Chili`s - Altervista

Transcription

MINNESOTA DEPARTMENT OF
.COMMERCE
85 7TH PLACE EAST, SUITE 500
SAINT PAUL, MN 55101-2198
MN.GOV/COMMERCE/
651.539.1500 FAX 651.539.1547
A N EQUAL OPPORTUNITY EMPLOYER
September 25, 2014
WILLIAM WOODS
BAKER BOTTS LLP
2001 ROSS AVENUE SUITE 600
DALLAS, TX 75201
Re: F-3451
BRINKER INTERNATIONAL INC
CHILI'S GRILL & BAR FRANCHISE AGREEMENT
Dear Mr Woods:
The Annual Report has been reviewed and is in compliance with Minnesota Statute Chapter
80C and Minnesota Rules Chapter 2860.
This means that there continues to be an effective registration statement on file and that the
franchisor may offer and sell the above-referenced franchise in Minnesota.
The franchisor is not required to escrow franchise fees, post a Franchise Surety Bond or
defer receipt of franchise fees during this registration period.
As a reminder, the next annual report is due within 120 days after the franchisor's fiscal year
end, which is June 30, 2015.
Sincerely,
MIKE ROTHMAN
Commissioner
By:
#Error
Registration Division
(651) 539-1638
MR::bp
F-3451
STATE OF MINNESOTA
DEPARTMENT OF COMMERCE
REGISTRATION DIVISION
IN THE MATTER OF THE REGISTRATION OF:
CHILI'S GRILL & BAR FRANCHISE AGREEMENT
By BRINKER INTERNATIONAL INC
ORDER AMENDING
REGISTRATION
WHEREAS, an a p p l i c a t i o n t o amend t h e r e g i s t r a t i o n and
amendment f e e have been
filed,
I T IS HEREBY ORDERED t h a t t h e r e g i s t r a t i o n d a t e d
February 10, 1998, i s amended as o f t h e date s e t f o r t h below
g^m^n
MIKE ROTHMAN
Commissioner
Department o f Commerce
85 7 t h Place East, S u i t e 500
St Paul, MN 55101
Date: September 25, 2014
UNIFORM FRANCHISE REGISTRATION APPLICA
FileN
State: Minnesota
Fee: $3
APPLICATION FOR (check only one):
INITIAL REGISTRATION OF AN OFFER AND SALE OF FRANCHISES
X RENEWAL APPLICATION OR ANNUAL REPORT
a«.*,Minn*wa
Bmpt
PRE-EFFECTIVE AMENDMENT
rfCawmTw
.
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SEP 2 3 2014
POST-EFFECTIVE MATERIAL AMENDMENT
Rec** ^ f y )
1.
Full legal name of Franchisor:
Brinker International Payroll Company, L P.
2.
Name of the franchise offering:
"Chili's®" and "Chili's® Grill & Bar"
3.
Franchisor's principal business address: 6820 LBJ Freeway
Dallas, TX 75240
4.
Name and address of Franchisor's agent in this State authorized to receive service of
process:
Commissioner of Commerce
Minnesota Department of Commerce
85 Seventh Place East
Suite 500
St. Paul, MN 55101
5.
The states in which this application is or will be shortly on file (or in which Franchisor is
exempt):
California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North
Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.
6.
Name, address, telephone and facsimile numbers, and e-mail address of person to whom
communications regarding this application should be directed:
Will Woods
Baker & McKenzie LLP
2001 Ross Avenue, Suite 2300
Dallas, Texas 75201-2980
214-978-3022 (telephone)
214-978-3099 (facsimile)
wi 11 [email protected]
742029-v2\DALDMS
MINNESOTA ANNUAL REPORT
y
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BAKER & M9KENZIE
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, TX 75201
United States
September 22, 2014
Asia Pacific
Bangkok
VIA FEDERAL EXPRESS
Beijing
Ho Chi Minh City
Hong Kong
Jakarta*
Kuala Lumpur*
Manila*
Melbourne
Seoul
Shanghai
Singapore
Sydney
Taipei
Tokyo
Europe, Middle Eact
& Africa
Abu Dhabi
Almaty
Amsterdam
Antwerp
Bahrain
Baku
Barcelona
Berlin
Brussels
Budapest
Mr. Daniel Sexton
Examiner
85 Seventh Place East, Suite 500
St. Paul, Minnesota 55101
Re:
1.
2.
Geneva
Istanbul
Johannesburg
3.
Paris
Prague
Riyadh
Brinker International Payroll Company, LP. (the "Franchisor")
Chili's Grill & Bar - Registration Renewal Application
File No.: F-3451
Enclosed please find the following documents for the renewal of the
Franchisor's registration in Minnesota:
Doha
Dubai
Ousseldorf
Frankfurt/Main
Madrid
Milan
Moscow
Will K. Woods
Tel: + 1 214 978 3022
Fax: +1 214 965 5903
[email protected]
Dear Dan:
Cairo
Casablanca
Kyiv
London
Luxembourg
Tel: +1 214 978 3000
Fax: +1 214 978 3099
www.bakermckenzie.com
4.
5.
6.
7.
St. Petersburg
Stockholm
The Franchisor's check in the amount of $300 representing the
filing fee;
Uniform Franchise Registration Application Page, including
Certification;
Consent to Service of Process and Limited Partnership
Acknowledgment;
Franchisor's Costs and Source of Funds page;
Seller Disclosure forms for sales persons, and for those
third party brokers and referral sources that have provided
them to the Company;
Auditors' Consent;
One clean and one redlined copy of the Franchisor's Franchise
Disclosure Document and Exhibits, including the audited financial
statements (Exhibit A to the disclosure document).
Warsaw
Zurich
Latin America
The 2014 fiscal year end of the Franchisor was June 25.
Bogota
Buenos Aires
Caracas
Guadalajara
If you have any questions regarding the application, please do not
hesitate to contact me by telephone. Thank you in advance for your assistance.
Juarez
Lima
Mexico City
Monterrey
Pono Alegre*
Rio da Janeiro*
Santiago
Sao Paulo*
Will K. Woefds
Partner
Valencia
North America
Chicago
Dallas
Houston
Miami
New York
Palo Alto
San Francisco
Toronto
Washington, DC
" Associated Firm
WW/ct
Enclosure
Baker & McKenzie LLP is a member of Baker & McKenzie International, a Swiss Verein.
786137-v1\DALDMS
Certification
I certify and swear under penalty of law that I have read and know the contents of this application,
including the Franchise Disclosure Document with an issuance date of September J5_> 2014 attached
as an exhibit, and that all material facts stated in all those documents are accurate and those documents
do not contain any material omissions. I further certify that I am duly authorized to make this
certification on behalf of the Franchisor and that I do so upon my personal knowledge.
Signed at Dallas, Texas, September
/7
, 2014.
Brinker International Payroll Company, L P.
a Delaware limited partnership
By: BIPC Management, LLC, its General Partner
c
Z>
By:
Jeffrey Hoban, Senior Vice President
STATE OF TEXAS
COUNTY OF DALLAS
§
§
§
Personally appeared before me this /7~^day of September 2014, the above named Jeffrey Hoban
to me known to be the person who executed the foregoing application (as Senior Vice President, of the
above named General Partner) and, being first duly sworn, stated upon oath that said application, and all
exhibits submitted herewith, are true and correct.
kMf/Ct
Notary Publ
(NOTARIAL SEAL)
rfSViX
My Commission Expires:
AO/H
742029-v2\DALDMS
MINNESOTA ANNUAL REPORT
JENNIFER WHITE
Notary Public. State of Texas
^sar.
UNIFORM FRANCHISE CONSENT TO SERVICE OF PROCESS
Brinker International Payroll Company, LP., a limited partnership organized under the laws of
Delaware (the "Franchisor"), irrevocably appoints the officers of the States designated below and their
successors in those offices, its attorney in those States for service of notice, process or pleading in an action or
proceeding against it arising out of or in connection with the sale of franchises, or a violation of the franchise
laws of that State, and consents that an action or proceeding against it may be commenced in a court of
competent jurisdiction and proper venue within that State by service of process upon this officer with the same
effect as if the undersigned was organized or created under the laws of that State and had lawfully been served
with process in that State. We have checked below each state in which this application is or will be shortly on
file, and provided a duplicate original bearing an original signature to each state.
X
California: Commissioner of
Business Oversight
X
Hawaii: Commissioner of Securities
X
Illinois: Attorney General
X
South Dakota: Director of the
Division of Securities
X
Indiana: Secretary of State
X
Virginia: Clerk, Virginia State
X
Maryland: Securities Commissioner
X
Minnesota: Commissioner of
Commerce
X
Washington: Director of Financial
Institutions
X New York: Secretary of State
X
Wisconsin: Administrator, Division of
Securities, Department of Financial Institutions
X
North Dakota: Securities Commissioner
Rhode Island: Director, Department of
Business Regulation
Corporation Commission
Please mail or send a copy of any notice, process or pleading served under this consent to:
Will Woods
2001 Ross Avenue, Suite 2300
Dallas, Texas 75201-2980
214-978-3022 (telephone)
214-978-3099 (facsimile)
wi 11 [email protected]
Dated: September I ? ,2014.
Brinker International Payroll Company, L.P.
By: BIPC Management, LLC, its General Partner
By:
742029-v2\DALDMS
MINNESOTA
LIMITED PARTNERSHIP ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF DALLAS
(7%
On the L
L day of September 2014, before me, the undersigned officer, personally appeared Jeffrey
Hoban, known personally to me to be the Senior Vice President of BIPC Management, LLC, the general
partner of Brinker International Payroll Company, L P., and that he, as such officer, being authorized so to
do, executed the foregoing instrument for the purposes therein contained, by signing the name of BIPC
Management, LLC by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
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No&ry Public
My Commission Expires:
S-JL- i.o/n
742029-v2\DALDMS
MINNESOTA
JENNIFER WHITE
\ Notary Public, State of Texas
l.W
My Commission Expires
August 02, 2017
FRANCHISOR'S COSTS AND SOURCE OF FUNDS
FOR
(Chili's Grill & Bar)
1.
Disclose the Franchisor's total costs for performing its pre-opening obligations to provide goods or
services in connection with establishing each franchised business, including real estate,
improvements, equipment, inventory, training and other items stated in the offering:
Category
Costs
Real Estate / Site Approval
$ 1.000-$ 3,000'
Improvements
N/A
Equipment
N/A
Inventory
N/A
Training
$16.000-$22,400
2
Other (describe)
Demographic analyses / Site demand forecasts
$
Construction/design evaluation
$ 2,200'
Prototype plans & specifications
$
Totals
2.
250-$ 2,500*
200
3
$19.750-$28.300
State separately the sources of all required funds:
Required funds are covered by general operating revenues, which include income from royalties
and franchise fees.
'.Franchisor's estimate of $ 1,000 per site visit; 1 -3 visits prior to opening
Franchisor's general estimate is $3,000 per person plus materials
Franchisor's estimate of demographics and forecasting
Franchisor based cost upon $75/hour for typical 16 hours plus $1,000 travel & expenses per design visit
Franchisor's cost is associated with one set of plans/specifications per restaurant
1
3
4
5
742019-v2\DALDMS
KPMG LLP
Suite 3100
717 North Harwood Street
Dallas, TX 75201-6585
Independent Auditors' Consent
The Board of Directors
Brinker International, Inc.:
We agree to the inclusion of our reports dated August 25, 2014, with respect to the consolidated balance
sheets of Brinker International, Inc. and subsidiaries as of June 25, 2014 and June 26, 2013, and the related
consolidated statements of comprehensive income, shareholders' equity, and cash flows for each of the
years in the three-year period ended June 25, 2014, and the effectiveness of internal control over financial
reporting as of June 25, 2014, in Brinker International Payroll Company, L.P.'s Franchise Disclosure
Document (Chili's Grill & Bar or Chili's Special Venue) dated September 19, 2014. This letter should not
be regarded as in any way updating the aforementioned reports or representing that we performed any
procedures subsequent to the date of such reports.
KfP^Gr IXP
Dallas, Texas
September 19,2014
KPMG LLP ]> a Delaware limited liability partnership,
Iho U.S. member firm of KPMG International Cooperative
('KPMG International"), a Swisi entity.
FRANCHISE DISCLOSURE DOCUMENT
Chili's® Grill & Bar
Chili's® Special Venue
chili's
A Delaware Limited Partnership
6820 LBJ Freeway
Dallas, TX 75240
(972)980-9917
www.chilis.com
www.facebook.com/chilis
www.twitter.com/chilis
www.foursquare.com/chilis
www.youtube.com/chilis
http://pinterest.com/chilis
http://blog.chilis.com
www.instagram.com/chilis
http://pliis.Poogle.com/+chilis
http://pluR.gooolo.eom/-l-https:/vine.co/chilis
The franchise is for a Chili's® Grill & Bar or a Chili's® Special Venue restaurant (collectively,
"Chili's Restaurants"). Chili's Grill & Bar restaurants are full service restaurants featuring a casual
dining atmosphere and a full service bar. Chili's Special Venue is an abbreviated format that typically is
based upon reduced square footage and/or a reduced menu.
The total investment necessary to begin operation ranges from $2,511,000 to $4,282,000 for a
prototypical Chili's Grill & Bar and $1.218.5001.198.500 to $3,182,000 for a Chili's Special Venue.
These totals include approximately $80,000 to $165,000 that must be paid to us or an affiliate. If you sign
a Development Agreement, you will also pay a development fee which is based on the factors described
in Item 5 and could range from $20,000 to $500,000.
This disclosure document summarizes certain provisions of your Franchise Agreement and
Development Agreement and other information in plain English. Read this disclosure document and all
accompanying agreements carefully. You must receive this disclosure document at least 14 calendar
days before you sign a binding agreement with, or make any payment to, the franchisor or an affiliate in
connection with the proposed franchise sale. Note, however, that no governmental agency has
verified the information contained in this document.
The terms of your contract will govern your franchise relationship. Don't rely on the disclosure
document alone to understand your contract. Read all of your contract carefully. Show your contract
and this disclosure document to an advisor, like a lawyer or accountant.
Buying a franchise is a complex investment. The information in this disclosure document can
help you make up your mind. More information on franchising, such as "A Consumer's Guide to Buying
a Franchise" which can help you understand how to use this disclosure document, is available from the
Federal Trade Commission. You can contact the FTC at 1-877-FTC-HELP or by writing to the FTC at
600 Pennsylvania Avenue, NW, Washington, DC 20580. You can also visit the FTC's home page at
www.ftc.gov for additional information. Call your state agency or visit your public library for other
sources of information on franchising.
There may also be laws on franchising in your state. Ask your state agencies about them.
Date of Issuance: September 20, 2013, as amended May SJJL 2014
FDD-2015
783265-v3\DALDMS
STATE COVER PAGE
Your state may have a franchise law that requires a franchisor to register or file with a state
franchise administrator before offering or selling in your state. REGISTRATION OF A FRANCHISE
BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS THE FRANCHISE OR HAS
VERIFIED THE INFORMATION IN THIS DISCLOSURE DOCUMENT.
Call the state franchise administrator listed in Attachment F for information about the franchisor
or about franchising in your state.
MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW
UNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN A
NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN ORDER TO CONTINUE
TO OPERATE YOUR BUSINESS. BEFORE YOU BUY, CONSIDER WHAT RIGHTS YOU HAVE
TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOU MIGHT HAVE TO ACCEPT
IN ORDER TO RENEW.
Please consider the following RISK FACTORS before you buy this franchise:
1.
THE FRANCHISE AGREEMENT AND DEVELOPMENT AGREEMENT REQUIRE
YOU TO RESOLVE DISPUTES WITH US BY LITIGATION ONLY IN DALLAS
COUNTY, TEXAS. OUT OF STATE LITIGATION MAY FORCE YOU TO ACCEPT
A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU
MORE TO SUE US IN DALLAS COUNTY, TEXAS THAN IN YOUR HOME
STATE.
2.
THE FRANCHISE AGREEMENT AND DEVELOPMENT AGREEMENT STATE
THAT TEXAS LAW GOVERNS THE FRANCHISE AGREEMENT AND
DEVELOPMENT AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE
SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO
COMPARE THESE LAWS.
3.
THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
See the following state effective date summary page for state effective dates.
FDD-2015
783265-v3\DALDMS
BRINKER INTERNATIONAL PAYROLL COMPANY. L.P.
STATE EFFECTIVE DATE SUMMARY PAGE
FOR CHILI'S RESTAURANTS
The following states require that the Franchise Disclosure Document be registered or filed with the state,
or be exempt from registration: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota,
New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin.
