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EXHIBIT 10.28
AREA DEVELOPMENT AGREEMENT
THIS AREA DEVELOPMENT AGREEMENT ("Agreement") is entered into as of
the
7th day of January, 2005 by
and between BACK YARD BURGERS, INC. ("Franchisor"),
and William N. Griffith
("Developer[s]").
RECITALS
A. The
Franchisor is the owner of the trade name and service
mark
"BACK YARD BURGERS," certain valuable trade practices, and
all
of the recipes, formulae, operating procedures,
exclusive
systems, methods, techniques, designs, trademarks,
service
marks, copyrights, manuals, training materials, and all
other
items now or hereafter owned, used or provided by the
Franchisor (collectively "Trade Practices") in connection
with
the retail sale of BACK YARD BURGERS franchises.
B. BACK
YARD BURGERS, INC. ("Franchisor") operates and
franchises
a number of drive-through and dine-in hamburger
restaurants
under the trade name "BACK YARD BURGERS" which are operated
in
accordance with the uniform standards of operation,
including
without limitation, design of building, layout of
equipment,
interior and exterior decoration, signs, operating
methods,
menus, advertising, sales techniques, personnel management
and
bookkeeping and accounting systems ("BACK YARD BURGERS
System").
C.
Developer desires to obtain from the Franchisor a grant of
the
exclusive right to develop and operate a number of BACK
YARD
BURGERS Restaurants.
The grant pertains to Williamson County and Travis
County, Texas. The parties hereto desire to provide for
such
grant upon the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
promises
hereinafter contained herein,
Franchisor and Developer agree as follows:
1. GRANT OF DEVELOPMENT RIGHTS
A. The
Franchisor hereby grants to Developer during the
term of this agreement the exclusive right to open
and operate BACK YARD BURGERS Restaurants
("Restaurant[s]") or ("Unit[s]") under the
development schedule set forth in attached Addendum
1, incorporated herein by reference ("Development
Schedule, Division of Territory and Map"). Developer
shall be required and hereby agrees to open
additional BYB units under the following conditions;
unless otherwise agreed upon:
(1) A minimum of one
(1) unit per each 70,000
population increase in the territory as
reported by the U.S. Census Bureau;
(2) Provided
that, the increases occur after the
Developer has met and
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finished the terms and time of the
Development Schedule and, such unit
increases are established within the time
limitations of the Franchise Agreement and
any renewal periods.
B. The right
of the developer to develop each Restaurant
is contingent upon Developer not being in default
under this Agreement, and in substantial compliance
with the terms and conditions of the Franchise
Agreements to which Developer is a party. Developer
must have opened and be operating all Restaurants
required by the Development Schedule.
C. This
Agreement is not a Franchise Agreement, and does
not grant to Developer any right to use Back Yard
Burgers Trade Practices, nor the Back Yard Burgers
System. Developer shall have no right under this
Agreement to license others to use the Trade
Practices or Back Yard Burgers System.
2. DEVELOPMENT FEE
In consideration of the rights granted herein to Developer,
Developer
shall pay the franchisor upon
the execution hereof a Development fee of Five
Thousand Dollars ($5,000.00)
per unit allocated to Developer under the
Development Schedule. The
Development fees shall be fully earned by the
Franchisor upon execution
hereof and is not refundable; provided, however that,
upon execution of the
Franchise Agreement for each unit, the Franchisor shall
credit Developer $5,000.00
towards the franchise fee for that unit.
3. TERM
The term of this Agreement shall be for a period of ten (10)
years
commencing on the date hereof
unless extended, or sooner terminated by the
Franchisor as provided for in
this Agreement. Developer shall have such option
to renew and extend the term
of each individual franchise agreement as is
provided for
thereunder.
4. TERRITORY
Exclusive Territory. During the term of this Agreement and
any
extension hereof, the
Franchisor shall not own, operate or grant a franchise
for
any other Back Yard Burgers
Restaurant within the following described territory:
Williamson County and Travis County, Texas
except in or in conjunction
with any military installation, zoo, or amusement
park. A map showing the
Territory is attached hereto and incorporated herein as
Addendum 1, Page 12 If
Developer fails to meet a requirement of the Development
Schedule, the Franchisor may
develop a Restaurant or grant a franchise for a
Restaurant within the
Territory, but not within the protected territory of any
of Developer's Restaurants,
or restaurant sites approved by the Franchisor as
such territory is described
in the respective franchise Agreement unless such
failure is due to fire,
flood, earthquake or other similar causes beyond the
Developer's
control.
