EXHIBIT 10.11 BUFFALO WILD WINGS(R) FRANCHISE AGREEMENTFranchise Agreement |
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EXHIBIT 10.11
BUFFALO WILD WINGS(R)
FRANCHISE AGREEMENT
BETWEEN
BUFFALO WILD WINGS
INTERNATIONAL, INC.
1600 UTICA AVENUE,
SUITE 700
MINNEAPOLIS, MN 55416
AND
AUTHORIZED
LOCATION:
--------------------------------------
Street
--------------------------------------
City State Zip Code
EFFECTIVE DATE:
--------------------------------------
(To be
completed by us)
<PAGE>
--TABLE OF
CONTENTS--
BUFFALO WILD WINGS(R)
FRANCHISE AGREEMENT
<TABLE>
<CAPTION>
<S> <C>
SECTION
PAGE
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1.
DEFINITIONS..............................................................................................1
2. GRANT OF
LICENSE.........................................................................................2
3. TRADEMARK STANDARDS AND
REQUIREMENTS.....................................................................4
4. TERM AND
RENEWAL.........................................................................................5
5. FACILITY STANDARDS AND
MAINTENANCE.......................................................................6
6. PRODUCTS AND OPERATIONS
STANDARDS AND REQUIREMENTS......................................................11
7. PERSONNEL AND SUPERVISION
STANDARDS.....................................................................15
8.
ADVERTISING.............................................................................................16
9. FEES, REPORTING AND AUDIT
RIGHTS........................................................................18
10. YOUR OTHER OBLIGATIONS;
NONCOMPETE
COVENANTS............................................................20
11. TRANSFER OF FRANCHISE...................................................................................23
12. DISPUTE
RESOLUTION......................................................................................26
13. DEFAULT AND
TERMINATION.................................................................................27
14. POST-TERM
OBLIGATIONS...................................................................................29
15. GENERAL
PROVISIONS......................................................................................30
</TABLE>
APPENDICES
----------
A. Trademarks
B. Designated Area
C. Addendum to Lease
D. Electronic Transfer of Funds
Authorization
E. Gift Cards Participation Agreement
F. Enrollment Form and Portal Terms
and Conditions
<PAGE>
BUFFALO WILD WINGS(R)
FRANCHISE AGREEMENT
This Franchise Agreement is made this ____ day of , 2006
between BUFFALO WILD
WINGS INTERNATIONAL, INC., an Ohio
corporation with its principal
business
located at 1600 Utica Avenue South, Suite 700,
Minneapolis, Minnesota 55416
("we" or "us"), and , a whose principal business address is
("franchisee" or "you"). If the
franchisee is a corporation,
partnership,
limited liability company or other legal entity,
certain provisions to this
Agreement also apply to its owners.
RECITALS
A. Our parent company has developed a unique
system for 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 BUFFALO WILD
WINGS(R) 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; and
E. You desire to develop and operate a
BUFFALO WILD WINGS
restaurant and we, in reliance on your representations, have approved your
franchise application.
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. "Control Person"
means the individual who has the authority to,
and does in fact, actively
direct your business affairs in regard to
the Restaurant, is responsible for
overseeing the general management
of the day-to-day operations
of the Restaurant and has authority to
sign on your behalf on all
contracts and commercial documents. The
Control Person is identified
on the Ownership and Management
Addendum attached to this
Agreement.
B. "Gross Sales"
includes the total revenues and receipts from the
sale of all products,
services and merchandise sold in your
Restaurant whether under any
of the Trademarks or otherwise,
including any cover charges
or fees, vending or similar activities
in your Restaurant or on its
premises as well as all license and use
fees. Gross Sales excludes
sales taxes.
C. "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.
D. "Principal
Owner" means any person or entity who, now or
hereafter, directly or
indirectly owns a 10% or greater interest in
the franchisee when the
franchisee is a corporation, limited
liability company,
partnership, or a similar entity. However, if we
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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 franchisee, we have the right
to designate that person or
entity as a Principal Owner for all
purposes under this
Agreement. In addition, if the franchisee is a
partnership entity, then each
person or entity who, now or hereafter
is or becomes a 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.
Each franchisee must have at
least one Principal Owner. Your
Principal Owner(s) are
identified on the Ownership and Management
Addendum attached to this
Agreement. Every time there is a change in
the persons who are your
Principal Owners, you must, within 10 days
from the date of each such
change, update the Ownership and
Management Addendum. As used in this
Agreement, any reference to
Principal Owner includes all
Principal Owners.
E. "Restaurant"
means the BUFFALO WILD WINGS Restaurant you develop
and operate pursuant to this
Agreement.
F. "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
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.
G. "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 on
Appendix A, as we may modify
and change from time to time, and the
trade dress and other
commercial symbols used in the Restaurant.
Trade dress includes the
designs, color schemes and image we
authorize you to use in the
operation of the Restaurant from time to
time.
H. "Unit General
Manager" means the individual who (i) personally
invests his or her full time
and attention and devotes his or her
best efforts to the
on-premises general management of the day-to-day
operations of the Restaurant,
(ii) meets our prior restaurant or
retail management experience
requirements, and (iii) does not
participate in the active
operation or management of any business
other than the Restaurant.