This Franchise Disclosure Document is registered, on file or exempt from registration in the following
states having franchise registration and disclosure laws, with the following effective dates:
California -
Effective Date:
September 20, 2013, as amended May 8 , H 2014
Hawaii -
Effective Date:
October 1, 2013, as amended May 19, 2014
Illinois -
Effective Date:
September 20. 2013. ar, amended Mav 8.19. 2014
Indiana -
Effective Date:
September 30, 2013, as amended May 8, 20M
Maryland -
Effective Date:
September 25, 2013, as amended May 8, 20 M
Michigan -
Effective Date:
September 20, 2013, as amended May 8JiL 2014
Minnesota -
Effective Date:
September 25, 2013, as amended May 13, 2014
New York -
Effective Date:
September 20, 2013, as amended May SJJL 2014
North Dakota -
Effective Date:
September 24, 2013, as amended May 8, 20M
Rhode Island -
Effective Date:
South Dakota -
Effective Date:
Virginia -
Effective Date:
Washington -
Effective Date:
Wisconsin -
Effective Date:
FDD-2015
783265-v3\DALDMS
ADDENDUMTO
DISCLOSUREDOCUMENT
FORTHESTATEOFMICHIGAN
THE STATE OF MICHIGAN PROID^^
ARE SOMETIMES IN FRANCHISE DOCUMENTS.
IF ANY OF THE FOELOÎNC
PROVISIONS A T ^ IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID
ANDCANNOTDE ENFORCED AOAINSTVOU^
Â)
A PROHIDITIONON THE RIGHT OF AFRANCHISEE T O ^ O I N AN
ASSOCIATION OFFRANCHISEES.
^D)
A REQUIREMENT THAT A FRANCHISEE ASSENT TO A RELEASE,
ASSIGNMENT, NOVATION, WAIVER, ORESTOPPEE^HICHDEPRIVESAFRANCHISEE
OFRIGHTS AND PROTECTIONS PROVIDED INTHISACT.THISSHALLNOTPRECEUDE
A FRANCHISEE, AFTER ENTERING INTO A FRANCHISE AGREEMENT, FROM
SETTLING ANY AND ALL CLAIMS.
(C)
A PROVISION THAT PERMITS A FRANCHISOR TO TERMINATE A
FRANCHISE PRIOR TO THE EXPIRATION OF ITS TERM EXCEPT FOR GOOD CAUSE.
GOOD CAUSE SHALL INCLUDE THE FAILURE OF THE FRANCHISEE TO COMPLY
^ I T H ANY LAWFUL PROVISION OF THE FRANCHISE AGIÊMENT AND TO CURE
SUCH FAILURE AFTER REING GIVEN WRITTEN NOTICE THEREOF AND A
REASONABLE OPPORTUNITY, ^ H I C H IN NO EVENT NEED RE MORE THAN TODAYS,
TOCURESUCHFAILURE.
(D)
APROVISION THAT PERMITSAFRANCHISOR TO REFUSE TO R E N E ^ A
F I ^ N C H I S E ^ I T H O U T F A I R L Y COMPENSATING THE FRANCHISEE BY REPURCHASE
OROTHERMEANSFORTHEFAIRMARKETVALUEATTHETIMEOFEXPIRATION,OF
THE FRANCHISEES
INVENTORY, SUPPLIES, EQUIPMENT, FIXTURES, AND
FURNISHINGS. PERSONALISED MATERIALS ^ V H I C H H A V E NO VALUE TO THE
FRANCHISOR
AND INVENTORY, SUPPLIES, EQUIPMENT, FIXTURES, AND
F U I ^ I S H I N G S N O T R E A S O N A B L Y R E ^ U I R E D I N T H E CONDUCT OF THE FRANCHISE
BUSINESS ARE NOT SUBJECT TO COMPENSATION.THIS SUBSECTION APPLIES ONLY
IF^ ^ T H E T E R M O F T H E F R A N C H I S E I S L E S S T H A N ^ YEARS^ AND ^ T H E
FRANCIHSEE IS PROHIBITED BY THE FRANCHISE OR OTHER AGREEMENT FROM
CONTINUING TO CONDUCT SUBSTANTIALLYTHE SAME BUSINESS UNDERANOTHER
T I ^ D E M A R K , SERVICE MARK, TRADE NAME, LOGOTYPE,ADVERTISING, OR OTHER
COMMERCIAL SYMBOL IN THE SAME AREA SUBSEQUENT TO THE EXPIRATION OF
THE FRANCHISE O R T H E FRANCHISEE DOES NOT RECEIVE AT LEAST6MONTHS
ADVANCENOTICEOFFRANCHISORSINTENTNOTTORENE^THEFRANCHISE.
(E)
APROVISIONTHATPERMITS THE FRANCHISOR TO REFUSE TO RENE^V
AFRANCHISEONTERMSGENERALLYAVAILABLETOOTHERFRANCHISEESOFTHE
SAME CLASS OR TYPE UNDER SIMILAR CIRCUMSTANCES.THISSECTIONDOES NOT
REÛIREARENEÂLPROVISION.
^F)
A P R O V I S I O N I ^ ^ U I R I N G T H A T ARBITRATIONORLITIGATIONBE
CONDUCTED OUTSIDE THIS STATE. THIS SHALL NOT PRECLUDE THE FRANCHISEE
FROMENTERING INTO AN AGREEMENT, AT THE TIME OF ARBITRATION, TO
CONDUCTARBITRATIONATALOCATIONOUTSIDE THIS STATE.
FDD^^
7 ^ ^ ^ ^ ^ D ^
(O
APROVIÔN^HCHPEI^TSAFRA^^
A TRANSFER OF OWNERSHIP O F A F R A N C H ^ E X ^
THIS
SURDTVISION DOES NOT FREVENTAFRANOHISOR FROM EXEROISINOARIOHT
FIRSTREFUSAE TO FUROHASE THE FRANCHISE. OOODOAUSESHAEEINOEUDE^RUT
ISNOTEIMITEDTO^
(i)
THE FAILURE OF THE FROFOSED TRANSFEREE TO MEET THE
FI^NOIHSORSTHEN CURRENTREASONAREE QUALIFICATIONS ORSTANDARDS.
OFTHE
^
THEFACTTHATTHEFROFOSEDTRANSFEREEISACOMFETITOR
FRANCHISORORSURFRANCHISOR.
^
THE UNWILLINGNESS OF THE FROFOSED TRANSFEREE
ACREEIN^RITINCTOCOMFLYÎTHALLLA^FULORLICATIONS.
TO
(iv)
THEFAILURE OF THE FRANCHISEE ORFROFOSED TRANSFEREE
TOFAY ANY SUMS O^VINC TO THE FRANCHISOR OR TO CURE ANYDEFAULTIN THE
FRANCHISEAOREEMENTEXISTINCATTHETIMEOFTHEFROFOSEDTRANSFER.
(H)
AFROVISION THAT REQUIRES THE FRANCHISEE TO RESELL TO THE
FRANCHISOR ITEMS THAT ARE NOT UNIQUELY IDENTIFIED WITH THE
FRANCHISOR.THIS SUBDIVISION DOES NOT FROHIRITAFROYISION THAT GRANTS
T O A F R A N C H I S O R A R I G H T OF FIRST REFUSAL TO PURCHASE THE ASSETS O F A
FRANCHISE ONTHE SAME TERMS AND CONDITIONS ASARONA FIDE THIRD PARTY
B I L L I N G AND ABLE TO PURCHASE THOSE ASSETS, NOR DOES THIS SUBDIVISION
P R O I H B I T A P R O V I S I O N T H A T G I ^ N T S T H E F R A N C H I S O R T H E RIGHT TO ACQUIRE
THEASSETSOFAFRANCHISE FOR THE MARKET OR APPRAISEDVALUE OF SUCH
ASSETS IF THE FRANCHISEE HAS BREACHED THE LAWFUL PROVISIONS OF THE
FRANCHISE AGREEMENT AND HASFAILED TO CURE THE BREACH IN THE MANNER
PROVIDED IN SUBDIVISION (C).
(I)
APROVISION WHICH PERMITS THE FRANCHISOR T O D I R E C T L Y O R
INDIRECTLY CONVEY, ASSIGN, OR OTHERWISE TRANSFER ITS OBLIGATIONS TO
FULFILL CONTRACTUAL OBLIGATIONS TO THE FRANCHISEE UNLESS PROVISION
HASBEENMADEFORPROVIDINGTHEREÛIREDCONTRACTUALSERVICES.
THEFACT THAT THERE I S A N O T I C E OF THIS OFFERING ON FILE WITH THE
ATTORNEY GENERAL DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR
ENDORSEMENTBYTHEATTORNEY GENERAL.
ADDRESS FORNOTICESTOTHEMICHIGANATTORNEY GENERALS
D e p a r t m ^ o f t h e Attorney General
Consumer Protection Division
Franchise Section
G.Mennen Williams Building, 1st Floor
^ W . O t t a w a Street
Lansmg,MI^^
^ I ^ ^ I I ^
FDO20^
CHILI'S RESTAURANTS FRANCHISE DISCLOSURE DOCUMENT
TABLE OF CONTENTS
Page
Item
ITEM 1
THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS, AND AFFILIATES 1
ITEM 2
BUSINESS EXPERIENCE
A
ITEM 3
LITIGATION
9
ITEM 4
BANKRUPTCY
9
ITEM 5
INITIAL FEES
9
ITEM 6
OTHER FEES
11
ITEM 7
ESTIMATED INITIAL INVESTMENT
17
ITEM 8
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
25
ITEM 9
FRANCHISEE'S OBLIGATIONS
29
ITEM 10
FINANCING
31
ITEM 11
FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND
TRAINING
^4-22
ITEM 12
TERRITORY
ITEM 13
ITEM 14
TRADEMARKS
41
PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION
4Ma
OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE
BUSINESS
4441
_
mo.
ITEM 15
ITEM 16
RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
4346
ITEM 17
RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION
47
ITEM 18
PUBLIC FIGURES
59
ITEM 19
FINANCIAL PERFORMANCE REPRESENTATIONS
59
ITEM 20
OUTLETS AND FRANCHISEE INFORMATION
ITEM 21
FINANCIAL STATEMENTS
ITEM 22
CONTRACTS
ITEM 23
RECEIPT
^RECEIPTS
FDD-2015
783265-v3\DALDMS
:
64
78
-22
FDD-2015
783265-v3\DALDMS
EXHIBITS
A -
B
-
DEVELOPMENT AGREEMENT
C
-
FRANCHISE AGREEMENT (INCLUDING STATE AMENDMENTS)
D
-
TABLE OF CONTENTS OF CHILLS FRANCHISE MANUAL
E
-
AGENTS FOR SERVICE OF PROCESS
F
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LIST OF STATE ADMINISTRATORS
G -
LIST OF CURRENT U.S. FRANCHISEES
H
T TST OF TT S FK ANPTTTSFRS W H O M A V F T R F T THF. S Y S T E M A N D FRANCHISERS
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WHO HAVE TNVOTJJNTARTLY OR VOLUNTARILY CLOSED A RESTAURANT
I
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STATE SPECIFIC ADDENDA TO FRANCHISE DISCLOSURE DOCUMENT
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ITEMI
THEFRA^CIHSOÂND^Y^
TheF^chisor
The^nchisorisBrmker^rnôn^Pay^Comp^^
document as ^ m k e ^ ^ w e B ' " ^ or "ourB' We refer to the person mterestedmbuymgatranohise as
ôu"or"yonrB' f f you areaeorporation, partnership, hmitedhahihty company or other e n t ^
provisionsof theFranehiseand Development Agreements willappiytoyour owners. These willhe
addressedinthis disclosure document where appropriate.
We were incorporated as a Delaware corporation in June 1987 under the name CBS
Development Company. Curnamew^schangedtoCRMPayrollCorporationin January 1991 and
changed again to Brinker International Payroll Corporation in Julyl991 In December 2001 we were
converted toalimited partnership and our name was changed to Brinker International Payroll Company,
L.P. Curprincipalofficesare located at 6820 LBJ Preeway,Dallas,Texas75240 and our telephone
number is (972) 980^9917. Cur agents for service ofprocess are listed in Exhibit L. Cur general partner
is BIPC ^ l ^ g ^ ^ t , LLC, ^ D ^ l ^ ^ l t t ^ t ^ d lability ^ r ^ p ^ y ^ G ^ r ^ l P ^ e r ^ . Ct^r
C^r^lP^rt^^r^^s^^r^t^bt^t^^^ddre^
We became the franchisor for Chili's Restaurants and assumed all of the existing Chili's
Restaurant franchise agreements from our predecessor and parent, Brinker International, Inc.
July 1,2010. BflwasincorporatedasaDelaware corporation in Septemberl983to succeed to the
business operated by Chili's, fnc.,aLexas corporation formed in August 1977. BU shares our principal
business address.
We dobusinessunder our company name and under the trademarks,trade names, and service
marks"Chili's^''and "Chili's^ Crill^Bar''and other trademarks and servicemarks,^
listed in Item 13. Certain operators use the "Chili's S o u ^ ^
Crill^Bar", and"Chili'sLoo^" marks in connection with the operation oftheirChili'sRestaurants.
Wo intend to begin offeringfranchises under a separate franchise disclosure document for
limited servicefast casual restaurantsoperating under thename"Chili'sExpress"("Chili'sLxpress
Restaurants") in 2013. Chili'sExpress Restaurants will offer menu items that are similarto those offered
in Chili's Restaurants, but we expect the menu f o r a ^ p i c a l Chili's Express Restaurant ^^^^^^
limited thanthemenu for typical full service Chili'sRestaurants.
Weor our predecessors have operated Chili'sRestaurants since 1975 and have offered franchises
forChili'sRestaurantssmcel984 Asoftheendofourlastfiscalyear(June2^0^
ourwholly-owned subsidiaries operated ^^^^companyowned Chili'sRestaurants, and we had
franchisedChili'sRestaurants in operation in the United States. Jn certain areas ofthe United States, we
have negotiated with qualified applicants to sell company-owned Chili's Restaurants as franchises^
we may continue to do sointhe future. Weare also actively expanding in various international markets.
In addition toChili's, wedobusiness as,and operateftalianrestaurantsunder, thenames
M^ggiano'sLittleltalyând/orMaggiano's^.BR acquired Maggiano'sLittle Italy by m e ^ ^
1995 Maggiano'srestaurants feature Italian food inapreWorld War R, "Little Italy" atm^^^
a f u l l service bar A ^ f June 26 2013 25 2014 Bll operated
comoanvowned Mariano's
restaurants. Neither wenor any of our afflliatesorpredecessorshaveofferedU.S. franchisesfor
Maggiano'srestaurants.
BII began opo^mgRom^^
andbeganâneb^^
OnDeeemberl^200^
BII soldamaôri^ interest in Romano^MaearoniG^^
Gate Capital—Gn April 9, 2013, Mae Acquisition, L^G sold Romano's Maearoni Griil to ignite
Restaurant Group, Inc., und we sold onrm^
Neither
we nor ai^y of our affiliates or predecessors operates or others franchises for Romano'sMac^^
restaurants.
Bit bega^n operating and franchising Gn The Border Mexican Grill ^ Gantina full service
Mexican restaurants in May 199L Gn June 30, 2010, Bll sold GnThe Border Mexican Grill^Gantina
to GTB Acquisition LEG, an affiliate of Golden Gate Capital. Neither we nor any of our affiliates or
predecessors operate or offer franchises for GnTh^
Gur Affiliates
Except as described in this Itetnl,neither we nor any predecessor or affiliate has conducted any
other business and has not offered franchises in any other line of business. However, we or our
subsidiaries or affiliates may in the future develop or acquire other businesses, including other restau^^^
concepts,some of which may be sold as franchises. We expect that any suchconcept would operate
under marks different from the Proprietary Marks described in Item 13 and that you will have no r ^ ^
regarding those restaurants.
TheEranchiseGffered
We offer qualified applicantsafranchise arrangement for Chili'sRestaurants. Chili's G r i l l e
Barrestaurantsarefullservicerestaurantsfeaturingacasual atmosphere andavaried menu of freshly
prepared appetizers, chicken, beef and seafood entrees, hamburgers and other sandwiches, salads,
barbecue ribs, fîtas and other southwestern and Mexicanstyle cuisine, pizzas, flatbreads, desserts anda
full service bar. Emphasis is placed on serving substantial portions ofhigh quality food at modest prices.
Chili'sRestaurants also include abbreviated formats that typically are based upon reduced square footage
and/orareducedmenu. We refer to these abbreviated formats in this disclosure document as "Chili's
Special Venue"restaurants. Also, in certaincircumstances we allow certain franchisees operating in
airportlocationstooperateaChili's kiosk ("Kiosk'') pursuant tothefranchisee'sex^
agreement underaletter of authorization. Chili'sRestaurants are generally open froml2tol4hoursa
day, 7 daysaweek, for lunch, dinnerand latenightmealsandfeature quick, efficient tableservice
designed to minimize customer waiting time.
Chili's Restaurants are typically free standing restaurants located in a metropolitan area or
surrounding suburbs. Proximity to office buildings, shopping malls, shopping centers and other high
traffic areas is desirable.
