exercise of that right
will not be subject to any limitation or review. We have the right to operate,
administrate, develop, and change the System in any manner that is not specifically
precluded by the provisions of this Agreement, although this right does not modify
the express limitations set forth in this Agreement.
3. Our Reasonable Business Judgment. Whenever we reserve discretion in
a particular area or where we agree to exercise our rights reasonably or in good
faith, we will satisfy our obligations whenever we exercise Reasonable Business
Judgment in making our decision or exercising our rights. Our decisions or actions
will be deemed to be the result of Reasonable Business Judgment, even if other
reasonable or even arguably preferable alternatives are available, if our decision
or action is intended, in whole or significant part, to promote or benefit the
System generally even if the decision or action also promotes our financial or other
individual interest. Examples of items that will promote or benefit the System
include, without limitation, enhancing the value of the Trademarks, improving
customer service and satisfaction, improving product quality, improving uniformity,
enhancing or encouraging modernization and improving the competitive position of the
System.
G. Any cause of action, claim, suit or demand allegedly arising from or related to the
terms of this Agreement or the relationship of the parties must be brought in the Federal
District Court for the District of Minnesota or in Hennepin County District Court, Fourth
Judicial District, Minneapolis, Minnesota. Both parties irrevocably submit themselves to,
and consent to, the jurisdiction of said courts. The provisions of this Section will survive
the termination of this Agreement. You are aware of the business purposes and needs
underlying the language of this subparagraph, and with a complete understanding, agree to be
bound in the manner set forth.
H. All parties hereby waive any and all rights to a trial by jury in connection with
the enforcement or interpretation by judicial process of any provision of this Agreement,
and in connection with allegations of state or federal statutory violations, fraud,
misrepresentation or similar causes of action or any legal action initiated for the recovery
of damages for breach of this Agreement.
I. You and us and our affiliates agree to waive, to the fullest extent permitted by
law, the right to or claim for any punitive or exemplary damages against the other and agree
that in the event of any dispute between them, each will be limited to the recovery of
actual damages
sustained.
10
J. All Principal Owners of a franchisee that is a corporation, partnership, limited
liability company or partnership or other legal entity must execute the form of undertaking
and guarantee at the end of this Agreement. Any person or entity that at any time after the
date of this Agreement becomes a Principal Owner must execute the form of undertaking and
guarantee at the end of this Agreement.
K. You and we are independent contractors. Neither party is the agent, legal
representative, partner, subsidiary, joint venturer or employee of the other. Neither party
may obligate the other or represent any right to do so. This Agreement does not reflect or
create a fiduciary relationship or a relationship of special trust or confidence.
L. In the event of any failure of performance of this Agreement according to its terms
by any party the same will not be deemed a breach of this Agreement if it arose from a cause
beyond the control of and without the negligence of said party. Such causes include, but are
not limited to, strikes, wars, riots and acts of government except as may be specifically
provided for elsewhere in this Agreement.
M. Except as qualified below, any dispute between you and us or any of our or your
affiliates arising under, out of, in connection with or in relation to this Agreement, the
parties relationship, or the business must be submitted to binding arbitration under the
authority of the Federal Arbitration Act and must be arbitrated in accordance with the
then-current rules and procedures and under the auspices of the American Arbitration
Association. The arbitration must take place in Minneapolis, Minnesota, or at such other
place as may be mutually agreeable to the parties. The decision of the arbitrators will be
final and binding on all parties to the dispute; however, the arbitrators may not under any
circumstances: (i) stay the effectiveness of any pending termination of this Agreement; (ii)
assess punitive or exemplary damages; or (iii) make any award which extends, modifies or
suspends any lawful term of this Agreement or any reasonable standard of business
performance that we set.
Before the filing of any arbitration, the parties agree to mediate any dispute that
does not include injunctive relief or specific performance actions covered below, provided
that the party seeking mediation must notify the other party of its intent to mediate prior
to the termination of this Agreement. Mediation will be conducted by a mediator or mediation
program agreed to by the parties. Persons authorized to settle the dispute must attend any
mediation session. The parties agree to participate in the mediation proceedings in good
faith with the intention of resolving the dispute if at all possible within 30 days of the
notice from the party seeking to initiate the mediation procedures. If not resolved within
30 days, the parties are free to pursue arbitration. Mediation is a compromise negotiation
for purposes of the federal and state rules of evidence, and the entire process is
confidential.