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5. FRANCHISE
AGREEMENTS
Developer may only develop a Restaurant hereunder by executing
a
Franchise Agreement with
Franchisor ("Franchise Agreement") for such Restaurant,
to be located at site
approved by Franchisor as provided therein. The
Franchise
Agreement for each Restaurant
developed under the Development Schedule shall be
the form of the Franchise
Agreement then being offered by Franchisor which will
be substantially in the form
provided as Exhibit D to the Uniform Franchise
Offering Circular. Such
Franchise Agreement shall not be effective unless
executed by Franchisor;
Franchisor need not execute a Franchise Agreement if
Developer is then in default
under any provision hereof.
6. INITIAL FRANCHISE
FEE
For each Restaurant to be developed pursuant to the terms
hereof,
Developer shall pay to
Franchisor at the earlier of a.) submitting the building
plan to state or local
regulatory authorities for approval, b.) the signing of
the property lease, c.)
closing on the property, d.) or the signing of the
Franchise Agreement, a
Franchise fee of Twenty-Five Thousand Dollars
($25,000.00) for the first
franchise, and Twenty-Two Thousand Dollars
($22,000.00) for subsequent
franchises developed under this Agreement. This fee
shall be fully earned upon
execution of the Franchise Agreement, and will be
non-refundable. Franchisor
shall credit Developer $5,000.00 towards the
Franchise fee for each unit
developed, per paragraph 2 of this Agreement.
7. RESTAURANT
OPERATION
Each Restaurant to be developed by Developer must be opened
and
operated in accordance with
and pursuant to the respective Franchise Agreement.
Developer's rights with
respect to each Restaurant will be governed by the
Franchise Agreement for each
restaurant.
8. TERMINATION
A.
Termination at end of term. This Agreement shall terminate
as
to all parties at the end of the term hereof if not
renewed
pursuant to the provisions of Paragraph 3.
B.
Termination For Good Cause. This Agreement shall not be
terminated except for good cause. The occurrence of any of
the
following events shall constitute good and sufficient
cause
for
Franchisor, at its absolute option and without prejudice
to any other rights or remedies provided for hereunder or
by
law or equity, to terminate this Agreement:
1. Immediately and
without an opportunity to cure as follows:
(a) If
Developer shall be adjudicated bankrupt,
or if any proceeding by or against Developer
or his corporation is instituted under any
section of the Bankruptcy Act, or if a
receiver (permanent or temporary) of
Developer's property or any part thereof is
appointed by a court of competent authority;
if Developer or his corporation
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makes a general assignment for the benefit
of creditors, or if a final judgment remains
unsatisfied of record for thirty (30) days
or longer (unless a supersede as bond is
filed) or if execution is levied against
Developer's business or property, or suit to
foreclose any lien or mortgage against the
restaurant or equipment is instituted
against Developer and not dismissed or
stayed within thirty (30) days.
(b) The
Franchisor and Developer agree in
writing to terminate the Agreement;
(c) The
Developer makes any material
misrepresentations relating to the
acquisition of the Development Agreement or
the Developer engages in conduct which
reflects materially and unfavorably upon the
operation and reputation of the franchise
business or system;
(d) The
Developer on three or more occasions
within a one year period fails to comply
with one or more requirements of this
Agreement, or any Franchise Agreement,
whether or not corrected after notice;
(e) The
Developer is convicted of a felony or
any other criminal misconduct which is
relevant to the operation of the business;
(f)
Developer's voluntary abandonment of any of
the Restaurants except for reasons beyond
Developer's control.
2.
Unless otherwise provided herein, after an
opportunity to cure as follows:
(a) The
Developer fails to pay any fees or other
amounts due to the Franchisor within ten
(10) days after receiving written notice
that such fees are overdue;
(b) If the
Developer fails, for a period of
fifteen (15) days after notification of
noncompliance, to comply with any federal,
state or local law or regulation applicable
to the operation of the business; and
(c) If
Developer violates any other term or
condition of this Agreement or any Franchise
Agreement and Developer fails to cure such
violation within thirty (30) days after
written notice from Franchisor to cure same.
C.
Monetary Obligations. In the event of termination of
this
Agreement in its entirety, Franchisor may retain all fees
paid
pursuant to this Agreement. In addition, all obligations
of
Franchisor to Developer and all rights of Developer under
this
Agreement shall then terminate; however, any obligations
of
Developer
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to take, or abstain from taking, any action upon
termination
pursuant to this Agreement shall not be affected by such
termination, including the payment to Franchisor of all
sums
earned and due from