Chili'sRestaurants arecharacterized by asystem (the"System") which includesdistinctive
exteriorand interior design, decor, color schemeand furnishings^ specialrecipesandmenu items^
uniform standards, specifications and procedures for operation^quality and uniformity of produ^
services offered^ procedures for inventory and management controls training and assistances and
advertising and promotional programs. The System is identified by certain trade names, service marks,
trademarks, logos, emblems and indicia of origin, i n c ^
^BAR''and othermarks we authorize foruse by Chili'sRestaurants(the "Proprietary M a ^ ^
Wecontinueto improve and develop the System and provide new information and techniques to
you by means ofaChili's Franchise Manual consisting of operations manuals, policies, specifications,
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7 ^ ^ ^ ^ D ^
standards checklist evaluation forms, spreadsheets, guides, reeipes, handbooks, and documents
(eoHeetiveiy,the"CFM^Weown the System
Afranehiseappheant may he an individual, corporation, partnership or other form ofiegaientity^
WeofferaDevelopment Agreement (the"Deveiopment Agreements whichgrants you the right to
establish 1 or more Chili's Restaurants, and a separate Franchise Agreement (the "Franchise
Agreement") for each restaurant you establish under the terms ofthe development schedule contained in
theDevelopment Agreement. FheFranchise Agreement, whichyoumust signforeachrestaurant
developed underthe Development Agreement, will be in the form ofthe Franchise Agreement attached to
this disclosure document as Exhibit C. Wemav also o f f e ^ a ^ r a n c h i s e A ^ ^ n t for 1 Chilis
Restaurant without of^rinâDevelopmentAêement in which case vou must comnlv with t^^
DevelopmentObliâtionsmAttachmentlto the Franchise Agreement The terms of previous and
subsequent franchise agreements and development agreements may vary from the terms of those
Agreements offered under this disclosure document.
You must designateaManaging Owner and/oranCperating Partner (see Item 15). We may
require your Managing Owner, Operating Partner and your Owners to sign agreements to be individually
bound by certain covenants including covenants protecting our confidential and proprietary information
and/orcovenantsnottocompete. YourManagingOwner,OperatingPartner,andany other of your
Owners are generally not required to guarantee your performance under the Agreements, but ifyou are in
monetary default under the Agreements(even if cured),we reserve the right to require your Managing
Owner to sign the Guaranty Agreement, in addition to our other rights and remedies under the
Agreements.
Unless indicated otherwise, in this disclosure document references to "you", "your", or
"Franchisee" includes your status both as aOeveloperunderaDevelopment Agreement andas a
Franchisee under all related Franchise Agreements. Any reference to "Development/Franchise
Agreement" refers to the Development Agreement and the Franchise Agreement, respectively^ any
reference to"Agreements" includes both the Development Agreement and Franchise Agreement. Any
referenceinthisdisclosuredocumenttoyour Owners includes theOwnersofaDeveloperundera
Development Agreement and the Owners ofaFranchisee under all related Franchise Agreements.
Competition
The market for restaurant services is well established. The age group from 18to 60 years old is
the primary population age group attracted to restaurants s ^
You will compete withavariety of table-service concept restaurants serving alcoholic beverages. The
restaurant business is highly competitive based on price, service, restaurant location, and food qu
and is ofên affected by changes in consumer tastes, economicconditions, population, and traffic
patterns. Chili's Restaurants compete in each market with locally owned restaurants, as well as with
national and regional restaurant chains, some of which operate more restaurants andhave longer
operating historiesthanus. Unless you haveaDevelopmentAgreement,ourcompany-ownedChili's
Restaurants and our other restaurant concepts may compete with you. There may also be active
competition betweenus for management personnel as well as for attractive commercial real estate sites
suitable for restaurants.
Industry Specific Regulations
In addition to the laws, regulations and ordinances applicable to the businesses generally,like the
Americans with Disabilities Act, Federal Wage and Hour Laws, the Immigration Reform and C o n ^
of 1986, and the Occupation, Health and SafetyAct, you should consider that certain aspects of the
FDDB^
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âurantandre^dbarbusi^
ordmance^ The U^.Food and Drug A d m m i s ^ i o n a n d t h e U ^ D ^
state and loealdepartmentsofheahhandotherageneie^havelaws and regulations eonee^
preparationof food and sanitary conditions of restaurant faeihties. State and local agencies routinely
conduct inspections for compliance with these requirements. Under the dean Air Act and state
implementing laws, certain state and local areas are required to attain, by the applicable statutory
guidelines, the national air quality standards for ozone, carbon monoxide and particulate matters. Certain
provisions ofthese laws impose caps on emissions resulting from commercial food preparation.
To operate the Restaurant, you will need to obtain a liquor license. State and local laws,
regulations and ordinances vary significantly in the procedures, difficulty and cost associated with
obtainingalicense to sell liquor, the restrictions placed on the manner in which liquor may be sold, and
the potential liability imposed by dram shop laws involving injuries, directly and indirec^^
sale ofliquor and its consumption. You will need to understand and comply with those laws in operating
the Restaurant.
Thâvmentc^dindnstrv^^
^qnirements for all merchants or
You
aê responsible for PCI Data Security Standard compliance as well as anv federal state and locals
regulations ^nd ordinances related to privacy maters including data and personally identifiable
informîo^
ITEM2
BUSINESS EXPERIENCE
Joseph M.DeRmto
Chairman of the Board
Joseph M.DePinto has served on the Board ofDirectorsofBR since August 2010. Mr.DePinto
became Chairman ofthe Board effective November 2013. Mr. DeTinto is currently President and Chief
Executive Officer of Êleven, Inc., based in Dallas,Texas,serving in this position sinceDecember
2005. Mr.DePintoservesontheBoardof Directors of 7-Bleven,lnc.basedinDallas,Texasâ^
OfficeMax, Inc. based in N^perville, Illinois. He also serves on the Boards oftheSMU Cox School of
^ ^ ^ b ^ d ^ D ^ ^
National Italian American Foundation based inWashington, DC, the Business Executives f^r National
Securitybasedin Washington, DC^^^theRetailfndustryEeadersAssociationbasedin Arlington,
Virginia, and EoneSt^r Big Brothers/Big Sisters.
WymanT.Roherts
ChiefExeentiveOfêerandRresidentofBII and President o f C h i ^ s O r ^
WymanRoberts has beenamemberofthe Board ofDirectorsofBlf since February 2013 and has
served as ChiefExecutive Officer and President ofBlf and our General Partner since January 1,20^
Mr. Roberts also serves as President of Chili's C r i l l ^ B a r and had held that position since November
2009. Mr. Roberts previously served as SeniorYice President, Maggiano'sEittle Italy President and
Chief Marketing Officer from March 2009 to November 2009. Prior to that, Mr Roberts served as
Senior Vice President and Maggiano'sEittle Italy President from August 2005 to March2009
KeliiVaiade
Executive Vice President and Chief Operating Officer of Chili's C r i l i ^ B a r
F00^5
7^^^DÔ^S
Ke^Vâde has served as Executives
^ Bar siueeMareh 2014. SheisalsoExeeutiveViee President and Chief Operating Ofêer of
General Partner. Ms.Vaiade previously served as Chief Operating Officer of C h i l i ' s G r i i l ^ B a r ^
July 2009 to March 2014 Priortothat, Ms Valade served as Senior Vice President of Chili's G r i l l e
Bar and On The Border PeopleWorks and Brinker Shared Services from October 2008 to July 2009 and
Vice President for Emerging Brands and Corporate Human Resources from June 2002 to October 2008.
RogerF.Thomson
Executive Vice President, ChiefDevelopmentOfficer^Secretary
RogerE. Thomson has served as ExecutiveVicePresident,Chief Development Officer and
Secretary since March 2014 He is alsoExecutiveViceEresident^Chief Development Officer and
Secretary of our General Partner. Mr.Thomson previously served as ExecutiveVicePresident^Chief
Administrative Officer, General Counsel and Secretary ofBR from June 1996 to March 2014.
Marie Perry
Senior Vice President, Controller and Treasurer and ChiefEinanciai Officer
Marie Perry was appointed as Senior Vice President, Controller and Treasurer and Chief
Einancial Officer ofBlf in March 2014(serving as ChiefEinancial Officer on an interim basis) She is
also SeniorVicePresident, Controller andTreasurer and ChiefEinancial Officer of our General Partner.
Ms. Perry previously served as SeniorVicePresident,Controller and Treasurer from August 2013to
March2014,VicePresidentofAccounting Shared Services and Planning and Analysis and Treasurer
fromOctober2010 to August 2013, and VicePresidentoflnvestorRelations andTreasurer from
November 2007 to October 2010
Steve Provost
Senior Vice President^PresidentofMaggiano's Little Italy
Steve Provost has served as Senior VicePresident of BU and our General Partner since
November 2009 He hasalso served as President ofMaggiano'sEittle Italy since November 2009 Mr
Provost previously served as SeniorVicePresident of Marketing and Brand Strategy for Maggiano's
Eittleltaly from April 2009 toNovember 2009 Prior toôiningBrinker,Mr.Provost served as
Executive Vice President and Chief Marketing Officer for Quizno's Master, EEC, based in Denver,
Colorado from May 2007 to March 2009 Mr. Provostwas employed by YUM Brands, fnc,based in
Louisville, Kentucky from 1991 to 2007, serving in various roles, most recently as Head Coach,
Southeast Region for the REC brand from May 2003 to May 2005 and ChiefMarketing Officer for the
LongJohnSilver'sandA^Wbrands from May 2005 to April 2007.
TonyADRridwell
SeniorVicePresident and ChiefPeopleWorl^s Officer
Tony Bridwell has served as Senior Vice President and ChiefPeopleWorks Officer ofBR since
March 2014 He is also Senior Vice President and ChiefPeopleWorks Officer for our General Partner.
MrBridwell previously served as Senior Vice President ofPeopleWorks from July 2013 to March 2014
Mr. Bridwell was previously employed with Partners in Leadership, fnc. in various positions include
Business Unit President from September 2012 to July 2013 and Area Vice President from April 2004 to
August2012.
David Doyle
Senior Vice President^Chieflnformation Officer
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7 ^ ^ ^ 0 ^ D ^
David Doyle has served as SemorV^
August 2015. He is also Senior Viee President aud C h i e f l y
Mr. Doyie previously served as SeniorVicePresident and Controller from Pehruary200
2013
Krista Gibson
Senior Viee President and ChiefMarêtingCmeer
Krista Gibson has served as SeniorViee President and ChiefMarketingCflieer of BR sinee
Mareh2014. She is also Senior Viee President and ChiefMarketingCffieerofour General Partner. Ms.
Gibsonpreviously servedas SeniorVieePresidentof BrandStrategy f o r G h i l i ' s G r i l l ^ B a r t r o m
September 2004 to Mareh 2014. Ms.Gibson began her eareer with BR as Viee President ofMarketing
forGn The BorderGrill^Gantinafrom July 1997 to August2004
Jeffrey Hohan
Senior Viee President, General Counsel and Assistant Secretary
JeffreyHoban has served as SeniorVieePresident,General Counsel and Assistant Secretary
since March 2014. He is also Senior Vice President,General Counsel and Assistant Secretary of our
General Partner. Mr.Hoban previously served as Senior Vice President, Assistant General Counsel and
Assistant Secretary tromMay 2009 to March 2014 and Vice President and Assistant General Counsel
fromJune2002toMay2009
David Parsley
Senior Vice President ofSupply Chain Management
David Parsley has served as Senior Vice President ofSupply Chain Management ofBR and our
General Partner since May 2011. Mr.Parsley served as President and CEC of Centralized Supply Chain
Services, LLC. located in Lenexa, Kansas from February 2009 to May 2011, Senior Vice President
Supply Chain Management for DineLquity,located in Lenexa, Kansas from November 2007 to February
2009,and Senior Vice President of Supply Chain Management for Applebees International,located in
Lenexa, Kansas, from April 2000 to November 2007.
Doug Comings
Vice President ofDomestic Franchise Operations
Doug Comings has served as Vice President ofDomestic Franchise Operations for Chili'sGrill
and Bar since June 2013 He is also Vice President ofDomestic Franchise Operations for our General
Partner. Mr. Comings previously served as Chili'sRegional Director from December 2010to June 2013
and Chili'sAreaDirectorfrom May 2001 to December 2010
HomeroOrtegon
Vice President ofStrategic Innovation
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7 ^ ^ ^ ^ D ^
Horned Oregon has served as Vice ^
He is alsoViee President of Strategic Innova^
Mr. Ortegon previously served
as Vice President of Design/ Construction /Facilities from January 2013 to August 2013, Senior
Director of Strategic Innovation from Cctoher2011 to January 2013, and SeniorDirector Strategic
Fngineeringfrom March 2010to October 2011. Mr.Drtegon was employed by Starbucks Corporation,
based in Seattle, Washington from October 2009 toMarch 2010 servingas Directorof Operations
Engineering. Prior to that, Mr. Ortegon was employed by Middleby Corporation, based in Elgin, Illinois
from January 2009 to October 2009 serving as Director ofEoodlnnovation^Fechnology.
Don^Reyhurn
Vice President ofDevelopment
Don Reybum has served as Vice President ofDevelopmentofBlf since January 2013. He was
previously Vice President ofDevelopment and Franchise Operations ofEJl from April 2012 to January
2013. He is also Vice President ofDevelopmentofourCeneral Partner. Mr.Reybum previously served
as Vice President of Development from October 2010 to April 2012, Vice President of Business
Development/Financial Planning and Analysis from April 2008 to October 2010, and Director Mergers
Âcquisitions/Franchise Business Development from August 2005 to April 2008.
Joseph CD Fayior
Vice President of Corporate Affairs
JosephCTaylor has been Vice President of Corporate Affairs o f B l l since February 2003. He is
also Vice President ofCorporate Affairs ofour General Partner.
Harriet Edelman
Director
Harriet Edelman has served on the Board ofDirectorsofBff since March 2008. Ms.Edelmanis
currently ViceChairmanofEmigrant Bank, having served in this position since November 2010, and she
serves asamanagement member of the Board of Emigrant Bank. Previously, Ms.Edelman served as
Advisor to the Chairman of Emigrant Bank, based in NewYork,NewYork, from June 2008 through
October 2010. Prior to that, she served as Senior Vice President and Chieffnformation Officer ofAvon
Products, fnc based in NewYork City, NewYork from January 2000 through March 2008 Ms
Edelman serves on the Board of Directors of UCBPharma based in Brussels, Belgium. Ms. Edelman
also serves on the Board ofFrusteesofBucknellUniversity,located in Eewisburg, Pennsylvania, and is^
Trustee oftheNewYorkBlood Center based in NewYork,NewYork.
Michael AD Oeorge
Director
Michael A.George has served on the Board ofDirectorsofBff since March 2013. Mr. George is
currently President and Chief Executive Officer of QVC, the world's leading video andecommerce
retailer and has served in this position since November 2005 and is based in West Chester, Pennsylvania.
Mr. George sits ontheBoardofDirectorsforEibertylnteractiveCorporationbased in Englewood,
Colorado, the Kimmel Center in Philadelphia, Pennsylvania, Alex'sEemonade Stand Foundation based
in Wynnewood, Pennsylvania, and the Pennsylvania Business Council based in Harrisburg,
Pennsylvania.
William TDOiles
Director
FDO20^
7 ^ ^ ^ ^ D ^
W ^ i a m T . G ^ has served on the
Mr. Giles is
currently GhiefFinaneialGfêer and
Store Development at AutoZone Ine. having served in this position since Jannary^^
Memphis^Tennessee. Mr. Giles sits on the Board ofDirectors for the AutoZone Liberty Bowl hased in
Memphis,Lennessee, and Lausanne Gollegiate School in Mentphis,Lennessee.
GerardoLLopez
Director
Gerardo I.Lopez has served on the Board ofDirectorsofBH since Fehmary 2015. Mr.Lopezis
currently President, GhiefLxecntive Officer and Director ofAMG Entertainment, Inc.based in
Kansas and has served in this position since March 2009. Mr. Lopez previously served as the Executive
Vice President of Starbucks GoffeeGompany and President of Global Consumer Products, Seattle'sBest
Coffee and Eoodservice divisions from September 2004 to March 2009. Mr. Lopez sits on the Board of
Directors ofDigital Cinema Implementation Partners based in Mahwah, New Jersey, Open Road Eilms
basedinHollywood,California,andRecreational Equipment, Inc.based in Kent,Washington.
ônLD Luther
Director
Jon L.Luther has served on the Board ofDirectorsofBff since April 2011. Mr.Luther retired as
the ChairmanoftheBoardofDunkin'Brands based inCanton, Massachusetts in May2013,having
transitioned out of the role of Executive Chairman,aposition he held from January 2009 to July 2010.
He was ChiefExecutive Officer ofDunkin'Brands from January 2005 to December 2006, atwhich time
he added the additional role of Chairman.
dohnWDMims
Director
JohnWMims has served on the Board ofDirectorsol^Bll sinceFebruary 2007 M^^^
served as—Senior VicePresident World WideSales^Resort Marketing AsiaforLasVegasSa^^^^
Corporation based in EasVegas,Nevada since March 2011. Previously,he was the Managing Partner of
Lhe Hunting Ridge Group, LLC, which he founded. Prior to that, he served as Chief Marketing and
SalesOf^cerforMillennium^CopthoêHotels Worldwide based in Eondon,England ^^^^
toJanua^2010. Mr.Mimsseês on tlê board ofEntertainmont Cruises based in Chicago, Illinois.
CeorgeRDMrôuic
Director
George R.Mrkonic has served on the Board of Directors of BR since September 2005 Mr
Mrkonic is currently the Non Executive Chairman of Paperchase Products Limited, London, UK
(Chairman since 200^ director since 1999). Mr.Mrkonic also serves asaDirector for Pacific SunWear
of California, fnc.basedinAâheim,California,Autozone,fnc.basedinMemphis,Lennessee,^
Syntel,fnc.basedmLroy,Michigan.
