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EXHIBIT 10.12 Buffalo Wild Wingsr Area Development Agreement

Development Agreement

EXHIBIT 10.12 Buffalo Wild Wingsr 

 

Area Development Agreement | Document Parties: BUFFALO WILD WINGS INTERNATIONAL, INC You are currently viewing:
This Development Agreement involves

BUFFALO WILD WINGS INTERNATIONAL, INC

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Title: EXHIBIT 10.12 Buffalo Wild Wingsr Area Development Agreement
Date: 3/28/2005
Industry: Restaurants     Sector: Services

EXHIBIT 10.12 Buffalo Wild Wingsr 

 

Area Development Agreement, Parties: buffalo wild wings international  inc
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EXHIBIT 10.12

 

Buffalo Wild Wings®

 

Area Development Agreement

 

 


Developer

 

 

Effective Date:

 

 


(To be completed by Us)


TABLE OF CONTENTS

 

 

 

 

 

 

SECTION


 

  

PAGE


 

RECITALS

  

1

 

 

 

1.

 

DEFINITIONS

  

1

 

 

 

2.

 

GRANT OF DEVELOPMENT RIGHTS

  

2

 

 

 

3.

 

DEVELOPMENT FEE

  

4

 

 

 

4.

 

DEVELOPMENT SCHEDULE

  

4

 

 

 

5.

 

TERM

  

7

 

 

 

6.

 

YOUR DUTIES

  

7

 

 

 

7.

 

DEFAULT AND TERMINATION

  

8

 

 

 

8.

 

RIGHTS AND DUTIES OF PARTIES UPON TERMINATION OR EXPIRATION

  

8

 

 

 

9.

 

TRANSFER

  

10

 

 

 

10.

 

MISCELLANEOUS

  

10

 

APPENDICES

 

A.

DEVELOPMENT TERRITORY

 

B.

DEVELOPMENT SCHEDULE


BUFFALO WILD WINGS®

AREA DEVELOPMENT AGREEMENT

 

This Area Development Agreement is made this          day of              , 20      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                      , a(n)                      whose principal business address is                      (“developer” or “you”). If the developer 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 video entertainment oriented, 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 B UFFALO W ILD W INGS® Trademark and other trademarks used in connection with the Operation of a B UFFALO W ILD W INGS restaurant;

 

D. Our parent company has granted to us the right to sublicense the right to develop and operate B UFFALO W ILD W INGS restaurants;

 

E. You desire to develop and operate several B UFFALO W ILD W INGS 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 them from time to time.

 

B. “Principal Owner” means any person who directly or indirectly owns a 10% or greater interest in the developer when the developer is a corporation, limited liability company, a partnership, or a similar entity. However, if we are entering into this Agreement totally or partially based on the financial qualifications, experience, skills or managerial qualifications of any person or entity who directly or indirectly owns less than a 10% interest in the developer, that person or entity may, in our sole discretion, be considered a Principal Owner for all purposes under this Agreement, including, but not limited to, the execution of the personal guaranty referenced in Section 10.J below. In addition, if the developer is a partnership entity, then each general partner is a Principal Owner, regardless of the percentage ownership interest. If the developer is one or more individuals, each individual is a Principal Owner of the developer. You must have at least one Principal Owner.

 

1


C. “Restaurants” means the B UFFALO W ILD W INGS Restaurants you develop and operate pursuant to this Agreement.

 

D. “System” means the B UFFALO W ILD W INGS 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 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.

 

E. “Trademarks” means the B UFFALO W ILD W INGS 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              (          ) B UFFALO W ILD W INGS Restaurants (the “Restaurants”) within the territory described on Appendix A (“Development 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 B UFFALO W ILD W INGS Restaurant business in the Development Territory prior to the earlier of (i) the expiration or termination of this Agreement; (ii) the date on which you must execute the Franchise Agreement for your last restaurant pursuant to the terms of the Development Schedule or (iii) the date on which the Designated Area for your final Restaurant under this Agreement is determined, except (a) for the Special Sites defined in Section 2.D below; (b) in the event that the Development Territory covers more than one city, county or designated market area, the protection for each particular city, county or designated market area shall expire upon the earliest of (1) any of the foregoing events or (2) the date when the Designated Area for your final Restaurant to be developed in such city, county or designated market area under this Agreement is determined; or (c) as otherwise provided in this Agreement. Notwithstanding anything in this Agreement, upon the earliest occurrence of any of the foregoing events (i) the Development Territory shall expire and (ii) we will be entitled to develop and operate, or to franchise others to develop and operate, B UFFALO W ILD W INGS restaurants in the Development Territory, except as may be otherwise provided under any Franchise Agreement that has been executed between us and you and that has not been terminated. At the time you execute your final Franchise Agreement under the Development Schedule, you must have an Authorized Location for your final Restaurant.