The Unit General Manager must be
appointed at least 60 days
prior to the Restaurant opening, fully
trained 20 days prior to the
Restaurant opening and is or will be
identified on the Ownership
and Management Addendum attached to this
Agreement.
GRANT OF
LICENSE
2. The following provisions control with
respect to the license
granted hereunder:
A. Authorized Location. We
grant to you the right and license to
establish and operate a
retail Restaurant identified by the BUFFALO
WILD WINGS Trademarks or such
other marks as we may direct, to be
located at a location to be
determined, in accordance with this
subparagraph or a location to be
designated within 90 days from the
date of this Agreement (the
"Authorized Location"). When a location
has been designated by you
and approved by us, it will become part
of this subparagraph 2.A as
if originally stated. If an Authorized
Location is not designated by
you and approved by us within 90 days
from the date of this
Agreement, we have the right to declare this
Agreement null and void without
the return of any Initial Franchise
Fee or other amounts paid to
us. You accept the license and
undertake the obligation to
operate the Restaurant at the Authorized
Location using the Trademarks
and the System in compliance with the
terms and conditions of this
Agreement.
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B. Designated Area. You must
locate and operate the Restaurant at an
Authorized Location within
the area described in Appendix B (the
"Designated Area").
We and our affiliates will not locate and
operate or grant to anyone
else a franchise to locate and operate a
BUFFALO WILD WINGS restaurant
within the Designated Area so long as
this Agreement is in effect,
except as provided in subparagraph 2.D.
You do not have any right to
sublicense or subfranchise within or
outside of the Designated
Area and do not have the right to operate
more than one Restaurant
within the Designated Area.
C. Opening. You agree that
the Restaurant will be open and operating
in accordance with the
requirements of subparagraph 5.A within (i)
270 days from the date of
this Agreement if the Restaurant is
located within an end cap,
shopping mall, Special Site or other
similar location, or (ii) 365
days from the date of this Agreement
if the Restaurant is a
free-standing building, unless in either case
we authorize in writing an
extension of time. Notwithstanding the
foregoing, if you are
entering this Agreement pursuant to an Area
Development Agreement
executed between you and us, you agree to open
the Restaurant by the date
stated in the Area Development Agreement.
If you fail to have your
Restaurant open and in operation according
to the provisions of this
subparagraph 2.C, we will have the right
to terminate this Agreement
without opportunity to cure pursuant to
subparagraph 13.B.2.
D. Nonexclusivity; Our
Reservation of Rights. The license is limited
to the right to develop and
operate one Restaurant at the Authorized
Location located in the Designated Area,
and does not include (i)
any right to sell products
and Menu Items identified by the
Trademarks at any location
other than the Authorized Location,
except for authorized catering
and delivery services as noted in
subparagraph 2.E, or through
any other channels or methods of
distribution, including the
internet (or any other existing or
future form of electronic
commerce), (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 of future
franchised, company or
affiliate owned restaurants at any time or at
any location. You acknowledge
that the consumer service area or
trade area of another BUFFALO
WILD WINGS restaurant may overlap with
your Designated Area.
You also acknowledge and
agree that we and our affiliates have the
right to operate and franchise others the right to operate restaurants or any
other business within and outside the Designated Area 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 Area that compete with
BUFFALO WILD WINGS 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 (except as otherwise provided for in this
subparagraph). Outside of the Designated Area, we and our affiliates have the
right to grant other franchises or develop and 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.
We and our affiliates have
the right to offer, sell or distribute,
within and outside the Designated Area, 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, 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 Designated Area through other
distribution channels or methods: any retail food service Menu Items that are
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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 Designated Area.
You acknowledge and agree
that certain locations within and outside
the Designated Area 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 Area 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.
In addition, you acknowledge
and agree that, subject to your right
of first refusal as set forth below, we and our affiliates have the right to
operate or franchise within and outside 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 ("Limited Seating
Facilities"). If we
develop a model for a Limited Seating Facility and determine that your
Designated Territory is an appropriate market for such a facility, we will
provide to you a written offer ("Offer") specifying the terms and
conditions for
your development of the Limited Seating Facility. You will have 90 days
following your receipt of the Offer to accept the Offer by delivering written
notice to us of your acceptance, provided that you are not in default under
this
Agreement or any other Agreement with us or our affiliates. If you do not
provide written notice to us within the time period or if you are in default
under this Agreement or any other agreement with us or our affiliates, you will
lose the right to develop the Limited Seating Facility and we may develop or
franchise others to develop the Limited Seating Facility within your Designated
Area. You acknowledge and agree that if you accept the Offer, we may require
you
to submit a full application, pay an initial fee and sign a new form of
franchise agreement.
E. Catering and Delivery. You
may not engage in catering and
delivery services and
activities within or outside of the Designated
Area, unless we authorize you
in writing, as further described in
subparagraph 6.L. We and our
affiliate companies will not engage in
catering and delivery
services and activities in the Designated
Area; however, we have no
obligation to enforce similar covenants
against any other franchisee.