FD02^
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RosendoGDParra
Director
RosendoG.Pachas served on the B ^
asunder and has served a s a P a r t n e r o f D ^
since NovemherDeeemher200^ Previonsiy, Mr. Parra served as Senior Vice President for the Home
and Small Business Group ofDe^fnc.hased in Anstin,Texas from Jnne 2006 to A^
Mr.Parra
also serves asaDirector for Nii Holdings, fnc.hasedinReston^Virginia and PGÊGo^
Prancisco,Gahfomia.
Unless noted ahove, ail of our officers and directors listed in this ftem2are located in our Dallas^
Texas office.
ITEM^
LITIGATION
H o h n ^ u m e t ^ v D r i v e r Internationa IncD D r i v e r Rest^^^
International PayroilGompanv^L^
fn August 2004, certain current and former hourly restaurant employees filedalawsuit against us and
certain of our affiliates in Galifomia Superior Gourt for San Diego Gounty alleging violations of
California lahorlaws with respect tomealperiods and rest breaks. The lawsuit seeks penalties and
attorney's fees and was certified asaclass action by the trial court in July 2006. On July 22, 2008,the
California Gourt of Appealdecertified the class action on all claims with prejudice. CnGctober22,
2008,the California Supreme Court grantedawrit to review the decision of the Court of Appeal. Cn
April 12, 2012, the California Supreme Court issued their d ^ ^ ^ l ^ ^ a f f i r m i ^ ^
part, and remanding in part for further proceedings. This matter has now been remanded back to
CaliforniaSuperiorCourtin San Diego County,and we intend to vigorously defend our position.
California Supreme Court's opinion resolved many of the leâl standards for meal neriods an
in our California restaurants In April 2014 the parties narticio^tedinamediîon where
preliminary settlementdiscussionsbeganbutasettlementwasnotachieved
fnAûst2014^the^rties
^nnonncedapreliminaryno^faultsettlementthatremainssubiectto court approval
Other than thelaction described above, there is no litigation required to be disclosed in this
Item.
ITEM4
BANKRUPTCY
Hatfield Restaurants Uimited,acorporation incorporated under the laws of England and Wales
andasubsidiary of Brinker fnternational, Inc.,owned and operated8restaurants located in the United
Kingdom. These restaurantswereclosedattheendofbusinessonTuesday, June 16, 2009 and the
company was voluntarily placed into administration under UK laws on June 17, 2009. The
administration process was formally concludedinOctober 2012,and this matter was closed.
Other than thelproceeding described above, there is no bankruptcy required to be disclosed in
this Item.
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ITEM^
^TIALFEES
AôfthefeesmthisRemârethesamefora^Chih^Reâ^^
Inâl Development Fee:
When yon sign a Development Agreement for more than 1 restaurant, yon must pay ns a
nonrefundable development fee. The development fee will he determined by mutual agreement before
you sign the Development Agreement and is based on the size of the territory,the number of restaurants
to be developed, demographic data and trends like density and growth rates, and other variable
conditions The development fee could range from $ 2 0 ^
conditions stated above F ^ r ^ n r f i ^ l y e ^ r e n d e d l u n e ^ 201325 2014 development fees were
generally $20,000.00 per Restaurant to be developed under the Development Agreement. The
development feeisdetermineduniformly but isnot urn
conditions stated above.
InitialFranchiseFee:
At or before the date on which you begin construction ofaChili'sRestaurant, you must pay us
^ ^ ^ ^ ^ h i ^ ^ ^
^ ^ l ^ ^ i A ^
The initial franchise fee is nonrefundable except in the following circumstances:
(1)
If your Development Agreement grants you the right to establish more thanlrestaurant,
and, ifyou are in compliance with the Development Agreement and all other agreements with us and you
open your Chili's Restaurants at least 90 days before the opening dates set forth in the Development
Schedule,youwill be entitled toa$10,00000 credit against the initial franchise fee,wh^
directly pay to you or apply asamonthly credit againstyour royalty fee and/ortechnical services fee.
(2)
f f y o u fail to secure the required liquor licenses by the date the Restaurant is otherwise
ready(and/or required) to open for business, then we may terminate the Franchise Agreement onlOdays
prior written notice. I f w e d o , w e w i l l refund your initial franchise fee (without interest), less any
expenses and/or damages we have incurred.
Except as described above,we are not obligated to return any portion of the initial franchise fee if the
Franchise Agreement is terminated by you or us for any reason.
InitialFrainingFee:
We willprovide initial training f^ryourManagingCwner, Operating Partner and up to 5
managers per Restaurant for your first2Chili's Restaurants at no cost to you except the expenses
incurred byyourpersonnel attending the initial training program, including transportation,^
and wages. Weestimate that your costs and expenses to attend the initial training program will range
from$60,000to$350,000
f f the opening date of yourRestaurant is moved afêr your personnel have completed initial
training, we may require your personnel to repeat our initial training program. Ifwe do, you must pay us
atrainingfeeatourthencurrentrates(currently,$^^^^pert^^^
expenses of your personnel. WemayalsorequireyoutopayatrainingfeeifwetraintheManaging
Owner, Operating Partner, and/or managers for your third and subsequent Restaurants or any
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10
replacements. All training costs are nonrefundable. Training fees and costs are determined uniformly
but may vary among franchisees based on the circumstances described in this paragraph.
Opening Team:
We may send an opening team to your Restaurant to help with the opening if we believe it is
necessary. If we do, our certified trained representatives will be at the Restaurant for a period of
approximately 20 total days before and after the opening date. You must reimburse us for our reasonable
expenses incurred in providing the opening team, including costs of transportation, lodging, meals and
wages. Costs may vary depending on factors like the number of opening team members, the distance
they must travel and the time period they are at the Restaurant. Historically, the cost of our opening
teams have ranged between $65,000-$125,000 for a Chili's Grill & Bar and $40,000-$ 100,000 for a
Chili's Special Venue. Although we do not always require an opening team, if we do, the types of costs
assessed are uniform.
Con^^^De^
We provide 1 eonstruetion/desiêvû^
Restaurant and 1 eonstruetion/design evaluation of your seeond Restaurant at no charge except
reimbursement ofour reasonable expenses, including the cost oftravel, lodging and meals. Ifwe initiate
further evaluations, we will bear the cost of the evaluation unless we have initiatedthe evaluation
because ofreasonable concerns with your construction/design process, in which case you must reimburse
us for our reasonable expenses. If you ask us and we perform an additional evaluation, then you must
pay us a reasonable fee (currently, $1,200) for the evaluation, as well as reimbursing us for our
reasonable expenses. Our costs for construction/design evaluations vary depending on the amount of
time and personnelutilizedin the actual evaluation. During our last fiscal year,construction/design
evaluation costs ranged from $0 to $2,500.
We may also choose to make available to you at a reasonable cost reports containing
demographic and market data and real estate analyses, fn determining the cost for these reports, we take
into account thenature,type,and amount of information requested as well as the administrative time
necessary to organize the information and third party resources. Each report costs between $0 to $2,500,
which would be payable toathird party.
OTHERFEES
f
Oolumnl^ ^
^
. *
*
^^
^^B^B
TypeofEee(l)
Royalty Eee
Technical Services Eee
Column 3*
- Column 2 - *
^
^
^
j
p
^
3
*
^
T
i Amount .
1.25% of Gross Sales (2)
2.75% of Gross Sales (2)
*
-
4
t
,
r *
*
T,
t
^
*
Column 4
<
*
1
% ,
7
Due Date
Payable by the
10th of each
month (2)
Remarks
- ^
See Note 2 for definition of Gross
Sales. The Royalty Fee payment must
be accompanied by a Monthly
Financial Statement.
Payable by the
10 of each
See Note 2 for definition of Gross
Sales. The Technical Services Fee
th
FDD-2015
783265-v3\DALDMS
11
t
month (2)
must be accompanied by a Monthly
Financial Statement.
Advertising Production
Fee(3)
.5% of Gross Sales
Payable by the
10th of each
month (2)
You must pay the Production Fee in
all cases. Production Fees are used to
maintain, direct, administer and
prepare advertising and promotional
activities, including creative costs.
Local Advertising
Program (LAP) Fee (3)
Minimum - 2.5% of
Gross Sales
As incurred by
you, with
quarterly reports
to us
We may require you to participate in
our Local Advertising, Regional
Advertising or National Advertising
Program and may change the
designation periodically. We currently
require our franchisees to participate
in the National Advertising Program.
If we require you to participate in
LAP, you must spend at least 2.5% of
Gross Sales on local advertising and
may spend more if you choose. See
Note 3.
Regional Advertising
Program (RAP) Fee (3)
Maximum - 4% of Gross
Sales
Payable by the
10th of each
month
See Note 3.
National Advertising
Program (NAP) Fee (3)
Currently, 2.90% of
Gross Sales;
Maximum - 4% of Gross
Sales
Payable by the
10th of each
month
See Note 3.
Supplemental Marketing
Programs
Varies
As invoiced
You may be required to pay for certain
costs related to supplemental
marketing programs, like limited time
offers, gift cards, gift certificates,
coupons, loyalty programs, customer
relationship management, and other
supplemental marketing programs that
we require you to participate in.
FDD-2015
783265-v3\DALDMS
12
Replacement and
Supplemental Training
Currently, $^©0^,000,
plus costs of your
personnel attending
training.
On demand
We may charge a training fee if we
train a replacement Managing Owner,
Operating Partner or manager or if
your personnel attend supplemental
training.
Product Testing Fee
Approximately $1,500
per product annually
typically charged to the
supplier; additional
product testing may be
required due to
specification
non-compliance
30 days after
billing
If we have not previously approved a
supplier and/or an item you wish to
use, you must apply to us for approval
and pay the cost of the test.
Supplier Facility
Inspection
Currently, approximately
$1,025 per day plus travel
expenses normally
charged to the supplier or
distributor
30 days after
billing
If we have not previously approved a
supplier, distributor, and/or item you
wish to use, you must apply to us for
approval and pay the cost of the
facility inspection. Multiple day
inspections may be necessary for
larger facilities.
Licensing Fees
Currently, none
As invoiced
You may be required to pay a license
fee for any computer or point-of-sale
system we make available to you.
Restaurant Inspection
Varies
On demand
If you fail within a reasonable time to
correct any deficiencies that we
identify during our inspection, you
must pay us a reasonable fee if we
must assist in the correction of these
deficiencies.
FDD-2015
783265-v3\DALDMS
13
Mandatory Sanitation
and Food Safety
Program (SAFE)
Currently, approximately
$262 per visit if you do
not receive a passing
grade. There is no charge
for a grade of 0 (perfect
score) to 1.
30 days after
billing
Participation in the Brinker
(Safe-Sanitation and Food Evaluation)
restaurant assessment program is
required. Unannounced assessments
will be conducted at least twice per
year. All restaurants are required to
participate in food safety training in
the first quarter of the fiscal year. We
reserve the right to include the rules,
terms, and conditions of the
assessment program in the CFM and
modify the rules, terms, and
conditions of the assessment program
from time to time.
Transfer
Franchise/Development
Agreements - $5,000 or
any greater amount
necessary to reimburse us
for our expenses, with a
single transfer maximum
of $25,000
Before transfer
No fee is charged to an individual or
partnership franchisee that transfers its
rights to a wholly-owned corporation.
Offering
Agreements-$10,000
30 days after
billing.
This covers our cost to review the
proposed offering of your securities.
Audit
Cost of audit, including
travel, lodging, wages,
and legal and accounting
costs.
On demand
Payable only if we find that you have
underpaid or understated any amount
owed to us by at least 2%.
Interest
Lesser of 18% per annum
or maximum legal rate.
On demand
Payable on all overdue amounts.
Indemnification
Agreements - Will vary
depending on loss.
On demand
FDD-2015
783265-v3\DALDMS
14
You must indemnify us for all losses
and expenses we incur because of your
actions.
Enfoêment Costs
Agreements-Will vary.
When determined
In anyûdieial or other proceeding, the
prevailing party will he entitled to
recover its reasonable costs and
expenses (including court costs,
attorneys'fees, and discovery costs)
trom the other party. In any other
situation in which we must enforce
your obligations under the
Agreements, you must pay our costs
and expenses.
Liquidated Damages
Ûnauthorized
Soiieitatiouof
Employees
Agreements-Lhree^)
times the employee's
salary plus our
enforcement costs
On demand
Ifyou employ one of our(or another
of our franchisee'sor developer's)
employees in violation of your
Agreement with us,we may require
you to pay liquidated damages.
Liquidated Damages
t^r Failure to Meet
Development Sehedule
$10,^month
Maximum period: lyear
Monthly during
any period of
non-eomplianee
Ifyou are not in compliance with your
development schedule,wemay,at our
soleoption, grantyouaperiod of
forbearance, ifyou pay liquidated
damages to compensate us for lost
royalties and other fees. Wewillnot
terminate the Development Agreement
during this forbearance period as long
as liquidated damages are paid;
however, ifyou are still not in
compliance afterthis forbearance
period, then we may terminate the
Development Agreement.
Relocation or
Reconstruction
Minimum royalty and
technical services fee
agreed hy you and us
Monthly during
period Restaurant
is not in
operation
ffyour Restaurant is closed more than
30 days through no fault of your own,
we may approve you to relocate or
reconstruct the restaurant, and charge
an agreed minimum monthly royalty
and technical services fee while the
Restaurant is closed.
Decor Items, Certain
Furniture and Fixtures
Currently,the prices that
we charge our
company-owned
restaurants for the items,
includingal5%
administration fee; prices
are subject to change
with prior written notice.
Priorto placing
order
Wearean approved supplier of decor
items, including certain furniture and
fixtures. You may establish buying
relationships with other approved
suppliers. See Item 8.
FOD^
7 ^ ^ ^ D ^ D ^
15
Approximately $1,500
per year/per restaurant
Gift Cards
As invoiced
You must participate in and bear
certain costs associated with our gift
card program. First Data Prepaid
Services f"First Data"! (formerly
known as Valuelink) is our third party
gift card provider. Valuolink£iraL
Data may bill you for certain items
related to start-up, but generally
VaiuelinkFirst Data will bill us and we
will bill you monthly. Our billing will
include a reconciliation of certain
costs and benefits of program
participation.
Notes:
(1)
All fees and expenses described in this Item 6 are nonrefundable. Unless we have otherwise
indicated in the preceding chart, all fees and expenses are imposed by, and are payable to, us.
Generally, all fees are uniformly imposed on our franchisees, but we mav. in our sole discretion,
nepotiate some fees under certain circumstances. Except as specifically stated above, these
amounts may be subject to increases based on changes in market conditions, our cost of
providing services, and future policy changes.
(2)
Unless we notify you in writing of a change, royalties and other monthly payments must be paid
by the 10 day of each month on Gross Sales for the preceding month, and must be submitted to
us together with any required reports or statements. You may not withhold or offset payments
based on our alleged non-performance under the Franchise Agreement. I f any payment is
overdue, you must pay us the overdue amount plus interest from the due date at the stated rate
and at our option we may charge a $500 late fee. We reserve the right to require payment on a
twice-a-month basis and/or to implement electronic debiting of your account for payment.
Currently, we have not implemented either of these payment options.
th
"Gross Sales" includes the total value of all services and products provided by and/or from the
Restaurant and all revenue from any sale of all services and products and all other income of
every kind and nature related to the Restaurant (including, the full value of on-premise sales,
off-premise sales, catering sales, internet sales, sales from tabletop and other digital media,
complimentary sales, coupon sales, sales to employees, employee meals, and any other type of
sale related to the Restaurant), whether for cash or credit (and regardless of collection in the case
of credit), with no deductions or exclusions whatsoever, except federal, state, or municipal sales
taxes you collect from customers and pay to the appropriate taxing authority.
(3)
Advertising programs are described in greater detail in Item 11. You must participate in the
advertising program we designate. This may be either the Local Advertising Program, the
Regional Advertising Program or the National Advertising Program. Currently, our franchisees
are required to participate in the National Advertising Program. You must pay the Production
Fee regardless of the advertising program we designate. We may change the required advertising
program designation periodically. Under certain limited circumstances (e.g., for a significant
multi-unit development plan, a large metropolitan area, airports or unique restaurant sites), we
may modify the advertising fees for a specific franchisee in our sole discretion.
FDD-2015
783265-v3\DALDMS
16
ITEM 7
ESTIMATED INITIAL INVESTMENT
YOUR ESTIMATED INITIAL INVESTMENT
CHILLS GRILL & BAR
ifliliff
V
!
^Columri^l: ; :}f|
v-
4 f
1
"1 g ^ C o l u m n • 2 • - •• % f' ' j /LCblui^ : ^ U
:
:
S :: " ' •
:
- . 'V'/'yc':.;.:y;
>.
^%^^^!%^-;
^:(;-Cplumh.4
Y •
l^-^^^y.^
% j : ^ . ^ ; 1%-;%;-Il): %L ^ ; V; • ^:
• •' Type of expenditure/. t k % ^ y ^cmal or ': 'T ; ^ - '•iiiM^^^^B^
Estimated Cost •
Payment'
;': • - f - ^ - ' y - ^ ^ y - ^ x
v':i: Low - High ; f ^ ^ .
i ifc"'^'r"•:~'vg'jj'Z:;
^ ^ • ^
•i;^* ;'V ;-j'
:
!