Nothing in this Agreement bars our right to obtain injunctive relief against threatened
conduct that will cause us loss or damages, under the usual equity rules, including the
applicable rules for obtaining restraining orders and preliminary injunctions.
N. During the term of this Agreement, neither we nor you may employ or seek to employ,
directly or indirectly, any person who is at the time or was at any time during the prior 6
months employed in any type of managerial position by the other party or any of its
subsidiaries or affiliates, or by any franchisee in the system, unless the violating party
compensates the former employer for all losses and expenses incurred in losing and replacing
the employee up to a maximum of $25,000, plus attorneys fees and expenses. This
subparagraph will not be violated if, at the time we or you employ or seek to employ the
person, the former employer has given its written consent. The parties acknowledge and agree
that any franchisee from whom an employee
was hired by you in violation of this subparagraph shall be a third-party beneficiary
of this provision, but only to the extent that they may seek compensation from you.
O. We will designate the Effective Date of this Agreement in the space provided on
the cover page. If no Effective Date is designated on the cover page, the Effective Date is
the date when we sign this Agreement.
11
IN WITNESS WHEREOF, the parties have executed the foregoing Agreement as of the dates written
below.
Bearcat Enterprises, Inc. | BUFFALO WILD WINGS INTERNATIONAL, INC. | |||||||||
Date: 12/26/02 | Date: 12/27/02 | |||||||||
/s/ T. Michael Ansley
|
/s/ Sally J. Smith
|
|||||||||
By: |
T. Michael Ansley | By: | Sally J. Smith | |||||||
Its:
|
President | Its: | President | |||||||
Witness: |
Jason P. Meyer
|
|||||||||
Signature: |
/s/ Jason P. Meyer
|
|||||||||
Date: 12-26-2002 | ||||||||||
/s/ LaVern A. Menker
|
||||||||||
By:
|
LaVern A. Menker | |||||||||
Its:
|
Vice President | |||||||||
Witness:
|
Jason P. Meyer
|
|||||||||
Signature:
|
/s/ Jason P. Meyer
|
|||||||||
Date: 12/26/02 | ||||||||||
/s/ Jason A. Curtis
|
||||||||||
By:
|
Jason A. Curtis | |||||||||
Its:
|
Treasurer/Secretary | |||||||||
Witness:
|
Jason P. Meyer
|
|||||||||
(Please type or print name) | ||||||||||
Signature:
|
/s/ Jason P. Meyer
|
12
PERSONAL GUARANTEE AND AGREEMENT TO BE BOUND
PERSONALLY BY THE TERMS AND CONDITIONS
OF THE AREA DEVELOPMENT AGREEMENT
PERSONALLY BY THE TERMS AND CONDITIONS
OF THE AREA DEVELOPMENT AGREEMENT
In consideration of the execution of the Area Development Agreement by us, and for other good
and valuable consideration, the undersigned, for themselves, their heirs, successors, and assigns,
do jointly, individually and severally hereby become surety and guarantor for the payment of all
amounts and the performance of the covenants, terms and conditions in the Area Development
Agreement, to be paid, kept and performed by franchisee, including without limitation the
arbitration and other dispute resolution provisions of the Agreement.
Further, the undersigned, individually and jointly, hereby agree to be personally bound by
each and every condition and term contained in the Area Development Agreement and agree that this
Personal Guarantee will be construed as though the undersigned and each of them executed an Area
Development Agreement containing the identical terms and conditions of this Area Development
Agreement.
The undersigned waives: (1) notice of demand for payment of any indebtedness or nonperformance
of any obligations hereby guaranteed; (2) protest and notice of default to any party respecting the
indebtedness or nonperformance of any obligations hereby guaranteed; and (3) any right he/she may
have to require that an action be brought against the franchisee or any other person as a condition
of liability.
In addition, the undersigned consents and agrees that: (1) the undersigneds liability will
not be contingent or conditioned upon our pursuit of any remedies against the franchisee or any
other person; and (2) such liability will not be diminished, relieved or otherwise affected by your
insolvency, bankruptcy or reorganization, the invalidity, illegality or unenforceability of all or
any part of the Area Development Agreement, or the amendment or extension of the Area Development
Agreement with or without notice to the undersigned.