TRADEMARK STANDARDS
AND REQUIREMENTS
3. You
acknowledge and agree that the
Trademarks are our parent
company's property and it has licensed
the use of the Trademarks to us with the
right to sublicense to others. You
further acknowledge that your right to use
the Trademarks is specifically conditioned upon the following:
A. Trademark Ownership. The
Trademarks are our parent company's
valuable property, and it is
the owner of all right, title and
interest in and to the
Trademarks and all past, present or future
goodwill of the Restaurant
and of the business conducted at the
Authorized Location that is
associated with or attributable to the
Trademarks. Your use of the
Trademarks will inure to our parent
company's benefit. You may
not, during or after the term of this
Agreement, engage in any
conduct directly or indirectly that would
infringe upon, harm or
contest our parent company's rights in any of
the Trademarks or the
goodwill associated with the Trademarks,
including any use of the
Trademarks in a derogatory, negative, or
other inappropriate manner in
any media, including but not limited
to print or electronic media.
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B. Trademark Use. You may not
use, or permit the use of, any
trademarks, trade names or
service marks in connection with the
Restaurant except those set
forth in Appendix A or except as we
otherwise direct in writing.
You may use the Trademarks only in
connection with such products
and services as we specify and only in
the form and manner we
prescribe in writing. You must comply with
all trademark, trade name and
service mark notice marking
requirements. You may use the
Trademarks only in association with
products and services
approved by us and that meet our standards or
requirements with respect to
quality, mode and condition of storage,
production, preparation and
sale, and portion and packaging.
C. Restaurant Identification.
You must use the name BUFFALO WILD
WINGS GRILL & BAR as the
trade name of the Restaurant and you may
not use any other mark or
words to identify the Restaurant without
our prior written consent.
You may not use any of the words BUFFALO,
WILD or WINGS or any of the
other Trademarks as part of the name of
your corporation, partnership, limited
liability company or other
similar entity. You may use
the Trademarks on various materials,
such as business cards,
stationery and checks, provided you (i)
accurately depict the
Trademarks on the materials as we prescribe,
(ii) include a statement on
the materials indicating that the
business is independently
owned and operated by you, (iii) do not
use the Trademarks in
connection with any other trademarks, trade
names or service marks unless
we specifically approve in writing
prior to such use, and (iv)
make available to us, upon our request,
a copy of any materials
depicting the Trademarks. You must post a
prominent sign in the
Restaurant identifying you as a BUFFALO WILD
WINGS franchisee in a format
we deem reasonably acceptable,
including an acknowledgment
that you independently own and operate
the Restaurant and that the
BUFFALO WILD WINGS Trademark is owned by
our parent company and your
use is under a license we have issued to
you. All your internal and
external signs must comply at all times
with our outdoor/indoor guidelines
and practices, as they are
modified from time to time.
D. Litigation. In the event
any person or entity improperly uses or
infringes the Trademarks or
challenges your use or our use or
ownership of the Trademarks,
we will control all litigation and we
have the right to determine
whether suit will be instituted,
prosecuted or settled, the
terms of settlement and whether any other
action will be taken. You
must promptly notify us of any such use or
infringement of which you are
aware or any challenge or claim
arising out of your use of
any Trademark. You must take reasonable
steps, without compensation,
to assist us with any action we
undertake. We will be
responsible for our fees and expenses with any
such action, unless the
challenge or claim results from your misuse
of the Trademarks in
violation of this Agreement, in which case you
must reimburse us for our
fees and expenses.
E. Changes. You may not make
any changes or substitutions to the
Trademarks unless we direct
in writing. We reserve the right to
change the Trademarks at any
time. Upon receipt of our notice to
change the Trademarks, you
must cease using the former Trademarks
and commence using the
changed Trademarks, at your expense. If the
changes to the Trademarks
require substantial remodeling due to a
modernization in trade dress, the
expenditure will be considered
toward the Maximum
Modernization Amount described in subparagraph
5.E. If the changes to the
Trademarks result in a required change to
outdoor signage, such changes
will be subject to the provisions in
5.F.
TERM AND
RENEWAL
4. The following provisions control with
respect to the term and
renewal of this Agreement:
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A. Term. The initial term of
this Agreement is 20 years, unless this
Agreement is sooner
terminated in accordance with Paragraph 13. The
initial term commences upon
the Effective Date (as defined in
subparagraph 15.S) of this
Agreement. We may extend this initial
term in writing for a limited
period of time not to exceed 6 months
to take into account the term
of any applicable lease for the
Authorized Location.