:
Column 5
•,.>'• ' ] • • • «A
ir'r'ivt ^-Hj^B:
" When Due
,
Payment Made
p
;
\
iz/^Wj
" •'•.'
$40,000
Lump Sum
See Item 5
Brinker
$6,000-525,000
Monthly
As arranged
Lessor
$90,000-$400,000
As arranged
As arranged
Suppliers
$1,090,000-$1,425,000
As arranged
As arranged
Contractors/
suppliers
$150,000-5500,000
As arranged
As arranged
Contractors/
suppliers
$20,000480,000
As arranged
As arranged
Contractors/
suppliers
Furniture/Fixtures/
Sound System/TVs
$135,000-$190,000
As arranged
As incurred
Suppliers/bankers
Kitchen/Bar
Equipment/
$300,000-$400,000
As arranged
As incurred
Contractors/
suppliers
Opening
Advertising
$8,000-$ 10,000
As arranged
As incurred
Suppliers
$60,000-$3 50,000
As arranged
As arranged
Suppliers of food,
lodging,
transportation
$65,000-$125,000
As arranged
As arranged
Brinker/suppliers
Initial Franchise
Fee
2
3
Leasehold Expense
4a
Pre-Construction
4b
Construction Costs
Site Work
5
6
Exterior Signage
7
8
9
Initial Training
10
Opening Team
FDD-2015
783265-v3\DALDMS
17
» '
'"
^r
i
,
T1
^
s
% * - v 1%,
- % '
-iv-vîT' ^'••^ -< ' ''-.r
;
Column
:4iri^'
v:
Column
3,
'
„
v
]
Column
5
"
^
' ,
^ -^1 Cpûmn,rj^-R^H;:
">
i
*" '
Column 2 , \ : ^ \ , '^
^
r
;
;''!• i:•: ' ^: ; \ ' / W x % / . '
^'^C^/ •* \
^
^
^
^
^
C
When Due
Type of expenditure
i.%^MemW;#\^r;
Payment Made
""Estimated Cost - ,
, ^Payment
*
1
.(
;
r-'-^' ••• Tl^^zta'.t
M-.}.-?.
: - "Low-High
-ry \..^v'-.Y^. ••••^'^y '-w^'fy iv'
j
,
•
^
t
* *
, ^
• *
r
f
J
J
:
;:
1
(
y
'r: T c ^ r11> - ~ ^ '
Working Capital
Inventory
•v ,
\tr ^ 1 ^ ^
Costs
12
13
Bar/Kitchen
Accessories
of food, lodging,
transportation
$12,000-522,000
As arranged
As incurred
Contractors/
suppliers
$15,000-520,000
As arranged
As incurred
Suppliers
$40,000-$50,000
As arranged
As arranged
Suppliers
Varies
As arranged
As arranged
Government
Agencies; your
attorneys or other
third party
$30,000-545,000
As arranged
As arranged
Suppliers
$450,000-5600,000
As arranged
3 months
Lessor
14
15
Liquor License
System Installation
16
Additional
Funds (3 months)
17
TOTAL
18
$2,511,000-54,282,000
Notes:
1
The above chart provides an estimate of your initial investment for 1 Chili's Grill & Bar restaurant
based on our experience with our Prototype 16 building. Your actual costs may vary significantly
from these estimates. Prototype 16 is a free-standing building which includes a facility of
approximately 6,028 square feet (which includes 363 square feet for a walk-in cooler/freezer).
Prototype 16 has a total seating capacity of 246 seats consisting of 172 seats in the dining area and 74
seats in the bar area of the building. We reserve the right to modify Prototype 16 or develop new
prototypes, and all franchisees will be required to use the prototype then used by us for each of their
franchised Chili's Restaurants. Prototype 16 can be enlarged or decreased to suit individual market
and volume needs. You must adapt the Prototype 16 plans to accommodate the particular
circumstances of the proposed site for your Restaurant. (See Item 8) We may provide suggestions on
such adaptations, and you must obtain our approval of the final plans. Changes in existing
prototypes or development of new prototypes may increase or otherwise change the initial investment
costs described above.
FDD-2015
783265-v3\DALDMS
18
This ftgure represents the initial franchise fee for each restaurant and does not include the
development fee. Seeltem5.
Due to the cost of land acquisition, the premises f^r
These
amounts assume that you will lease the premises for the restaurant and do not include costs of land
acquisition. I f land for the restaurant site is purchased, purchase costs will vary significantly
dependingonthemarket in whichtheChili'sRestaurantwillhe located;however,these costs
generally range from 5500,000 to 51,500,000 hased on our experience in acquiring restaurant sites
nationwide. Weestimatethatrentpaymentstypicallyrangefrom56,000to 525,000 per month hased
onahuild to suit lease and from 56,000 to 521,000 fbraground lease hased on our experience in
leasing restaurant sites nationwide. Tand and site preparation costs will vary substantially depending
on the lot size, geographic area and market conditions. Costs related to evaluation of the restaurant
site are not included in this estimate.
^
This estimate includespreconstructioncosts for architectural and relateddrawings,engineering,
testing, permits, utility tap fees and other fees. Costs may vary significantly ifyou lease an in-line
site fbr the restaurant, and utility tap fees can vary substantially from location to location.
^
This estimate includes foundation, slab, materials, hardware, roof, plumbing, electrical, flVAC
equipment, and labor. Costs may vary significantly based on the site and regional construction costs.
5
This work includes utility extensions,paving of parking areas,pouring sidewalks and curbs, and
installation of outdoor lighting, f f the property isapad site, the cost would be between 590,000 and
5105,000 forpaddevelopmentplus 525,000to 540,000 for landscaping, and up to 5500,000 forafull
site (based on between 590,000 and 5105,000 for the cost ofthe pad plus 51,800 to $3,000 per
parking space constructed plus 535,000 to 555,000 for landscaping).
6
The range given includes exterior graphics and door signage. The low end of the range includes
standard building signage of2exterior building signs; the high end of the range also includesatogo
sign,afreestanding pole sign andafreestanding monument sign.
7
We require you to purchase benches, chairs, stools, decor, decorative elements, and tables that meet
our specifications. Weare an approved supplier of certain furniture and decor packages.
The estimate given covers the cost ofkitchen and bar equipment, hood ventilation and refrigeration
equipment. Werequire you to purchase certain kitchen equipment that meets our specifications.
The advertising you may needtopurchasebefore opening the restaurant includes time onlocal
broadcast media, advertisements in local newspapers, direct mail, and magazines.
10
Weprovide initial training for up t o 5 o f your representatives (in addition to your Managing Cwner
and Operating Partner). This is an estimate ofthe costs that you will incur for transportation, lodging
and food, and wagesfor attendees ofour initial training program. The low end of the estimate
assumes that your Managing Owner, Operating Partner, andlother representative will attend initial
training, and the high end ofthe estimate assumes that your Managing Owner, Operating Partner, and
5other representatives will attend initial training. The actual cost will depend on the distance the
attendees must travel and the type ofaccommodations you choose.
11
The figures given include the cost ofan opening crew provided by us. Seeftem5.
12
This estimate for working capital is for organizational expenses.
FDD-2015
783265-v3\DALDMS
19
13
We estimate that the range given will be sufficient to cover your inventory needs for the first month
of operation.
14
The estimate includes restaurant smallwares, like cooking, serving, and other utensils for food
preparation.
15
License fees will vary significantly, depending on the locale and the requirements of the applicable
state, county or municipal liquor licensing laws and related liquor licensing authorities, so we cannot
provide an accurate estimate. In some states, liquor licenses must be purchased at costs ranging from
$5,000 to $500,000.
16
This estimate is for the cost of a computerized cash accounting system, including installation.
17
This is our estimate of the amount needed to cover your expenses for the start-up phase of the
business, including lease payments, inventory (including restaurant equipment and food), payroll,
facility expenses like utilities, insurance, pest control, security, repairs and maintenance and
complimentary sales and other costs. The range provided also includes our best estimate ofthe cash
requirements including Builders Risk insurance (at preferred months of operations). For the purpose
of this disclosure document, we have estimated the start-up phase to be 3 months from the date the
restaurant opens for business. These figures are estimates and we cannot assure you that you will not
have additional expenses starting the restaurant. Your actual cost will depend on factors like your
management skill, experience and business acumen; local economic conditions; the local market for
the restaurant; the prevailing wage rate; competition in the market place; and the sales level reached
during the start-up phase. These amounts do not include any estimates for debt service.
18
See Notes 3 and 14 describing significant additional expenses related to the purchase of a restaurant
site and the acquisition of a liquor license for the restaurant, which expenses are not included in the
estimated total investment. The total estimated initial investment does not include the development
fee described in Item 5. The numbers above are representative of costs expended for construction of
a Chili's Restaurant in the State of Texas (a right-to-work state). You should consult a construction
standard index to determine whether these costs accurately reflect the costs of construction in the
area in which you will develop.
To our knowledge, none of the expenditures described above are refundable, unless otherwise
indicated. Except as specifically described above, the stated amounts may be subject to increases based
on changes in market conditions, the cost of providing services, and future policy changes. At the
present time, we have no plans to increase payments over which we have control.
FDD-2015
783265-v3\DALDMS
- 20
CHILFS SPECIAL VENUE
.
H
'
Column. 1".
r * " * ^
:
- :
*
K
/
1
;
•f**
^^^^n^-??^^^
;?, . .; expenditu^^ ; .
!
•f' ;
1
il^.^'^S^Cftv-^K ' . V j i ^ W
^
T i
^
1"
*
*\
l Actual or . '
Estimated Cost,
Low -.High
Initial Franchise
Fee
$40,000
Leasehold
Expense
$3,500-$20,000
2
3
4a
Pre-Construction
'
'
rfl
4 ' r^-" Column 3. *- -
/ Columns
s
1
$45,000-$200,000
'C0iufM:5Jo '|^>;
g
^
-j '
*
,
'
!
T M ; ' ! '' 'r.\\^-\ : •
, u
.When Due *
1
To Whom
Payment Made-
• - " ' ;*,^ y i ' ^ ^ o V f ! : i .
' . . ^ ^ • y ^ y ' ^ l •<~.*K.i.-.
'
Lump Sum
Monthly
As arranged
Method .of Payment.
1
• " -<, ifc
-
i
:
^ ' *\ ^
iv-'T-'
,
- ^ L,?: v
See Item 5
Brinker
As arranged
Lessor
As arranged
Suppliers
J
;
Y.:/. • - ^ . >
'
$400,000-$ 1,000,0
00
As arranged
As arranged
Contractors/
suppliers
$50,000-$300,000
As arranged
As arranged
Contractors/
suppliers
Exterior Signage
$15,000-$75,000
As arranged
As arranged
Contractors/
suppliers
Furniture/Fixtures/
Sound System/
TVs
$55,000-$100,000
As arranged
As incurred
Suppliers/bankers
Kitchen/Bar
Equipment
5210.000190.000$350,000
As arranged
As incurred
Contractors/
suppliers
Opening
Advertising
$5,000-510,000
As arranged
As incurred
Suppliers
$60,000-5350,000
As arranged
As arranged
Suppliers of food,
lodging,
transportation
$40,000-5100,000
As arranged
As arranged
Brinker/suppliers
of food, lodging,
transportation
Construction
Costs
4b
Site Work
5
6
7
8
9
Initial Training
10
Opening Team
Costs
11
FDD-2015
783265-v3\DALDMS
21
; ~r Column 1 *" *
;
Column 2 „ - .
^ . "' \ : r 1.
-
f
„
'
^
, Type of
expenditures
+
-Actual or /
^ : Estimated Cost .
> - - s Low-High
Working Capital
Inventory
12
13
Bar/Kitchen
Accessories
.vr
, .
* . , 1' - ' ,
" Column3- , •
f
/
.
z, —
1
1
-
- ' -v . _ _
*
' '
" , To Whom ' ,
Method of Payment - * ^WHeitDue
Payment Made
\ : ^ / V '
' " - I * ' " '
\; - *
""
* ^%
^ , ,4% f , '
*
*
^
'
~* * ,
As incurred
Contractors/
As arranged
suppliers
;
*• ' '
$12,000-522,000
\
/ ^ "
" Column-5 .
*
\ '1
k
$8,000-$ 15,000
As arranged
As incurred
Suppliers
$25,000-535,000
As arranged
As arranged
Suppliers
Varies
As arranged
As arranged
Government
Agencies; your
attorneys or other
third party
14
15
Liquor License
FDD-2015
783265-v3\DALDMS
22
__* '
' ' 1! / K
Column \ \
i
s
^ y U .Column 2T
^
**
.if'
;
t
Type of
expenditure"
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Estimated Cost
'Low-High "
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Payment Madey, . , ' '
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$25 000-$40,000
As arranged
As arranged
Suppliers
Additional
Funds (3 months)
$225,000-$525,00
0
As arranged
3 months
Lessor/Brinker
18
$1,218,500,1,198.5
2Q-$3,182,000
As arranged
As arranged
Suppliers
System
Installation
)
16
17
TOTAL
Notes:
1
The above chart provides an estimate of your initial investment for 1 Chili's Special Venue
restaurant. The Chili's Special Venue concept does not have a specific prototype building, but
instead is designed as a "special" building using a standardized kit of design elements. It may be
built as either a free-standing unit, food court finish-out, an existing in-line/end-cap type of finish-out
or as a counter service interior finish-out. Because of the flexibility in the design, Chili's Special
Venue units currently operate in a square foot range of 2,000 to 5,000. Seat counts could vary
significantly depending on the square footage, service style, inclusion/exclusion of bar, and the type
of bar, but most current units contain anywhere from 70 to 210 seats.
2
This figure represents the initial franchise fee for each restaurant and does not include the
development fee. See Item 5.
3
Due to the cost of land acquisition, the premises for Chili's Special Venue restaurants are normally
leased. These amounts assume that you will lease the premises for the restaurant and do not include
costs of land acquisition. I f land for the restaurant site is purchased, purchase costs will vary
significantly depending on the market in which the Chili's Special Venue restaurant will be located;
however, these costs generally range from $250,000 to $1,500,000 based on our experience in
acquiring restaurant sites nationwide. We estimate that rent payments typically range from $5,000 to
$20,000 per month based on a build to suit lease and from $3,500 to $15,000 for a ground lease
based on our experience in leasing restaurant sites nationwide. Rent amounts may vary significantly
for airport locations. Land and site preparation costs will vary substantially depending on the lot
size, geographic area and market conditions. Costs related to evaluation of the restaurant site are not
included in this estimate.
4a
This estimate includes pre-construction costs for architectural and related drawings, engineering,
testing, permits, utility tap fees and other fees. Costs may vary significantly if you lease an in-line
site for the restaurant, and utility tap fees can vary substantially from location to location.
FDD-2015
783265-v3\DALDMS
23
'
'
^
This estimate inehides foundation, siah, materials, hardware, roof, plumbing, eleetrieal, ^BAC
equipment, andlahor. lfyouieaseaninlinesite,theeostofeonstruetionof improvementsis
estimated to range from $400,000 to $1,000,00^ Costs may vaty significantly based on the site and
regional construction costs.
5
This work includesutility extensions, pavingof parking areas,pouringsidewalksandcurbs,and
installation of outdoor lighting. If the property isapad site, the cost would be $50,000, and up to
$300,000 forafull site.
6
This will depend on the building type.
7
We require you to purchase benches, chairs, stools, decor, decorative elements, and tables that meet
our specifications. Weare an approved supplier of certain furniture and decor packages.
8
The estimate given covers the cost ofkitchen and bar equipment, hood ventilation and refrigeration
equipment. Werequire you to purchase certain kitchen equipment to meet our specifications.
9
The advertising you may needtopurchasebefore opening the restaurant includes time onlocal
broadcast media, advertisements in local newspapers, direct mail, and magazines.
10
We provide initial training for up t o 5 o f your representatives (in addition to your Managing Owner
and Operating Partner). This is an estimate of the costs that you will incur fortransportation,lodging
and food,and wages forattendees of our initial training program. Thelowendof the estimate
assumes that your Managing Owner, Operating Partner, andlother representative will attend initial
training, and the high end of the estimate assumes thatyourManagingOwner,OperatingPartner,and
mother representatives will attend initial training. The actual cost will depend on the distance the
attendees must travel and the type of accommodations you choose.
The figures given include the cost of an opening crew provided by us. Seeltem5.
Thisestimateforworkingcapital is for organizational expenses.
13
We estimate that the range given will be sufficient to cover your inventory needs fbr the first month
of operation.
14
T h e ^ i m ^ e m^des ^ a u r a n t s m ^ w a ^ like cooking serving and other utensils for food
preparation.
15
License fês will vary signifieantiy, depending on the loeale and the requirements ofthe
state, county or municipal liquor licensing laws and related liquor heensing authorities, so wee
provide an accurate estimate. In some states, liquor licenses must he purchased at costs ranging from
$5,000 to $500,000. Franchise taxes that some states require to he paid hy franchisees that are
certain types ofhusiness entities are not included.