 

2


D. The rights granted under this Agreement are limited to the right to develop and operate Restaurants located in the Development 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 Development 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 Development Territory. You may not use any the words B UFFALO , W ILD or W INGS or any of the other Trademarks as part of the name of your corporation, partnership, limited liability company or other similar entity.

 

You acknowledge and agree that (i) we and our affiliates have the right to operate or franchise within the Designated Area one or more facilities selling, for dine in or take out, all or some of the Menu Items, using the Trademarks or any other trademarks, service marks or trade names, without compensation to any franchisee, provided, however, that such facilities shall not have an interior area larger than 2,400 square feet and shall not have seating capacity for more than 48 people; (ii) we and our affiliates have the right outside of the Development Territory to grant other franchises or operate company or affiliate owned B UFFALO W ILD W INGS 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 developer; and (iii) we and our affiliates have the right to operate and franchise others to operate restaurants or any other business within and outside the Development Territory under trademarks other than the B UFFALO W ILD W INGS Trademarks, without compensation to any developer, except that our operation of, or association or affiliation with, restaurants (through franchising or otherwise) in the Development Territory that compete with B UFFALO W ILD W INGS restaurants in the video entertainment oriented, fast casual restaurant segment will only occur through some form of merger or acquisition with an existing restaurant chain.

 

In addition, we and our affiliates have the right to offer, sell or distribute, within the Development 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 developer. The distribution channels or methods include, without limitation, grocery stores, club stores, convenience stores, wholesale, hospitals, clinics, health care facilities, business or industry locations (e.g. manufacturing site, office building), military installations, military commissaries 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 Development 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 (unless sold at the limited seating facilities referenced in subparagraph (i) of the paragraph above). 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 Development Territory.

 

3


Further, you acknowledge that certain locations within the Development Territory are by their nature unique and separate in character from sites generally developed as B UFFALO W ILD W INGS restaurants. As a result, you agree that the following locations (“Special Sites”) are excluded from the Development 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 $              , 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 $              . The Initial Franchise Fee for the second Restaurant is $              . The Initial Franchise Fee for each subsequent Restaurant is $              .

 

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 non-refundable. 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 $              . 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 Development Territory as further described in Section 4. Upon our consent to 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.

 

DEVELOPMENT SCHEDULE

 

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

 

4


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 Development Territory. If you fail to either execute a Franchise Agreement or to open a Restaurant according to the dates set forth in the Franchise Agreement, we, in our sole discretion, may (i) require that you hire a franchise development expert with recognized experience in developing franchises in a similar line of business to ours or (ii) immediately terminate this Agreement pursuant to Section 7.B.

 

B. You may not develop a Restaurant unless (i) at least 45 days, but no more than 60 days, prior to the date set forth in the Development Schedule for the execution of each Franchise Agreement, you send us a notice (a) requiring that we send you our then current disclosure documents, (b) confirming your intention to develop the particular Restaurant and (c) sending us all information necessary to complete the Franchise Agreement for the particular Restaurant and (ii) all of the following conditions have been met (these conditions apply to each Restaurant to be developed in the Development Territory):

 

1. Your Submission of Proposed Site . You must find a proposed site for the Restaurant which you 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 Consent to Proposed Site . You must receive our written consent to your proposed site. We agree not to unreasonably withhold consent to a proposed site. Prior to granting our consent to a site, you must have the site evaluated by the proprietary site evaluator software that has been developed by GeoVue, Inc. You will pay GeoVue, Inc. an evaluation fee of $400 per site evaluated, provided, that you must purchase the rights to have at least 3 sites evaluated. 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 consent to 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 furnish to us, at least 30 days prior to the earliest of (i) the date set forth in the Development Schedule by which you must execute a Franchise Agreement or (ii) the actual date in which the Franchise Agreement would be executed, a franchise application for the proposed Restaurant, financial statements and other information regarding you, the operation of any of your other Restaurants within the Development 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 B UFFALO W ILD W INGS 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.

 

5


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 or any of your affiliates 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 must begin substantial construction of each of the Restaurants at least 150 days before the deadline to open each of the Restaurants if the Restaurant will be in a free standing location or at least 120 days before the deadline to open the Restaurant if the Restaurant will be in a non-free standing location. In addition, on or before the deadlines to start construction you must submit to us executed copies of any loan documents and/or any other document that proves that you have secured adequate financing to complete the construction of the Restaurant by the date you are obligated to have that Restaurant open and in operation. In the event that you fail to comply with any of these obligations, we will have the right to terminate this Agreement without opportunity to cure pursuant to subparagraph 7.B.

 

D. You acknowledge that you have conducted an independent investigation of the prospects


 
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