B. Renewal Term and
Conditions of Renewal. You may renew your
license for two renewal
terms, (the first renewal term is 10 years;
the second renewal term is 5
years), provided that with respect to
each renewal: (i) you have given us written
notice of your decision
to renew at least 6 months
but not more than 12 months prior to the
end of the expiring term;
(ii) you sign our then-current form of
franchise agreement (modified
to reflect no additional renewal term
upon expiration and other
modifications to reflect that the
agreement relates to the
grant of a renewal), the terms of which may
differ from this Agreement,
including higher fees and a modification
to the Designated Area
(although in no event will the revised
Designated Area have a
residential population of the lesser of
approximately 30,000 to
40,000 or the residential population that
existed as of the Effective Date);
(iii) you have complied with the
provisions of subparagraph
5.E regarding modernization and, in
addition, 6 months prior to
the end of the initial term, you perform
any further items of
modernization and/or replacement of the
building, premises, trade
dress, equipment and grounds as may be
necessary for your Restaurant
to conform to the standards then
applicable to new BUFFALO
WILD WINGS restaurants, regardless of the
cost of such modernizations
and/or replacements, unless we determine
that you should relocate your
Restaurant because your Authorized
Location no longer meets our
then-current site criteria, in which
case you must comply with the
90 and 240 day relocation requirements
of subparagraph 5.D; (iv) you
are not in default of this Agreement
or any other agreement
pertaining to the franchise granted, have
satisfied all monetary and material
obligations on a timely basis
during the term and are in
good standing; (v) if leasing the
Restaurant premises (and not
subject to relocation under (iii)
above), you have renewed the lease
and have provided written proof
of your ability to remain in
possession of the premises throughout
the renewal period; (vi) you
comply with our then-current training
requirements; (vii) you pay
us, at least 30 days prior to the end of
the expiring term, a renewal
fee in the amount of $20,000; and
(viii) you and your Principal
Owners and guarantors execute a
general release of claims in
a form we prescribe.
C. Relocation Upon Renewal.
If, as a condition of renewal, we
require you to relocate your
Restaurant pursuant to subparagraph
4.B(iii) above, you may renew
your license for two renewal terms
(the first renewal term for
15 years and the second renewal term for
5 years), provided that with
respect to each renewal, you meet all
conditions stated in
subparagraph 4.B.
FACILITY STANDARDS
AND MAINTENANCE
5. You acknowledge and agree that we have the
right to establish,
from time to time, quality standards
regarding the business
operations of
BUFFALO WILD WINGS restaurants and
stores to protect the distinction,
goodwill
and uniformity symbolized by the
Trademarks and the System. Accordingly,
you
agree to maintain and
comply with our quality
standards and agree to the
following terms and conditions:
A. Restaurant Facility; Site
Under Control. You are responsible for
purchasing or leasing a site
that meets our site selection criteria.
You must obtain our written
consent to the 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 must execute
the Enrollment Form and Portal Terms
and Conditions attached as
Appendix F and pay GeoVue, Inc. an
evaluation fee of $400 per
site evaluated, but you must pay for the
rights to have at least 3 sites
evaluated and these fees are non
refundable. If your
authorized location is located in an area with a
lower population or smaller
trade area, we may reduce the number of
required site evaluations.
You may not use the Restaurant premises
or Authorized Location for
any purpose other than the operation of a
BUFFALO WILD WINGS Restaurant
during the term of this Agreement. We
make no guarantees concerning
the success of the Restaurant located
on any site to which we
consent.
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You may not open your
Restaurant for business until we have notified
you in writing that you have
satisfied your pre-opening obligations
as set forth in subparagraphs
5.A and 5.B and we have approved your
opening date. We are not
responsible or liable for any of your
pre-opening obligations,
losses or expenses you might incur for your
failure to comply with these
obligations or your failure to open by
a particular date. We also
are entitled to injunctive relief or
specific performance under
subparagraph 12.C for your failure to
comply with your obligations.
In the event that you plan to
enter into any type of lease for the
Restaurant premises, you must
provide us a copy of the lease at
least 10 business days prior
to the date you would execute the
lease; we reserve the right
to, in such 10 days period, review and
approve or reject the lease.
We have no responsibility for the
lease; it is your sole
responsibility to evaluate, negotiate and
enter into the lease for the Restaurant
premises. You and your
landlord are required to sign
the Lease Addendum attached as
Appendix C. We require you
submit the Lease Addendum to the landlord
at the beginning of your
lease review and negotiation, although the
terms of the Lease Addendum
may not be negotiated without our prior
approval. You must provide us
a copy of the executed lease and Lease
Addendum within 5 days of
their execution.
You must execute, and provide
us an executed copy of your lease
(including an executed copy
of the Lease Addendum) or the purchase
agreement for the selected
and approved site for your Restaurant
within 120 days from the date
of execution of this Agreement if the
Restaurant will be in a free
standing location or within 90 days
from the execution of this
Agreement if the selected and consented
to site for the Restaurant is
in a non-free standing location. If
you fail to have your
"site under control" (execute the lease or the
purchase agreement within the
periods set forth in this
subparagraph), we will have
the right to terminate this Agreement
without opportunity to cure
pursuant to subparagraph 13.B.2.