16
This estimate is forthecostofacomputerizedcash accounting system, including installat^^
17
This amount is our estimate of the amount needed to cover your expenses for the start up phase of
the business, including lease payments, inventory (including restaurant equipment and food), payroll,
facility expenses like utilities, insurance, pest control, security, repairs and maintenance and
complimentary sales and other costs. The range provided also includes our hest estimate ofthe cash
requirements includingBuilders Risk insurance(at preferred months of operations). For the purpose
FDD^15
24
of^diôsuredocume^weh^
âurant opens for busmen Thesefiguresare estimates and we oannot assure yontharyou will not
have additional expenses starting the restaurant. Your aetualeost will depend on factors like your
management skill, experience and business aeumen; local economic conditions; the local market for
the restaurant; the prevailing wage rate; competition in the market place; and the sales level rea^^^
during the start-up phase. These amounts do not include any estimates for debt service.
18
See Notes3andl4describing significant additional expenses related to the purchase ofarestaurant
site and the acquisition ofaliquor license for the restaurant,which expenses are not included in the
estimated total investment. The total estimated initial investment does not include the development
fee described in Item 5. The numbers above are representative of costs expended for construction of
aChili'sSpecialYenue restaurant in the State ofTexas(arightto-work state). You should consulta
construction standard index to determine whether these costs accurately reflect the costs of
construction in the area in which you will develop.
Toour knowledge, none of the expenditures described above are refundable,unless otherwise
indicated. Except as specifically described above, the stated amounts may be subject to increases based
on changes inmarket conditions, the cost of providingservices, andfuture policy changes. At the
present time,we have no plans to increase payments over which we have control.
ITEM8
RESTRfCT^NSONSOURCESOFFRODUCTSANDSERYICES
Farchasesfron^ Designated and Approved Suppliers
You generally have no obligation to purchase or lease from us, our affiliates, or other designated
third party suppliersany of theproducts, services, supplies, fixtures,equipment(includingcomputer
hardware and sofâre and electronic cash register systems), inventory or real estate used in establishing
or operating the Restaurant. However, you must obtain gifr card processing services from our designated
third party supplier and we are an approved supplier (but not the only approved supplier) of the other
items listed below:
GifrCards^You may only purchase and sell gifr cards that have been approved by us. The only
gift card processor vou mav use isValuelinkPirstOata The estimated cost to purchase gifr cards for sale
in your restaurant is approximately $1,500 per year/per restaurant. We will reconcile costs and benefits
o f t h e g i f r card program and generate periodic accountingstofranchisees. Wehave implementeda
comprehensivegif^cardpolicy that is applicable to you and with which you must comply. We may
supplement, replace, revise, or otherwise modify the gifr card policy at any time, and you must comply
with any revised gift card policy. Wemay require you to signage card participation agreement in the
future.
DecorProducts^TumitureÊixtures^We are an approved supplier of the decor packages and
certain restaurant furniture and fixtures.
Merchandise. Marketing and Training Products ^ Supplies. You must purchase certain
merchandise, marketing and training products and supplies from our approved suppliers.
F00^5
7 ^ ^ ^ D ^ D ^
25
Advertising and Promotional Material Yon mnst purchase certain advertising and promotional
materials from our approved suppliers.
None of our officers owns an interest in any privately held suppliers, oramaterial interest in any
publicly held suppliers, ofthe Chili's franchise system. Prom timetotime, ourofficersmay own
nonmaterialinterestsinpuhlicly held companies that may he suppliers to ourfranchisesystem.
Furcâses A c c o r d s to Specifications
Pood Beverages^FPÊ and Other Items^You must comply with all of our standards and
specifications for the purchase of all food and beverage items, ingredients, supplies, materi^^
furnishings, equipment (including computer hardware and soflâreând other products used or offer^^
for sale at the Restaurant.
Site Selection^The site forvour Restaurant must satisfy our site selection criteria. Before you
acquireasiteforaRestaurant, you must submit to us the information we require, as well asaletter of
intent or other evidence satisfactory to us confirming your favorable prospects for obtaining the s ^ We
will have 30 days afrer we receive the information from you to approve or disapprove the proposed site.
We will not unreasonably withhold our approval, but no site will be deemed approved unless we have
expressly approved it in writing. (See f t e m l l )
LeaseTerms^ff you enter intoalease for the Restaurant premises, we have the right to ask you
to provide us withacopy of the executed lease and you must provide us withacopywithin3business
days of our request. Unless we agree to waiveaparticular provision, any lease foraChili'sRestaurant
mustcontaintheprovisionslistedat S e c t i o n 4 2 ( a ) ^ ( h ) of theDevelopment Agreement These
provisions are designed to protect our rights as your franchisor.
Construction and Cpening^You must beîn construction of the Restaurant in compliance with
our standards and specifications withinlÔ days afrer we approve the site (or, if the premises is then
occupied, immediately afrer you gainpossession). Among other requirements, you must employa
qualifiedarchitect and engineer, reasonably acceptable tous,to prepare fbr our approval preliminary
plans and specifications for site improvement and construction of the Restaurant based upon prototype
drawings furnished by us. You may not use our prototype plans as construction plans or blue prints, but
only as required design concepts,which you must adapt to your site. You must complete construction
within210days afrer construction begins(unless construction is delayed by strikes, lockouts, fir^^
casualties, acts ofCod, weather and other factors heyond your reasonable control). Before opening your
Restaurant for business, you must comply with all opening requirements we specify in the Agreements,
the CPM,and/orelsewherein writing (which includes email communications). Youmaynotopena
Restaurant to the public until you have received writtenÂuthorization to Cpen" from us.
Advertising and Promotional MaterialsÂll of your advertising and promotions must conform
to our standards and requirements. Wemust approve all advertising and promotional plans and materials
before you use them if we have not prepared them or previously approved them during thel2 months
preceding the date of their proposed use. You must submit any unapproved plans and materials to us,
and we will use reasonable efforts to approve or disapprove them within l^daysafrer we receive them
You must not use the plans or materials until we have approved them, and must promptly discontinue
using any advertising or promotional plans or materials ifwe notifyyou to do so.
FOD^5
7 ^ ^ ^ D ^ D ^
26
P U ^ R ^ O ^ ^ C ^
retamedalocal public regions
fi
Regardless of whether
you havcrctainedalocalpuhhcrclafiousfirm, you must allow us to review
discretion, auy press releases before their distrlhutiou to
You must also alert us to any actual
crisis situatiouthatdcvclops(orauypotcutial crisis situations
lusurancc^You must obtain and maintam insurance policies protcctm^you and us and various
related parties against any demand or claim for personal injury, death or property damage, or any loss,
liability or expense related to the operation ofthe Restaurant.
These policies must be written byaresponsible insurance carrier or carriers which are ratedÂ"
or better by the A.M.Best Company,lnc.,are responsible and authorized to do business in the state your
Restaurant is located, and are acceptable to us. Ataminimum, you must carry
(i)
comprehensivegeneralliability insurance, including broad form contractual
liability,broadf^rmpropertydamage,personalinjury,completed operations, products
liability, and fire damage coverage in the amount of $2,000,000 per occurrence for
bodily injury and property damage, $2,000,000 for liquor liability, and^$3,000,^^^
^n^rala^reâte and cvber liability with limits and coverage reasonably r e o ^ ^
^
(ii)
property insurance against damage or loss by fire and such other hazards (including
earthquake and flood (where applicable), lightning, windstorm, hail, explosion,
vandalism, malicious mischief aircrafr,yehicleandsmoke)on an "all risk" basis for the
full cost ofreplacement ofthe Restaurant premises;
(iii)
worker'scompensation insurance covering all ofyour employees with
employer's liability limits not less than $500,000 for each bodily injury by accident
and $500,000 for each bodily injury ofan employee by disease, and you are required
to carry this insurance regardless of waiver or exemption of coverage under any
applicable state statute;
(iv)
"all risk" builder'srisk insurance and performance and completion bonds in
forms and amounts satisfactory to us for any construction, remodeling, renovation or
refurbishing ofthe Restaurant;
(v)
automobile liability insurance for all owned, non-owned and hired vehicles
coveringbodily injury, death and property damage withaminimum combined single
coverage limitof$l,000,000; and
(vi)
commercial umbrella liability or excess liability insurance withaminimum limit
of$5,000,000 per occurrence, which policy mustprovide excess limits for the general
liability,automobile liability and employer'sliability forms required above or at least
as broad in coverage.
You may,with our written consent, elect reasonable deductibles for the coverages described in
(i),(ii),(v),and(vi) above. You may not, without ourpriorwritten consent, agreeto sublimits in
the insurance policies listed above. Exceptforworker'scompensation insurance, all insurance
policies must name us, our affiliates, successors and assigns (and their officers, directors,
shareholders, partners, employees, servants, representativesandagents)asadditional insureds. In
addition, all insurance policies must waive subrogation in favor of us, our affiliates, successors
FDD^5
27
and assigns (and their officers, directors, shareholders, partners, employees, servants,
representatives and agents).
Supplier Approval procedure
Yon mnst purchase allfood items, ingredients,snpplies,materialsand other products nsedor
offered f^r sale at the Restaurant solely from suppliers (including manufacturers, distributors
distributors of groceries, bakery, dairy, produce, seafood and meat items) and other sources) who
demonstrate, to our continuing reasonable satisfaction, the ability to meet our then current standards and
specifications, whopossess adequate qualitycontrols and capacity to supply your needs promptly and
reliably; who have been approved in writing by us before you make any purchases from any supplier; and
who have not been disapproved. Wemay change the number of approved suppliers at any time and may
designate ourselves, our affiliate, orathird party as the exclusive source for any particular item. Wemay
profit from your purchases from approved suppliers, and we and/or our affiliates may receive payments,
fees, commissions or reimbursements from such suppliers in respect of your purchases. I f you wish to
purchase any products from an unapproved supplier, you or the proposed supplier must submitawritten
request forapprovaltous andyoumaîllberequiredtohavethesuppliersignaconfidentiality
agreement.You may not purchase from any supplier unless and until we have approved the supplier in
writing. We (and our representatives) will have the right to inspect the suppliers facilities and take
samples from the supplier for testing at your or the supplier'sexpense. (See Item 6) We also have the
right to re-inspect the facilities and products of any approved supplier periodically and to revoke our
approval ifthe supplier fails to continue to meet any ofour then-current criteria. We may use an audit
companythatweselecttoconductsuch inspections, and the proposed supplier must achieveascore that
we approve.
Among other things,we consider the following in determining whether to approveasupplier:
Technical ^ Whether the proposed supplier offers innovations or expertise not available
elsewhere that would give the System some competitive advantage in the marketplace.
ûality^Whethertheproposedsupplierfillsaneed in quality.
Supply^Whetherthe proposed supplier offers needed additional capacity or fillsageo^ra^hical
weakness in the supply chain.
Cost
Whether the proposed supplier offers an opportunity to reduce System costs while
maintaining or improving quality,supply and service.
Sa^^^Whether the manufacturing processes are effective to maintain the required fo^
standards.
Althoughwe are notrequiredto approve or disapprove supplier requests within any particular
time period,we generally respond within
days afrer we receive the written request. We are not
required to approve any particular supplier(and may make that determination in our sole discretion).
Rurchasiug Arrangements
During o u r ^ l ^ ^ ^ fiscal year we had no revenues based on the sale of required items to
Chili's franchisees ^ ^ ^ t Rlf h ^ d ^ ^ ^ ^ f ^ ^ ^ ^ l ^ ^ O O b a s e d o n t h e s a l e o f
required itemstoChili'sfranchisees during our ^ ^ ^ ^ fiscal year.
FDD2^
7 ^ 5 ^ ^ ^ ^
28
We negofiate purchase aângeme^
We
may,hutarenotrequired^negotiate^
luauy
event, you are responsible for coordinating payment directly with our approved suppliers and
distributors.
We may receive rebates or discounts fromcertain unaffiliatedsuppliers of equipment, trade
fixtures, furniture, food and beverages, and other general restaurant supplies, based on amounts
purchased for our company-owned Restaurants and franchised Restaurants. During our last fiscal year,
we did not receive any rebates or discounts based on purchases of those products by Chili'sfranchisees.
Our franchisees are responsible for negotiating their own discounts and rebates from our
suppliers and distributors and may earn discounts and rebates from suppliers onadifferent basis than we
do because ofvolume purchasing, servicing, timing and several other purchasing factors.
Weestimate that the purchase and lease of all equipment, trade fixtures, decor items, restaurant
supplies, and other itemsyou mustpurchaseor lease from usorourafflliates, or from unaffiliated
approvedor designated suppliers,will represent approximately l ^ t o l 5 ^ of your total purchases and
leases to establish the franchised business and O ^ t o l ^ o f your total purchases and leases to operate the
Chili'sRestaurant. Ofyourtotalpurchasesand leases whichmustconfbrmto our speciflcationsor
which you must purchase from approved suppliers,we estimate that you will purchasel^to 5^ from us
in establishing your Ohili^sRestaurant and 0 ^ to 5^ from us in operating your Ohili'sRestaurant.
Wewillconsider many factors whenwe evaluate whether or not to renew or grant additional
franchises to aparticular franchisee, including whether or not the franchiseehascomplied withthe
sourcing requirements described above.
FRANOmSEESORÔAÔNS
T^sta^le lists your principal obligations un^
Itwill
help you find nôre detailed information aôut your obligations in têsea^reenênts and in other
iten^softlîs disclosure documents
'•' - " ' _ • / ' . -fT _ ; . ' f . k • '0"
Obligation »
,
Section in
Franchise
Agreement
\
Section in
..' _ Development .
; .Agreement .
J
k
Disclosure
Document
Item
>
a. Site selection and acquisition/
lease
N^SeQtion3.6;
Sections 4.1, 4.2,
and 6.1
Items 8 and 11
Attachment \
b. Pre-opening purchases/leases
Article 3
Section 4.3
Items 5, 7 and 11
c. Site development and other
pre-opening requirements
SeetwwSect.ions3.2
and 3.6:
Attachment I
Section 4.4
Items 8 and 11
FDD-2015
783265-v3\DALDMS
29
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1
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' Agreement
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d. Initial and ongoing training
Sections 3.1, 3.4,
and 3.7
Section 6.4
Item 11
e. Opening
Sections 3.2, 3.5
and 3.6
Sections 4.3(e),
and 4.4(d)
Item 11
f. Fees
Sections 4.1, 4.2,
4.3, 11.8, and 11.9
Article 2
Section 3.4
Items 5, 6 and 7
g. Compliance with standards and
policies/manuals
Article 7
Sections 5.2 and
5.3
Sections 6.5, 6.6,
and 6.7
Items 8, 11/13
and 14
h. Trademarks and proprietary
information
Articles 8 and 9
Sections 7.7 and
16.2
Sections 6.5, 6.6
and 6.7
Items 1, 13 and
14
i. Restrictions on products/services
offered
Sections 7.1,7.5,
7.6, and 7.7
N/A
Item 16
j.
Section 7.4
N/A
N/A
k. Territorial development and sales
quotas
Recitals
Section 1.1
Item 12
1. Ongoing product/service
purchases
Sections 7.6 and
7.7
N/A
Item 8
m. Maintenance, appearance and
remodeling requirements
Sections 7.1, 7.8,
7.9, 7.10, and 7.11
N/A
Items 8 and 11
n. Insurance
Article 12
Sections 4.3 and
11.8
Items 7 and 8
Warranty and customer service
requirements
FDD-2015
783265-v3\DALDMS
30
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/ * Disclosure ; '
Section in ' Document
Development
Item
- ' Agreement - j
*" - ^" ''T"
*
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o. Advertising and promotions
Article 11
N/A
Items 6 and 11
p. Indemnification
Sections 13.9, 17.2,
and 17.3
Sections 8.7, 11.2,
11.3, and 11.8
Item 6
q. Owner's
participation/staffing/
management
Sections 7.2 and
7.4
Section 6.3
Items 1 and 15
r. Records and reports
Article 10
N/A
Items 6 and 11
s. Inspections and audits
Sections 7.11 and
10.5
Sections 4.4(a)
and
4.4(c)
Items 6 and 11
t. Transfer
Article 13
Article 8
Items 6 and 17
u. Renewal
Section 2.2
N/A
Item 17
v. Post-termination obligations
Sections 15.1,
16.3(b) and 16.3(c)
Sections 7.7,
9.3(b), and 9.3(c)
Item 17
w. Non-competition covenants
Article 16
Section 9.3
Items 15 and 17
x. Dispute resolution
Article 21
Article 14
Item 17
ITEM 10
FINANCING
We do not offer direct or indirect financing. We do not guarantee any notes, leases or other
obligations you may make to others.
