2003 AMENDMENT
TO FRANCHISE AGREEMENT
This 2003
Amendment to Franchise Agreement (this “Amendment”) is
entered into as of December 17, 2003 by and between
Ryan’s Properties, Inc. (“Ryan’s”) and
Family Steak Houses of Florida, Inc.
(“FSH”).
WHEREAS,
Ryan’s and FSH are parties to that certain Franchise
Agreement, dated as of September 16, 1987, as amended prior to
the date hereof (the “Existing Franchise Agreement”;
the Existing Franchise Agreement as amended by this Amendment shall
be referred to as the “Franchise Agreement”) (all
capitalized terms used herein that are not otherwise defined herein
to have the meanings ascribed to them in the Existing Franchise
Agreement); and
WHEREAS, FSH has
informed Ryan’s that FSH does not expect to have in operation
at December 31, 2003 a number of Restaurants (defined as
restaurants of FSH operating as Ryan’s Family Steak Houses)
equal to at least 80% of the number of Restaurants required to be
in operation as of that date pursuant to the terms of the Existing
Franchise Agreement; and
WHEREAS,
Section XV (Termination and Defaults) of the Existing
Franchise Agreement provides, among other matters, that FSH shall
be in default under the Existing Franchise Agreement if “at
the end of any calendar year the number of Restaurants in operation
is less than 80% of the number of Restaurants required to be in
operation as of that date pursuant to the terms of this Agreement,
as amended”; and
WHEREAS, the
parties desire to wind down and terminate the franchise
relationship under the Existing Franchise Agreement in an amicable
manner that minimizes unnecessary disruption;
NOW, THEREFORE,
for valuable consideration, the receipt and sufficiency of which
are acknowledged by each of the parties hereto, the parties hereto
agree as follows:
1.
Termination or Conversion of Restaurants .
(a)
FSH agrees that, in accordance with the schedule set forth on the
attached Exhibit A, FSH shall complete as to each and every
one of FSH’s Restaurants:
|
|
|
|
|
(i) its
sale to an unaffiliated third party to be operated as a restaurant
with a name and logo (immediately upon consummation of such sale)
that differs sufficiently from “Ryan’s Family Steak
House” and “Fire Mountain” to avoid any
reasonable likelihood of confusion;
|
|
|
|
|
|
(ii) the
termination of its operation as a restaurant of any sort;
and/or
|
|
|
|
|
|
(iii) the
conversion of that Restaurant from a “Ryan’s Family
Steak House” to a restaurant with a name and logo that
differs sufficiently from “Ryan’s
|
|
|
|
|
|
Family Steak
House” and “Fire Mountain” to avoid any
reasonable likelihood of confusion between any of FSH’s
restaurants and any of Ryan’s restaurants; provided, further,
that, if at any time FSH changes the exterior façade or
interior design of any such Restaurant (or former Restaurant), FSH
shall cause the new exterior façade or interior design (as
applicable) to differ sufficiently from Ryan’s’
“Fire Mountain” and the ‘lodge look’ of
“Ryan’s Family Steak House” to avoid any
reasonable likelihood of confusion between any of FSH’s
restaurants and any of Ryan’s restaurants.
|
(b)
FSH shall cause each such Restaurant sale, termination or
conversion to be accomplished in as commercially reasonable a
manner as possible consistent with the requirements of this
Amendment.
(c)
No later than five (5) business days after the completion of
the sale, termination or conversion of a Restaurant pursuant to
this Amendment, FSH shall certify that fact in writing to
Ryan’s. Ryan’s may request any and all such
information, and may make any and all such inspections, as may be
reasonably necessary to verify the sale, termination or conversion
of any or all Restaurants in accordance with this
Amendment.
(d)
The Continuing Services and Royalty Fee set forth in the Existing
Franchise Agreement shall continue to apply to the total gross
receipts from each of FSH’s Restaurants until the date the
sale, termination or conversion as contemplated by this Amendment
of such Restaurant is completed. Payment of any unpaid Continuing
Services and Royalty Fee for any sold, terminated or converted
Restaurant shall be made in accordance with the Existing Franchise
Agreement.
(e)
From and after January 1, 2004, (i) Ryan’s shall
have no further obligations under Paragraphs II (Location), IV
(Training and Assistance), Subparagraph B of Paragraph V
(Advertising) or Subparagraph D of Paragraph VI (Confidential
Operating Manual) of the Franchise Agreement, and
(ii) Attachment 1 to the July 13, 1992 letter agreement
amending the Franchise Agreement shall no longer be in effect. From
and after the date that the sale, termination or conversion as
contemplated by this Amendment of an FSH Restaurant is completed,
Ryan’s shall have no further obligations under any provision
of the Franchise Agreement with respect to such Restaurant. Without
limiting the preceding provisions, from and after the earlier of
(i) the date that all Restaurants are sold, terminated or
converted or (ii) June 30, 2005, FSH shall not be
entitled to receive supplies that are proprietary to Ryan’s.
Nothing contained herein, however, shall impede FSH from continuing
to use recipes obtained from Ryan’s and now used at the
Restaurants in its converted restaurants; provided, however, that
FSH shall remain obligated under Paragraph XIV.D and, to the
extent applicable, Paragraph VI.B with respect to such
recipes.
(f)
FSH acknowledges that the deadlines set forth in Exhibit A are
of the essence. Accordingly, if FSH fails to complete the sale,
termination or conversion as contemplated by this Amendment of the
cumulative number of Restaurants as contemplated by this Amendment
by any applicable date set forth on Exhibit A:
|
|
|
|
|
(i)
(A) if such failure is with respect to the requirement that
all of the Restaurants be sold, terminated or converted by
June 30, 2005, such failure shall constitute a default under
the Franchise Agreement, and, without the necessity
|
2
|
|
|
|
|
of any notice
(including without limitation any “Notice to Cure” or
#147;Notice of Cure”), Ryan’s shall have all remedies
available under the Franchise Agreement, at law and/or in equity by
reason of such breach; or
|
|
|
|
|
|
(B) if
such failure is with respect to the cumulative number of
Restaurants required by this Amendment to be sold, terminated or
converted by any date other than June 30, 2005, such failure
shall constitute a default under the Franchise Agreement if such
failure is not fully cured within one hundred eighty
(180) days after the occurrence of such failure, and in such
event, without the necessity of any notice (including without
limitation any “Notice to Cure” or “Notice of
Cure”), Ryan’s shall have all remedies available under
the Franchise Agreement, at law and/or in equity by reason of such
breach; and
|
|
|
|
|
|
(ii) without
limiting clause (i) in any way, during any quarterly period
(except for the first thirty (30) days of such quarterly
period, if immediately prior to such period FSH was in compliance
with the Franchise Agreement) that more FSH’s Restaurants are
in operation than permitted by this Amendment (such excess number
of Restaurants at any time being hereinafter referred to as the
“Excess Number”), the Continuing Service and Royalty
Fee during that quarter shall be equal to the sum of (A) 4% of
the total gross receipts of all of FSH’s Restaurants in
operation, plus (B) the product of (x) 2% of the total
gross receipts of all of FSH’s Restaurants in operation,
multiplied by (y) the quotient of (1) the Excess Number,
divided by (2) the total number of FSH’s Restaurants in
operation.
|
Each of subparagraphs (i)(A),
(i)(B) and (ii) of this paragraph (f) is independent of
the other, and Ryan’s’ rights under any of such
subparagraphs shall not be affected by whether or not Ryan’s
then has rights under the terms of any of the other such
subparagraphs.
2.
Additional Agreements .
(a)
Ryan’s a