B. Construction; Future
Alteration. You must construct and equip the
Restaurant in strict
accordance with our current approved
specifications and standards
pertaining to equipment, inventory,
signage, fixtures,
furnishings, accessory features (including sports
memorabilia) and design and
layout of the building. You may not
commence construction of the
Restaurant until you have received our
written consent to your
building plans. If your Restaurant is not
constructed strictly
according to the previously consented building
plans, we will not approve
your Restaurant for opening. You will
have 30 days from the date we
deny our approval for opening your
Restaurant to correct all the
construction problems so that your
Restaurant is strictly
constructed according to the consented
building plans. If you fail to correct the
problems within the 30
day period we may immediately
terminate this Agreement pursuant to
subparagraph 13.B.2. If the
Restaurant opening is delayed for the
foregoing reasons, you will
be responsible for any losses and costs
related to such delay.
Without limiting the
generality of the prior paragraph, you must
promptly after obtaining
possession of the site for the Restaurant:
(i) retain the services of
one of our designated architects; and
(ii) retain the services a
general contractors and audio/visual
equipment providers and
installers, each of whom must have
successfully gone through our
application process or otherwise been
approved by us in writing
(although if this Agreement is for your
first BUFFALO WILD WINGS
restaurant or if you or any of your
affiliates have failed to
timely open any other BUFFALO WILD WINGS
restaurant in accordance with
the terms of any franchise agreement
with us, you must use one of
our designated general contractors and
audio/visual equipment
provider and/or installers); (iii) have
prepared and submitted for
our approval a site survey and basic
architectural plans and
specifications (not for construction)
consistent with our general
atmosphere, image, color scheme and
ambience requirements as set
forth from time to time in the manuals
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for a BUFFALO WILD WINGS
restaurant (including requirements for
dimensions, exterior design,
materials, interior design and layout,
equipment, fixtures,
furniture, signs and decorating); (iv) purchase
or lease and then, in the
construction of the Restaurant, use only
the approved building
materials, equipment, fixtures, audio visual
equipment, furniture and
signs; (v) complete the construction and/or
remodeling, equipment,
fixtures, furniture and sign installation and
decorating of the Restaurant
in full and strict compliance with
plans and specifications we
approve and all applicable ordinances,
building codes and permit
requirements without any unauthorized
alterations; (vi) obtain all
customary contractors' sworn statements
and partial and final waiver
obtain all necessary permits, licenses
and architectural seals and
comply with applicable legal
requirements relating to the
building, signs, equipment and
premises, including, but not
limited to, the Americans With
Disabilities Act; and (vii)
obtain and maintain all required zoning
changes, building, utility,
health, sanitation, liquor and sign
permits and licenses and any
other required permits and licenses (if
this Agreement is for your
first BUFFALO WILD WINGS restaurant or if
in any previous franchise
agreement executed between you or any of
your affiliates and us, you
or any of your affiliates have not met
your obligations regarding
the build out of any previous BUFFALO
WILD WINGS restaurant, you
must retain the services of a company
specialized in assisting
restaurant operators during the
construction process to
assist you in submitting, processing,
monitoring and obtaining in a
timely manner all necessary
construction documents,
licenses and permits and to advise you
throughout the construction
of your Restaurant). It is your
responsibility to comply with
the foregoing conditions.
If this is not your first
BUFFALO WILD WINGS restaurant and you have
opened all others on a timely
basis, you may request that we approve
a general contractor that is
not on our current list of approved
suppliers. You must pay us a
$5,000 processing fee to process your
request to qualify the
general contractor. If you want to use an
audio/visual equipment
provider/installer who is not on our list of
approved suppliers (whether
it is for your first or any subsequent
restaurant), you must pay us
$250 for any audio/visual equipment
provider/installer that you
submit for our qualification. You also
must pay a bid review fee of
$150 and a final inspection fee of $500
for audio/visual related
services (in addition to travel expenses of
the inspector), regardless of
whether you use a newly approved or
previously approved
audio/visual provider and installer. Your
general contractor may not be
your audio/visual equipment provider
and installer. You, your
affiliates or your Principal Owners, or any
person related to, or any
entity controlled by your Principal Owners
may not be your general contractor unless you
have requested our
approval, you have paid the
$5,000 qualification processing fee, and
we have approved your
request. If you have signed an Area
Development Agreement for 8
or more restaurants, you also may
request approval an architect
that is not on our list of approved
suppliers. The architect will
be required to attend a two day
training session at our
Minneapolis headquarters, at a cost of
$7,500.
Any change to the building
plans or any replacement, reconstruction,
addition or modification in
the building, interior or exterior decor
or image, equipment or
signage of the Restaurant to be made after
our consent is granted for
initial plans, whether at the request of
you or of us, must be made in
accordance with specifications that
have received our prior
written consent. You may not commence such
replacement, reconstruction, addition or
modification until you have
received our written consent
to your revised plans.
You must begin substantial
construction (site work, utility
infrastructure and building
erection) of the Restaurant at least 150
days before the deadline to
open the Restaurant 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.