FDD-2015
783265-v3\DALDMS
31
ITEMU
FRANCÔRSAS^TANCÂDVERTISIN^
COMF^TERSYSTEMÂNDTRAININC
Except as listed below^ we are not required to provide you with
Fre-Opening Obligations^
Before you open your Restaurant,wewilh
OevelopmentAgreement:
L
Promptly afreryousigntheOevelopmentAgreement,provideyouwithsiteseleet^
guidelines and criteria, and site selection eounsehng and assistane^^
Wewillalso,
at our option, make available, atareasonable cost, reports containing demographic and market data an
real estate analyses. (Development ^reement^ Articled S e c t i o n ^ l ^ Franchise AêemeutArt^^
^Secti^n^^ndAtt^hmentl)
The site for the Restaurant is selected by you, but must be approved by us. The Restaurant may
not be relocated without first obtaining our written consent. We will assist you in the site selection
process under the terms of the Development Agreement by providing site selection guidelines and
criteria, and certain site selection counseling and assistance. Our criteria for site selection requires an
evaluation of the demographics of thelocation (including the age and incomelevel of residents of the
market area for the location), traffic patterns, the size ofthe location, and the proximity to
other centers of population concentration.
The Development Agreement providesaspecifiedTerritory within which you must select sites
foryourRestaurants. Before you acquireanysite,you must submit to us,in writing intheformwe
require, adescription of the site, and a market feasibility study for the site, whichmust include
demographic information, traffic counts, site plans, relationship ofthe site to potential compete
Restaurants, and suchother information or materials as we may reasonably require, together withaletter
of intent or evidence satisfactory to us which confirms your favorable prospects for obtaining the site.
We have 30 days afrer receiving the site information and materials from you to approve or disapprove, in
our sole discretion, the proposed site as the location for the Restaurant. No site is approved until it has
been expressly approved in writing by us. You may be in default under the Development Agreement if
you have not opened the cumulative number of Restaurants withinthe time periods specified in the
Development Schedule.
2.
Provide you with construction/design evaluation as we deem advisable. Wewill provide,
at no additional charge to you,lconstruction/design evaluation for the first restaurant developed by you
as well aslconstruction/design evaluation for the second restaurant developed by you. (Development
Agreement, Articled, ^ c t i o n s ^ l ^ a n d ^ l ^ P r a n c h i s e A^reem^ Articl^^ Section36and
Att^hêntf)
3.
Withinareasonable period afrer you sign the Development Agreement, make available,
at no charge to you, standard prototype plans and specifications,which indicate the exterior and interior
design and layout, fixtures,fumiture, and signs foraprototype restaurant. These should be used as
reference, and you must adapt the standardprototype design to your location, at your own expense.
^ D ^ ^ ^ ^ t ^ ^ ^ ^ t ^rticl^6 Secti^n^l^Pranc^^^^
A^ê^l)
FDD^5
7^^^DÔ^S
32
F^chiÂ^m^
L
Provideyou withan m^^mmgprogramfbryourManagmgOwn^^
Operating Partner and up toôfyour managed (Pranehise Agreement, Artiele^Seetion^.l)
2.
Provideyon withonsite preopeningandopeningsnpervisionandassistanee^whieh
may include, at your expense, an opening erew), as we deem
personnel. (Pranehise Agreement, Article 3,Seetion52)
3^
Provide you with access tolcopy of the OPM (Franchise Agreement, Articled,Section
51)
TypicalLengthofTimeReforeYouOpenYour Restaurant
We estimate the time from the date you sign the Development Agreement to the date you hegin
operating your first Restaurant will he approximatelyl2tol8months, and that the Franchise Agreement
willhe signed at least lOdayshefore commencement of construction. Fhis time may he extended or
reduced depending on the time necessary to ohtainasite, the availability offinancing,your ability to
obtain financing, and the amount of time required to obtain the permits and licenses necessary for
operation, none ofwhich are within our control.
Oontinning Obligations^
During the operation ofyour Restaurant, we wilh
1.
Make available other training programs, as we deem appropriate. (Franchise Agreement,
Articled,Sections33,34)
2.
Provide continuing advisory assistance to you in the operation ofthe Restaurant, as we
deem advisable. (FranchiseAgreement, Articled, Sections.3)
3.
Make available research data and other materials relating to merchandising marketing
and advertising. Wehavetherighttoreviewand approve or disapproveall advertising and promotional
materials, whichyou propose to use. (Franchise Agreement, Article3, Section 3.3 and Article 11,
Sectionll6)
4.
Revise the contents of the OFM as needed. (Franchise Agreement, Article 5, Section
5.1). We reserve the right to charge a reasonable fee (based on our costs and expenses) for any
replacement OFM or pages ofthe OFM you request, ifthe replacement is needed because you failed to
properly maintain or update the OFM as provided or due to your loss ofthe Manual.
5.
Provide you, as we deem appropriate, advice and written materials concerning
techniques ofmanaging and operating the Restaurant, including new developments and improvements in
restaurantequipment, food products, packaging, andpreparation. (Franchise Agreement, Article3,
Section3.3(c))
6.
Atouroption, establish, maintainandadministeraregionaladvertisingprogramora
national advertising program and may require you to conduct local advertising. (Franchise Agreement,
Articlell,Sectionslll,112,113,114)
F0D2^
^ ^ ^ D ^ D ^
33
7
P ^ i d e you with a c c ^ ^
and "The C h i h ^ G r ^ ^ B a r Crisis Communications
Wemay aiso make our Puhiio Relations
department available to you from time-to-time to provide puhlie relations counsel and crisis
communications assistance. (Franchise Agreement, Article^Section^S)
Advertising
We may require you to participate in either our Local Advertising Program, our Regional
Advertising Program or our National Advertising Program. We may change the program in which you
are required to participate during the term ofthe Franchise Agreement.
National Advertising Program
Currently, our franchiseesmust participate in ourNational Advertising Program, which we
estahlishedon September 1,2000. FheNational Advertising Programis organized, govemed,and
operated in accordance with our written guidelines (the "NAP Cuidelines") and we are responsible for
maintaining and administering advertising programs in accordance with the NAP Cuidelines. No
advertising or promotional plans or materials maybe used under theNational AdvertisingProgram
without our prior written consent.
Lender theNational Advertising Program, you may berequired to pay tons up to 4 ^ of
Restaurant Cross Sales to be used by us for maintaining, administering, directing, and preparing
advertising and promotional activitiesfr^rthe benefit of the System. Currently, the required National
Advertising fee is 2.90^ ofRestaurant Cross Sales, but we may increase that amount at our discretion at
any time in the future. This fee(the "NAP Fee") is used exclusively by us for any and all costs incurred
in theNational Advertising Programincluding thee
advertising materials like the preparation and coordination oftelevision, radio, magazine, direct mai^^
newspaper advertisingcampaigns, outdoor billboard advertising; marketing surveys and other public
relations activities; (ii) the employment of advertising agencies; (iii) the preparation
promotionalbrochuresandother marketing materials;(v) the cost of developing and maintaining any
website(s)relatedtotheNational Advertising Program;and(vi) reasonable administrative costs a
overhead we incur in activities reasonably relatedto the administrationordirection of theNational
AdvertisingProgram; and (v) other itemsasset forth in theNAPCuidelines. Wewill direct all
advertising and production programs in the National Advertising Program, and we will have sole
responsibility for alladvertising, marketing, and/or promotional materials used in connectionw^
National Advertising Program.
lender the National Advertising Frogram,we may also require you to participate inaRegional
AdvertisingProgram (if suchaprogram exists for your Restaurant), ff we do,we reserve the right to
allocate the NAP Fee between the National Advertising Program and the Regional Advertising Program.
ffthe NAP Fee is less than 4 ^ ofRestaurant Cross Sales, then we may also require you to spend
an amount equal to the difference between the actual NAP Fee and 4 ^ of Restaurant Cross Sales on
local advertising for the Restaurant. All local advertisingis subject to the requirements in AttachmentC
to the Franchise Agreement and to our prior written approval. You will have the discretion to spend local
advertising funds as and when you reasonably determine to be appropriate, so long as your expenditure
schedule is acceptable to us in our reasonable discretion. Withinl5 days afrer each fiscal quarter, you
must submit to us written documentation (signed and certified by you and your Managing Cwner) to
show that you have complied with these requirements, as well as other reports we may require. Ifyou do
not comply with these requirements and/or i f you fail to spend the required amount on approved local
advertising, then you will be in default ofthe Franchise Agreement and (in addition to any other rights
F00^5
7 8 ^ ^ ^ ^
34
available tou5)wemayrequireyou to remit tbefrmdstousandwewill spend tbefrmdson ioeai
advertising fortbe Restaurant.
Weexpeet that tbe NAP Fee (ineluding any portion allocable toaRegional Advertising
will be spent tor advertising and/or promotional purposes duringourfisealyear in wbieb tbey are
received. I f excess amounts remain at tbe end of tbe fiscal year, tben all expenditures in tbe following
fiscal year(s)will be made first out of accumulated fees from previous years and tben from fees collected
during tbe current year. Fbe National Advertising Program (and any Regional Advertising Program) is
operated as a conduit for tbe collection and expenditure of advertising fees. A statement of tbe
operations of tbe National Advertising Program (and any Regional Advertising Program) will be
prepared annually and willbe made available toyouupon request. We arenot required to audit tbe
statements of operations.
We reserve tbe rigbt to terminate tbe National Advertising Program (and any Regional
Advertising Program), but tbe program will not be terminated until all monies bave been expended for
advertising and/or promotional purposes or otber appropriate arrangements bave been made.
During our last fiscal year,
of tbe NAP Pee was spent on national m e d i a ( w i t b ^ ^ ^
^^t^^lîAion^dvertis^^
was spent on production/agencyfees/miscellaneous fees, ^ ^ ^ ^ spent on website, email and social
media, 1 ^ ^ ^ spent on administrative expenses, and 2^â^ spent on research and development.
Regional Advertising Program
We bave tbe rigbt to designate any geographical area (for example, an area of dominant influence
or"ADl")asaregion for purposes ofaRegional Advertising Program.
The Regional Advertising Program may be composed ofone or more Chilis Restaurants operated
by usand/orby you and/orourother franchisees(and/or their parent company oraffiliates). I f w e
establishaRegional Advertising Program for the geographic area where the Restaurant is located, then
you must becomeamember of the Regional AdvertisingProgram. We have the discretion to exclude
Chilis Restaurants we operate from the Regional AdvertisingProgram and, upon written request
(includingthereasonsfortherequest),wemay grant you (or anyotherfranchiseeintheRegional
Advertising Program)an exemption for any length of time from membership in the Regional Advertising
Program. Asacondition of granting an exemption,we may require that you comply with thelocal
advertising requirements under Sectionll.2 of the Franchise Agreement but in an amount equal to the
amounts you would have otherwise been obligated to pay under the Regional Advertising Program. Our
decision concerning an exemption request is final.
Any Regional Advertising Program will be organized, governed, and operated in accordance with
our written guidelines (the "RAP Guidelines") and we will be responsible for maintaining and
administering regional advertising programs under the RAP Guidelines. No advertising or promotional
plans ormaterials may be used underaRegional Advertising Program without our prior written consent.
We will direct all advertising and production programs in the Regional Advertising Program, and we will
have sole responsibility for all advertising, marketing, and/or promotional materials used in connect
with the Regional Advertising Program.
Llnderthe Regional AdvertisingProgram, we may require you to pay to usacontinuing monthly
advertising fee o f ^ o r less ofRestaurant Gross Sales (the "RAP Fee"). We will use the RAP Fee for
purposes similar to thosepurposes described above for theNational AdvertisingProgram, buton a
regional basis fftheRAPFeeis less thanôfRestaurant Gross Sales, then we may require that you
FDD^5
7 ^ ^ ^ D ^ D ^
35
spend an amount equal to the d i f f ^
advertismg that eomphes with Attaehme
restrictions on your expenditure ofloeal advertising funds ( i n e l ^ ^
to those described under the National Advertising Program.
Local Advertising Program
fender our Local Advertising Program, you must spend no less than 2.5^ of Restaurant Gross
Sales^LAPPee") on local advertising for theRestaurant. "Localadvertising"isadvertisingthat
complies with the requirements on AttachmentGto the Franchise Agreement. Wemust approve all local
advertising before you use it.
fngeneral, you will have the discretion to spend the LAPPee when you deem appropriate, so
long as your determination is reasonable, your expenditure schedule is acceptable to us and you submit
written documentation to us(signed and certified by you and your Managing Gwner)withinl5daysaffer
the expirationofeachfiscalquarter demonstrating that you have compliedwiththelocaladvertising
requirements. However,we reserve the right to require you to remit up tolOO^ of the LAP Pee to us on
lOdays notice for use by us for advertising and promotional activities in the Restaurants local area, fn
addition,if you do not comply withthelocal advertising requirements and/or if you fail to spend the
entire LAP Pee on local advertising we approve, then you will be in default ofthe Franchise Agreement
and (in addition to any other rights available to us)we may require you to remit the LAP Fee to us and
we will spend it on local advertising for the Restaurant.
Advertising Media
We advertise Chili's Restaurants and the products offered by the Restaurants in various media
including television, radio, magazine and newspaper advertising campaigns, and direct mail and outdoor
billboard advertising. Lhe majority of our advertising is developed by our outside advertising agencies
with the assistance of our in-house advertising department. We may use outside advertising agencies,
which may be either regional or national in scope.
Production Fee
In addition to the amounts you are required to pay under the designated advertising program, you
must pay us . ^ o f Restaurant GrossSales asanadvertising Production Feefor the productionof
advertising and promotional materials. During our last fiscal year,100^ ofthe Production Fee was spent
on the production ofadvertising and promotional materials.
Other Advertising Requirements
All advertising and promotion by you in any medium must be conducted inadignified manner
and conform to our standards and requirements as stated in the CFM or otherwise. You must obtain our
approval of all advertising and promotional plans and materials that you desire to use before you use
them ifthey have not been prepared or previously approved by us within one year. You must submit any
unapproved plans and materials to us (by personal delivery or through the mail, return receipt requested),
and we must approve or disapprove the plans and materials within 14days from the date of receipt. You
may not use any plans or materials until they have been approved by us and must promptly discontinue
use ofany advertising or promotional plans or materials upon receiving notice from us.
FDO20^
7 ^ ^ ^ 0 ^ D ^
36
You must participatemsuppleme^
gifr certificates, coupons, loyal^
marketing programs as we may periodica^ require. You may be responsible
witbtbese supplemental marketing programs.
recurrently do not baveaformaltrancbisee advisory council or association.
Computer Hardware and Software
You must bave a computerized point-of-sale system to operate tbe restaurant (tbe "PCS
System"). We do not require you to use any particular brand of computer hardware, but we reserve tbe
rigbttorequireyoutoinstallaPCS System designatedby us at your sole cost. We can require you to
replace your existing PCSSystemwitbone designated by us and,insucbevent,youwillbegivena
minimum of^years'prior notice.
You may not installanybacko^bouse("BCH") or frontofbouse("PCH") software system
without our prior written approval. Wemay require you to install and maintain any BCHand/orPCH
software system that we designate.
Thecosttoobtainasystem is typically inthe range of approximately $30,000 to $45,000 per
restaurant.
Currently, we do not have direct access to the infbrmation and data on the PCS System, however
we have the right underthePranchise Agreement to establish such access in the future.
Neither we,our affiliates, nor any third parties are required to provide ongoing maintenance,
repairs, upgrades, orupdatestoyour computer system. Currently, therearenooptionalor required
maintenance/upgrade contracts torthe PCS System.
Operations Manual
The Table of Contents of our CPM is attached as ExhibitOto this disclosure document. The
CPMhasatotalof970 pages.
Training
Your Managing Owner or Operating Partner and up t o 5 o f your managers (if you open only one
Restaurant)orl0of your managers (if you open two or more Restaurants)must attend and complete our
initial management training program toour satisfaction. Allnewmanagershiredbyyouandany
Managing Owneror Operating Partnerlaterappointedby you must attend andcomplete our initial
training program to our satisfaction.
We willprovideinstructorsandtrainingmaterialsfortheinitialtrainingofyourManaging
Owner or Operating Partner and up t o 5 o f your managers (if you open only one Restaurant) or up to 10
of your managers (if you open two or more Restaurants)at no additional charge to you, provided that you
or your employees will be responsible f^r expenses incurred in attending the training, including meals,
lodging and transportation.
Por initial training: (i)ofyour personnel in excess ofthe six(or eleven) representatives noted
above; or (ii) of any person later employed by you in the position of manager; or (iii) for each
replacement Operating Partner or Managing Owner; or (iv)afrer your first two Chili's Restaurants are
FDD^n^
7 ^ ^ ^ D ^ D ^
37
opened o r ^ i f t h e o p e n r n g o f ^ R e ^
another initio f i n i n g
tofranehiseesoperating nnder the System. Yon are responsible for all eosts and expenses hke meals,
lodging and transportation ofthe persons attending training.
Initial training programs are offered at various times during the year depending on the nnmher of
franchisees entering the System,the number of replacement personnel needing training,the number of
new restaurants we open and the timing of scheduled restaurant openings. The initial training program
will generally last 15 weeks.
If you operate more than one Chili'sRestaurant and your Managing Owner,Operating Partner
and at least^managers at your second Restaurant have completedour initial training programto our
satisfaction,we may approve your Chili's Restaurant asaCertifredTraining Restaurant. If we do, then
with our approvalyoumay conduct theinitialtrainingfr^r your managersat your CertifiedTraining
Restaurant. I f y o u trainyour managers, we willhave therighttoreviewanddetermine (by written
certification)whetheryour managers have satisfactorily complete training.