It is further understood and agreed by the undersigned that the provisions, covenants and
conditions of this Guarantee will inure to the benefit of our successors and assigns.
FRANCHISEE: Bearcat Enterprises, Inc.
PERSONAL GUARANTORS: | ||||||||||||||||
/s/ T. Michael Ansley | /s/ LaVern A. Menker | |||||||||||||||
Individually | Individually | |||||||||||||||
T. Michael Ansley | LaVern A. Menker | |||||||||||||||
Print Name | Print Name | |||||||||||||||
820 Cherokee Ave. | 813 Briarcliff Drive | |||||||||||||||
Address | Address | |||||||||||||||
Royal Oak
|
Michigan | 48067 | St. Marys | Ohio | 45885 | |||||||||||
City
|
State | Zip Code | City | State | Zip Code | |||||||||||
248-336-2775 |
419-394-9936 |
|||||||||||||||
Telephone |
Telephone |
13
/s/ Jason A. Curtis | ||||||||||||||||
Individually | ||||||||||||||||
Jason A. Curtis | ||||||||||||||||
Print Name | ||||||||||||||||
4789 Heidi Drive |
||||||||||||||||
Address |
||||||||||||||||
Sterling Heights
|
Michigan | 48310 | ||||||||||||||
City
|
State | Zip Code | ||||||||||||||
586-268-6542 |
||||||||||||||||
Telephone |
14
APPENDIX
A
DESCRIPTION OF DESIGNATED TERRITORY
DESCRIPTION OF DESIGNATED TERRITORY
The Designated Territory consists of two separate areas in Michigan, described as follows:
The first area shall be that area located in Clinton Township, Michigan within the following
boundaries:
North boundary: Beginning at the intersection of Route 53 and Route 59; then eastbound on
Route 59 to Garfield Road;
East boundary: then along Garfield Road southbound to Utica Avenue; then southeast on Utica
Avenue to 12 Mile Road;
South boundary: then along 12 Mile Road westbound to Route 53;
West boundary: then along Route 53 northbound to its intersection with Route 59, the
beginning point of this description.
The second area consists of that area in Berkley, Michigan within the following boundaries:
North boundary: Beginning at the intersection of Southfield Road & Normandy Road, then
eastbound on Normandy Road following a line extending to Stephenson Highway;
East boundary: then along Stephenson Highway southbound to the intersection with Gardenia
Avenue; and then eastbound along Gardenia Avenue to the intersection with I-75; then
southbound along I-75 to 9 Mile Road;
South boundary: then along 9 mile road westbound to Southfield Road;
West boundary: then along Southfield Road northbound to its intersection with Normandy Road,
the beginning point of this description.
Buffalo Wild Wings | Bearcat Enterprises, Inc. | |||||||||||
International, Inc. | ||||||||||||
By: | /s/ Sally J. Smith | By: | /s/ T. Michael Ansley | |||||||||
Its: | President | Its. | President | |||||||||
Dated: | 12/26/02 |
A
APPENDIX B
DEVELOPMENT SCHEDULE
DEVELOPMENT SCHEDULE
You acknowledge and agree that a material provision of the Area Development Agreement is that
the following number of BUFFALO WILD WINGS Restaurants must be opened and continuously operating in
the Designated Territory in accordance with the following Development Schedule:
Date by Which | Date by Which the | Cumulative number of | ||||||||
Franchise | Restaurant Must be | Restaurants Required to | ||||||||
Agreement Must be | Opened and | be Open and Continuously | ||||||||
Signed and Site | Continuously | Operating for Business in | ||||||||
Approval Request | Operating for | the Designated Territory | ||||||||
Restaurant | Restaurant | Must be Submitted | Business in the | as of the Date in Preceding | ||||||
Number | Type | to us | Territory | Column | ||||||
1
|
Free standing | Date of this Agreement | 12/1/03 | 1 | ||||||
2
|
To be Determined | 2/1/04 | 12/1/04 | 2 |
For purposes of determining compliance with the above Development Schedule, only the
Restaurants actually open and continuously operating for business in the Designated Territory as of
a given date will be counted toward the number of Restaurants required to be open and continuously
operating for business.
Buffalo Wild Wings International, Inc. |
Bearcat Enterprises, Inc. | |||||
By:
|
/s/ Sally J. Smith | By: | /s/ T. Michael Ansley | |||
Its: President | Its. President |
B