You must provide us weekly development
and construction reports in
the form we designate from the date you
begin development until the
date you open the Restaurant. For
instance, you must contact us weekly and
provide checklists and
digital photos during
construction. In addition, on or before the
deadlines to start
construction you must submit to us executed
copies of any loan documents
and any other document that proves that
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you have secured adequate
financing to complete the construction of
the Restaurant by the date
you are obligated to have the Restaurant
open and in operation. In the event
that you fail to begin
construction or to secure
financing pursuant to this paragraph, we
will have the right to
terminate this Agreement without opportunity
to cure pursuant to
subparagraph 13.B.2.
C. Maintenance. The building,
equipment, fixtures, furnishings,
signage and trade dress
(including the interior and exterior
appearance) employed in the
operation of your Restaurant must be
maintained and refreshed in accordance
with our requirements
established periodically and
any of our reasonable schedules
prepared based upon periodic
evaluations of the premises by our
representatives. Within a period
of 30-45 days (as we determine
depending on the work needed)
after the receipt of any particular
report prepared following
such an evaluation, you must effect the
items of maintenance we
designate, including the repair of defective
items and/or the replacement
of irreparable or obsolete items of
equipment and interior
signage. If, however, any condition presents
a threat to customers or
public health or safety, you must effect
the items of maintenance immediately,
as further described in
subparagraph 6.G. The items
of maintenance generally result from
common wear and tear over a
period of time, accidents or lack of
care. Examples include, but
are not limited to, repairing or
replacing HVAC equipment,
plumbing and electrical systems that are
not functioning properly;
repairing a leaking roof; repairing or
replacing broken operational
and audio-visual equipment; refreshing
general appearance items such
as paint (interior and exterior) and
landscaping; replacing worn
carpet, furniture and other furnishings;
and conducting routine
maintenance of areas that affect the
appearance of the Restaurant and
goodwill of the Trademarks such as
the appearance of the outdoor
signage, the parking lot and dumpster
area. Items of maintenance
will not be considered items of
modernization or replacement
under subparagraph 5.E and, therefore,
any expenses for maintenance
will not be counted towards the Maximum
Modernization Amount that you
are required to spend pursuant to
subparagraph 5.E.
D. Relocation. If you need to
relocate because of condemnation,
destruction, or expiration or
cancellation of your lease for reasons
other than your breach, we
will grant you authority to do so at a
site acceptable to us that is
within your Designated Area; provided
that (i) the new site has
been evaluated by the proprietary site
evaluator software that has
been developed by GeoVue, Inc. (or by
the proprietary site
evaluation system then being used by us) and
you have paid the $400
evaluation fee, provided, that you must
purchase the rights to have
at least 3 sites evaluated unless we
determine your trade area
does not require 3 evaluations; (ii) we
have consented in writing to the new
site; (iii) the new Restaurant
is under construction within
90 days after you discontinue operation
of the Restaurant at the
Authorized Location; and (iv) the new
Restaurant is open and
operating within 240 days after construction
commences, all in accordance
with our then-current standards. If you
voluntarily decide to
relocate the Restaurant, your right to
relocate the Restaurant will
be void and your interest in this
Agreement will be voluntarily
abandoned, unless you have given us
notice of your intent to
relocate not less than 60 days prior to
closing the Restaurant, have
procured a site that has been evaluated
by the proprietary site
evaluator software that has been developed
by GeoVue, Inc. (or by the
proprietary site evaluation system then
being used by us) and
accepted by us within 60 days after closing
the prior Restaurant, have
opened the new Restaurant for business
within 180 days of such
closure and complied with any other
conditions that we reasonably
require. You must pay the costs of any
relocation, and we reserve
the right to charge you for any
reasonable costs that we
incur.
In the event your Restaurant
is destroyed or damaged and you repair
the Restaurant at the
Authorized Location (rather than relocate the
Restaurant), you must repair
and reopen the Restaurant at the
Authorized Location in
accordance with our then-current standards
for the destroyed or damaged
area within 240 days of the date of
occurrence of the destruction
or damage.
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You do not have the right to
relocate in the event you lose the
right to occupy the
Restaurant premises because of the cancellation
of your lease due to your breach.
The termination or cancellation of
your lease due to your breach
is grounds for immediate termination
under subparagraph 13.B.2.
E. Modernization or
Replacement. From time to time as we require,
you must effect items of
modernization and/or replacement of the
building, premises, trade
dress, equipment and grounds as may be
necessary for your Restaurant
to conform to the standards for
similarly situated new
BUFFALO WILD WINGS restaurants. The maximum
cumulative amount (the
"Maximum Modernization Amount") that you will
be required to spend during
the initial term of this Agreement
depends on whether your
Restaurant is a free standing location and
is established as follows:
(i) Free Standing
Locations (a single use, single
tenant,
unattached building or pad site). You will be
required to spend
no more than $185,000 during the
initial 10 years
of this Agreement and $50,000 during
years 11-15. If
we do not require you to spend $185,000
during the first
10 years of the Agreement, we may
require you to spend the
remaining amount, in addition
to the $50,000,
during years 11-15. If we do not require
you to spend
$235,000 during the first 15 years of this
Agreement, we may require you to spend
the remaining
amount up to
$235,000 during years 16-20.
(ii) Non-Free
Standing Locations. You will be required
to spend no more
than $155,000 during the initial 10
years of this
Agreement and $25,000 during years 11-15.
If we do not
require you to spend $155,000 during the
first 10 years of
the Agreement, we may require you to
spend the
remaining amount, in addition to the $25,000,
during years
11-15. If we do not require you to spend
$180,000 during
the first 15 years of this Agreement, we
may require you to spend the
remaining amount up to
$180,000 during
years 16-20.
Notwithstanding the prior
paragraphs, we will not require you to
make any modernization
expenditures during the first three years of
this Agreement. Thereafter,
however, you must complete to our
satisfaction any changes we
require within 24 months from the date
you are notified of any
required changes, except for outdoor signage
as set forth in subparagraph
5.F.
Each and every transfer of
any interest in this Agreement or your
business governed by
Paragraph 11 or renewal covered by Paragraph 4
is expressly conditioned upon
your compliance with these
requirements at the time of
transfer or renewal without regard to
the Maximum Modernization
Amount.
The Maximum Modernization
Amount will be adjusted every 5-year
period in accordance with any
change in the National Consumer Price
Index - All Urban Consumers
for the recently completed 5-year
period, as described in
subparagraph 16.Q. The Maximum Modernization
Amount does not include any
required expenditures for equipment or
leasehold improvements
necessary to prepare new product offerings.
Furthermore, you must perform
general, continued maintenance and
refreshing of the Restaurant
premises whenever necessary as set
forth in subparagraph 5.C and at a cost
not included in the Maximum
Modernization Amount.
You acknowledge and agree
that the requirements of this subparagraph
5.E are both reasonable and
necessary to insure continued public
acceptance and patronage of
BUFFALO WILD WINGS restaurants and to
avoid deterioration or
obsolescence in connection with the operation
of the Restaurant. If you
fail to make any improvement as required
by this subparagraph or perform the
maintenance described in
subparagraph 5.C, we may, in
addition to our other rights in this
Agreement, effect such
improvement or maintenance and you must
reimburse us for the costs we
incur.
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F. Signage. The outdoor
signage at your Restaurant must comply with
our then current
specifications, which we may modify and change from
time to time due to
modifications to the System, including changes
to the Trademarks. You must
make such changes to the outdoor signage
as we require. We will pay
for 1/3 of the cost to replace your
outdoor signage if: (i) your
Restaurant's sign is less than 2 years
old and (ii) we require that
you replace the sign within one year
from the date of
notification. In any case, your failure to replace
the signage within 15 months
from the date of notification will
constitute a default of this
Agreement under Paragraph 13. Any
upgrades to the type or size
of your outdoor signage will be at your
expense. Your costs for the
signage will be included in the Maximum
Modernization Amount under
subparagraph 5.E.
PRODUCTS AND OPERATIONS
STANDARDS AND REQUIREMENTS
6. You must implement and abide by our
requirements and
recommendations directed to enhancing substantial System uniformity. The
following provisions control with respect to products and operations:
A. Authorized Menu. Your
business must be confined to the
preparation and sale of only
such Menu Items and other food and
beverage products as we designate
and approve in writing from time
to time for sale by your
Restaurant. You must offer for sale from
the Restaurant all items and
only those items listed as Menu Items
and other approved food and
beverage products. We have the right to
make modifications to these
items from time to time, and you agree
to comply with any
modifications. You may not offer or sell any
other product or service at
the Authorized Location without our
prior written consent.
B. Authorized Products and
Ingredients. You must use in the
operation of the Restaurant
and in the preparation of Menu Items and
other food and beverage
products only the proprietary sauces and
mixes and other proprietary
and non-proprietary ingredients,
recipes, formulas, cooking
techniques and processes and supplies,
and must prepare and serve
Menu Items and products in such portions,
sizes, appearance, taste and
packaging, all as we specify in our
most current product
preparation materials or otherwise in writing.
We will supply to you a copy
of the current product preparation
materials prior to opening
the Restaurant. You acknowledge and agree
that we may change these
periodically and that you are obligated to
conform to the requirements.
All supplies, including containers,
cups, plates, wrapping,
eating utensils, and napkins, and all other
customer service materials of
all descriptions and types must meet
our standards of uniformity
and quality. You acknowledge that the
Restaurant must at all times
maintain an inventory of ingredients,
food and beverage products and other
products, material and supplies
that will permit operation of
the Restaurant at maximum capacity.
C. Approved Supplies and
Suppliers. We will furnish to you from time
to time lists of approved
supplies or approved suppliers. You must
only use approved products,
services, inventory, equipment,
fixtures, furnishings, signs,
advertising materials, trademarked
items and novelties, and
other items or services (collectively,
"approved
supplies") in connection with the design, construction and
operation of the Restaurant
as set forth in the approved supplies
and approved suppliers lists,
as we may amend from time to time.
Although we do not do so for
every item, we have the right to
approve the manufacturer,
distributor and/or supplier of approved
supplies and in some
instances, require that you use designated
sources or suppliers. Along
with a number of other approval
criteria, to be an approved
supplier, the supplier must have the
ability to provide the
product and/or service, on a national basis,
to at least 80% of the then
existing Restaurants. You acknowledge
and agree that certain
approved supplies may only be available from
one source, and we or our
affiliates may be that source. All
inventory, products,
materials and other items and supplies used in
the operation of the
Restaurant that are not included in the
approved supplies or approved
suppliers lists must conform to the
specifications and standards
we establish from time to time.
ALTHOUGH APPROVED OR
DESIGNATED BY US, WE AND OUR AFFILIATES MAKE NO
WARRANTY AND EXPRESSLY
DISCLAIM ALL WARRANTIES, INCLUDING WARRANTIES
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OF MERCHANTABILITY AND
FITNESS FOR ANY PARTICULAR PURPOSE, WITH
RESPECT TO SERVICES,
PRODUCTS, EQUIPMENT (INCLUDING, WITHOUT
LIMITATION, ANY REQUIRED
COMPUTER SYSTEMS), SUPPLIES, FIXTURES,
FURNISHINGS OR OTHER APPROVED
ITEMS. IN ADDITION, WE DISCLAIM ANY
LIABILITY ARISING OUT OF OR
IN CONNECTION WITH THE SERVICES RENDERED
OR PRODUCTS FURNISHED BY ANY
SUPPLIER APPROVED OR DESIGNATED BY US.
OUR APPROVAL OR CONSENT TO
ANY SERVICES, GOODS, SUPPLIERS, OR ANY
OTHER INDIVIDUAL, ENTITY OR
ANY ITEM SHALL NOT CREATE ANY LIABILITY
TO US.
D. Computer System. You must
purchase and use any computer system
that we develop or select for
the Restaurant, including all future
updates, supplements and
modifications (the "Computer System"). Any
updates, supplements or
modifications are not subject to or part of
the Maximum Modernization
Amount defined in subparagraph 5.E. The
Computer System may include
all hardware and software used in the
operation of the Restaurant,
including electronic point-of-sale cash
registers and back office
programs used to record, analyze and
report sales, labor,
inventory and tax information. The computer
software package developed
for use in the Restaurant may include
proprietary software. You may
be required to license the proprietary
software from us, an
affiliate or a third party and you also may be
required to pay a software
licensing or user fee in connection with
your use of the proprietary
software. All right, title and interest
in the software will remain
with the licensor of the software. The
computer hardware component
of the Computer System must conform to
specifications we develop. We
reserve the right to designate a
single source from whom you
must purchase the Computer System. You
acknowledge and agree that we
will have full and complete access to
information and data entered
and produced by the Computer System.
You must, at all times, have
at the Authorized Location internet
access with a form of high
speed connection as we require and you
must maintain: (i) an email
account for our direct correspondence
with the Control Person; and
(ii) a separate email account for the
Restaurant.
E. Serving and Promotional
Items. All sales promotion material,
customer goodwill items,
cartons, containers, wrappers and paper
goods, eating and serving
utensils and other items, and customer
convenience items used in the
sales promotion, sale and distribution
of products covered by this
Agreement are subject to our approval
and must, where practicable,
contain one or more of the Trademarks.
We may require you to carry
and offer for sale in the Restaurant a
representative supply of
approved trademarked clothing and other
novelty items, including
special promotional items that we develop
and market from time to time.
F. Health and Sanitation.
Your Restaurant must be operated and
maintained at all times in
compliance with any and all applicable
health and sanitary standards
prescribed by governmental authority.
You also must comply with any
standards that we prescribe. In
addition to complying with such
standards, if the Restaurant is
subject to any sanitary or
health inspection by any governmental
authorities under which it
may be rated in one or more than one
classification, it must be
maintained and operated so as to be rated
in the highest available
health and sanitary classification with
respect to each governmental
agency inspecting the same. In the
event you fail to be rated in
the highest classification or receive
any notice that you are not in compliance
with all applicable health
and sanitary standards, you
must immediately notify us of such
failure or noncompliance.
G. Evaluations. We or our
authorized representative have the right
to enter your Restaurant at
all reasonable times during the business
day for the purpose of making
periodic evaluations and to ascertain
if the provisions of this
Agreement are being observed by you, to
inspect and evaluate your building, land
and equipment, and to test,
sample, inspect and evaluate
your supplies, ingredients and
products, as well as the
storage, preparation and formulation and
the conditions of sanitation
and cleanliness in the storage,
production, handling and
serving. If we determine that any condition
in the Restaurant presents a
threat to customers or public health or
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safety, we may take whatever measures
we deem necessary, including
requiring you to immediately
close the Restaurant until the
situation is remedied to our
satisfaction. Our inspections and
evaluations may include a
"mystery shopper" program from time to
time throughout the term of
this Agreement. We hire various vendors
who send the "mystery
shoppers" into the BUFFALO WILD WINGS
restaurants. You will be
obligated to pay for 3 "mystery shopper"
visits during the first 3
months after you open your Restaurant. In
addition, any time you fail
an evaluation, by us or by a mystery
shopper, you must pay the
next three mystery shoppers we send to
your Restaurant.