The subjects covered, approximate hours of classroom and on the job training, and other
information about our initial training program are described below:
TRATNfNCRRCCRAM
Column 1 '
Hours of
> Classroom
(See Note 1)
Subject
Column 3
Column 4
îik'^" j^îy
"î^.f,
Hours of
On-The-Job
. (See Note 1)
' 'Location
(See'Note 2)
Column 2
T
FOH Function
Training
• Includes:
Bartender, Server,
Host, QA, & ToGo
position required
modules
21.25 hours
50 hours
Certified Training Restaurant
HOH Function
Training
• Includes: Line
Cook, Prep Cook, &
Dishwasher
position required
modules
5.25 hours
80 hours
Certified Training Restaurant
60
Management
#
#
#
FDD-2015
783265-v3\DALDMS
#
240
^M'^^^^
38
Certified Training
Restaurant
^
^
^
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D
^
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Column 2
^ ^
^
c
^^^^BB
^
Hours of
Classroom :
- (SfeeNote i), ; ' ^
^
^
3
^
^
^
^
^
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Columns
^Column4
^ ^
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Oufheôb
^ ^ N o ^ ^
^ ^
^ ^
^
^
r
^
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^ ^^ ^
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Column!
^ ^
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(1)
The time periods aôc^d to the
spent hyyouandyour personnel may vary hasedonthe experience andperformanee of those
persons heing trained.
(2)
All reqniredpreopening training willhe held at one of
mnst he completed to onr satisfaction at least2months(hnt not more than5months)hefore the
Restanrantopens. OurCertifiedTrainingRestanrantsare locatedthronghontthe^.Sândthe
location ofthe Certified Training Restaurant to which you are assigned will vary depending npon
the region of the ^S.inwhich your Restaurant is located.
Instructional materials for the initial trainingprogram include the CTM, standard accounting
forms, employee manuals, personnel forms, and the pre-opening procedural manual.
Jennifer Hartley, VicePresident of Chili's PeopleWorks, supervises the conduct of all ^
training programs and restaurant openings. Ms.Hartley has served in this position since ânuary2013.
She was previously Vice President of Clohal Shared S e ^
Presidentof LeamingManagementtromDecemher2008 toPehruary 2011, and VicePresidentof
Macaroni CrillHR^TrainingfromAugust2008 to December 2008
Cur initial training and pre-opening training will he conducted hy persons who have worked in
our Chili'sRestaurants for at least^months and successfully completed our training certification cour^^^
The training certification requirements vary depending on the subject matter for which the employee has
been certified to provide training. The instructor will vary depending on the time, location and subject
matter taught. Although wemaintainacertifiedtrainingstaff (hourly workers,managers,Ceneral
Manager, Area Director,and Regional Director) for our restaurants, there is no formal franchisee t^^^
staff. Your training programs will be conducted by one or more members of our certified training staff
from our CertifiedTraining Restaurants or "CTRs" We currently have 6,000 certified
expectto draw on the substantial experience of our management and other restaurant personnel in
conducting training.
^02^5
7 ^ ^ ^ D ^ D ^
39
We may require your persons to a ^
We have the right to
ehargeareasouahle fee for these suppiemeutaltramiug programs. You must aiso pay ali expenses you or
yourpersouuei iueurmauy traiuiug program, iueiudiug the eost of travel, lodging, and meals ^
Agreement, Seetion^B^
fn addition to required training programs,we may provide eonfereuees for general managersiua
designated area. Attendanee at these meetings is voluntary, and you will he responsible for your
expenses. We may also hold annual eonferenees for general managers and quarterly meetings for unit
supervisors. Your representatives may attend these meetings, at your expense.
As disclosed in Item 16, you may not advertise, promote, post or list information relating to the
Restaurantonthel^ternet^throughtheereationof a Website orotherwise) without our prior w r ^
consent.
ITEM^
TERRITORY
Youwill not receive anexclusive territory. You may face competition from other franchisees,
from outlets that we own, or from other channels ofdistribution or competitive brands that we control.
Development Agreement
WemaysignaOevelopment Agreement with you, although we have no obligation to do so. The
Development Agreement grants you an assigned geographic area ("Territory"). ThesizeoftheTerritory
may range fromaportionofacity or an unincorporated area toasingle or multicounty area, orasingle
or multistate area, and will be described in Articlelof each Development Agreement by county or state
lines oradescription of municipal boundaries. Airports, schools, railroad/railway stations, government
institutions,military installations,stadiums,sportsarenas,casinos,"bigbox"ret^^^
institutional or public service operations will not be included in theTerritory even if they fall t o ^
partially inside the boundaries ofthe Territory.
Ifyou are in compliance with the Development Agreement and any franchise agreement with us,
wewill not establish,orlicense anyone other thanyou to establish, any Chili'sRestaurant under the
SystemintheTerritory during the term of the Development Agreement. However,weand/or any other
Chili's franchisees and any other authorized person or entity may,at any time, advertise or promote the
System and fulfill customer orders in theTerritory without compensation to you.Wemay also offer and
sell and authorize any person or entity to offer and sell products and services in theTerritory o t h e r s
throughaChili'sRestaurant, including through Chili^sExpressRestaurants^ These products and services
may be similar to those offered by the Restaurants and may be offered and sold under the Proprietary
Marks(e.g. prepackaged food and beverage items, shirts, clothing or other Chili'smemorab^^
other names and marks(see below).
The territorial exclusivity granted to you is not dependent on your achievement ofacertain sales
volume, market penetration, or other contingency except as stated in the next paragraph. Also, except as
stated in the next paragraph, there are no circumstances under which theTerritory granted to you may be
altered beforethe expiration orthe termination ofthe DevelopmentAgreement.
ff you arein default of theDevelopmentAgreement,wemay,inaddition to other remedies,
modify,reduce or accelerate the development schedule; terminate, modify and/or reduce your t^^
exclusivity; or modify and/or reduce theTerritory.
^D20^
7 ^ ^ ^ ^ D ^
40
F r a n c e Agreement
TheFranehise Agreement grants y o u t h e r i ^
location, whieh is deseribedin Attachment AtotheFranehise Agreement. Yon may not relocate the
Restaurant without first ohtainingonr written consent. There are no territorial rights granted with the
Franchise Agreement. There is no requirement that yon achieve any specified sales volume or market
penetration underthe franchise Agreement.
OtherConcepts and Distribution Channels
We have established other franchises and company-owned restaurants which may he considered
competitive toaChili's Restaurant or which sell similar products or services under different t^^
or trademarks. These include Maggiano'sLittle Italy restaurants. (Seefteml) Additionally, we intend
to begin offeringfranchisesfor C h i ^
Egress Restaurants in the future. (Seelteml) Chilis Express Restaurants will offer menu items that
are similar to those offered in Chili'sRestaurants, but we expect the menu fora^^^^
Restaurant will be more limited than the menu for typical full s e ^ i c e C l ^
Eoththe^h^
Mî^no^sEittle Italy andCîli^ Express concepts maintain their
principal place ofhusiness at 6820 EB^ Freeway, Dallas, Texas 75240, and wedo not maintain
physically separate offices or trainings
In addition,we offer
pre-packaged food and beverage items under the Chilis trademarks through supermarkets and other retail
outlets. Totheextentthattheserestaurantsandproducts compete for customers in their various market
segments and all restaurants compete for customers generally, your Restaurant may compete for
customers with our other company owned or franchised restaurants that operate under other trademarks
or retailproducts that aresoldunder the Chili's trademarks. We currently have no mechanism for
resolving confiictsbetweenfranchisees of Chili's Restaurants and the franchisedor company-owned
restaurantsoperating under different marksor tradenames. Anyconfiicts wouldberesolvedona
case by-case basis and, since there have been no conflicts in the past, no formal procedure or mechanism
has been adopted for such disputes.
Cther than those described above, we do not have any additional concepts or alternative
distribution methods that we are currently planning on implementing; however, we are constantly
evaluating the need to develop additional restaurant concepts or other means to deliver our products to
the marketplace. Weor our present or future affiliates may establish other franchises or company-owned
restaurants selling or leasing similar products or services under the trade names or trademarks described
aboveor underdifferenttradenamesortrademarks,andany oftheseunitsmaybelocatedinthe
Territory granted to you by the Development Agreement. You may use the Internet to advertise only in
compliance with the Franchise Agreement.
Options/RightsofFirst Refusal
We generally do not grant any right of first refusal to obtain additional restaurant locations. If
you wish to obtain an additional location, it must be included within your development schedule and you
will be required to enter intoaseparate Franchise Agreement forthe restaurant location.
TTEM^
TRADEMARKS
^02^5
7 ^ ^ ^ ^ ^ ^
41
The Franchise Agreement grants you the right to use the Proprietary Marks designated by us only
in the manner we authorize and only for the operation of the Restaurant at the location specified in the
Franchise Agreement.
Depending on the type of Restaurant you are authorized to operate, you must operate the
Restaurant under the service mark "Chili's" or "Chili's Grill & Bar".
The following Proprietary Marks are registered with the United States Patent and Trademark
Office ("USPTO"). We have renewed (and intend to renew} the registration(s) and have filed (and
intend to file) all appropriate affidavits at the times required by law.
'
,
r
MARK
. . ,
/ '
/
:
REGISTER
%* -
. . ,\
*'
' • <
1' '
REGISTRATION
DATE.
..
m ^ M f f i ^ M ^ i w a^fl
rhili's
Prinrinnl
1 1^4^78
Hrfn^r ?4 1078
P h i l i ' c anH D p c i o n
Prinripal
1 AAS Q71
N n v A m h e r 17 1 0R7
Chili's Southwest Grill &
Principal
1,651,125
July 16, 1991
Chili's-Like No Place
Principal
1,680,720
March 24, 1992
Chili's T™
Principal
1 Q8Q ORO
Tilly?'*
Chili's Rnr & Rites
Prinripnl
? 070 674
Tun* in 1QQ7
P h i l i ' Q T n r t nnH r ) p s i p n
Principal
7 0 0 1 04Q
Sftpt*TTiher 9
Pepper S and Design
Principal
2,674,260
January 14,2003
- y ^ y ^ i ^ r ^ ^ ^ ' ^
ri^^^y'ri'^rîi*^ rzU* ^w-*.-,- i
kjei in. ueLVvui; uei yii
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. REGISTRATION
NUMBER
P
_
Z .<
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/* r
T
^
^
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^
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Pepper Logo
Principal
2,674,259
January 14, 2003
Presidente Margarita
(logo only)
Principal
2,503,744
November 6, 2001
Presidente Margarita &
Principal
2,518,659
December 1,2001
Big Mouth Burgers
Principal
2,236,373
April 6, 1999
Big Mouth Burgers &
Design
Principal
2,240,877
April 20, 1999
Pepper S and Design (red
Principal
3,947,703
April 19,2011
FDD-2015
783265-v3\DALDMS
42
tx~
, \
MARK
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'REGISTRATION".
, N UMBER ^ . . :
'REGISTER-
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RFGISIKATION
DATE • \ ,
t
^
-* *
*
t r
i
and green)
Pepper S and Design (no
color claimed)
Principal
3,947,699
April 19,2011
Chili's (stylized) (B&W)
(2010 version)
Principal
4,114,832
March 20, 2012
Chili's & Design (Pepper)
(color) (2010 version)
Principal
4,258,631
December 11, 2012
Chili's & Design (Pepper)
(b&w) (2010 version)
Principal
4,231,149
October 23,2012
There is no presently effective determination of the U.S. Patent and Trademark Office, the
trademark trial and appeal board, the trademark administrator of any state or any court, nor any pending
infringement, opposition, or cancellation proceeding, nor any pending material litigation involving the
Proprietary Marks which is relevant to their ownership, use or licensing.
We know of no superior prior rights or infringing use that could materially affect your use of the
Proprietary Marks, and we know of no agreements currently in effect which significantly limit our rights
to use or license the use of the Proprietary Marks in any manner material to the franchise.
If any infringement of or challenge to your use of the Proprietary Marks or litigation involving
the Proprietary Marks is instituted or threatened against you, you must promptly notify us and must
cooperate fully in defending or settling the litigation. You and your owners agree that neither you nor
they will communicate with any person other than us and our counsel concerning any action, claim or
infringement. We will have sole discretion to take action, as we deem appropriate and the right to
exclusively control any litigation, USPTO action, or other proceeding involving any infringement,
challenge or claims relating to the Proprietary Marks.
We are not obligated by the Franchise Agreement to specifically protect any rights granted to you
to use the Proprietary Marks or to protect you against claims of infringement or unfair competition
involving them. We are not obligated to participate in your defense and/or indemnify you for expenses
or damages ifyou are a party to an administrative or judicial proceeding involving the Proprietary Marks
if the proceeding is resolved unfavorably to you.
You may not use any of the Proprietary Marks as part of your corporate or other name. You
must also follow our instructions for identifying yourself as a franchisee and for filing and maintaining
the requisite trade name or fictitious name registrations. You must execute any documents we or our
counsel determine are necessary to obtain protection for the Proprietary Marks or to maintain their
continued validity and enforceability. Neither you nor your owners may take any action that would
prejudice or interfere with the validity of our rights with respect to the Marks and may not contest the
validity of our interest in the Marks or assist others to do so.
FDD-2015
783265-v3\DALDMS
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ThehcenseoftheProp^^M^
except for the location ofthe Restaurant Wehave and retain the right, among others:
L
Togrant other iicensesfor the ProprietaryMarksin addition to thosehcenses already
granted to existing franchisees.
2.
Tonse the Proprietary Marks in selling products and services.
3.
Todevelop and establish other systems using the same or similar Proprietary Marks or
any other Proprietary Marks and grant licenses or franchises under those systems without providing you
any rights.
4.
Todevelop other marks that may he similar to the Proprietary Marks and exclude those
similar marks from the Proprietary Marks, in which case you will have no rightto use them.
We reserve the right to substitute different Proprietary Marks for use in identifying^^
and the businesses operating under it if our currently owned Proprietary Marks no longer can be used, or
ifwe, in our sole discretion, determine that substitution ofdifferent Proprietary Marks will ^
to the System. You will be responsible for all expenses related to the substitution of different Proprieta^
Marks and must complete the substitution in accordance with the deadlines we reasonably establish.
TPEM^
RATENTSÔRYRICHTSA^RRORRIETARYINFORMATI^^
Patents and Copyrights
Wedo not own any registered patents, and do not have any pending patent applications, that are
materialtothefranchise. We donot own any copyrightsthat are materialtothefranchise except as
described below.
Weclaim copyright protection in originalmaterialsused inthe System, including theCPM,
menus, construction plans and specifications, training, and advertising and promotional materials used in
the System.
There is no presently effective determination ofthe U.S.Copyright Office (Library o
or any court affecting our copyrights. There is no currently effective agreement that limits our right to
use and/or license our copyrights. We are not obligated by the Agreements, or otherwise, to protect any
rights you have to use the copyrights. We have no actual knowledge of any infringements that could
materially affect the ownership, use or licensing ofthe copyrights.
Confidential Manuals and CtherConfidential Information
You and your owners must at all times treat the CPM, any other manuals we authorize, and the
informationcontained in thosemanuals, as confidential. You must not copy, duplicate, recordor
otherwise reproduce those materials, or make them available to any unauthorized person. TheCPMis
our sole property and must at all times be kept inasecure place on the Restaurant premises. We may
revise the contents ofthe CTM, and you must comply with each new or changed standard. You must at
all times ensure that the CPM is kept current and up-to-date, and, ifthere is any dispute as to the contents
ofthe CPM, the terms ofthe master copy ofthe CPM we maintain at our home office will be controlling.
FOOÔ^
7^^^^^D^S
44
In addition to our mannas you and yo^^
You and your owners may not, during the term of th^
eommunieate, divulge, or use for the henefitof any other personorlegaientity, any eonfidential
information, drawings, ôwtedge, or ^ o w howeoneerning the methods of development or opera^^^
Chiii's Restaurants whieh may he eommunieated to you or them or of whieh you or they may leam in
operating Chili'sRestaurants under the Agreements. You and your owners may divulge the eonfidential
information only to those ofyour employees, as must have aeeess to it in order to develop or operate the
Restaurants. All information, drawings, knowledge, knowhow,and techniques used in or related to the
Restaurant which weeommunieate in writingorotherwise toyou, including, software licensedor
provided hy us, the CFM, recipes, plans and specifications, marketing information and s t ^
evaluation and selection techniques are confidential for purposes ofthe Agreements.
If youoryourownersfailtocomply withtherequirementsofthe Agreementsconceming
confidentiality, it will causeus irreparable injury (in addition to any other remedies we have)and you
and your owners must pay allour court costs and our reasonable attomeys'fees incurred in obtaining
specificperformance of,or an injunction against any violation of,the requirements of the agreements
concerning confidentiality.
IFFMI^
ORLICAFICNTCRARTICIRATF^
FRANCHISE RAINESS
When you sign the Agreements, you must designate an individual to serve as your ^Managing
CwnerB' Fhe same person must act as your Managing Cwner under the Development Agreement and all
Franchise Agreements between us. Ifyou are an individual, you will be the Managing Cwner.
ff you are operating asacorporation,apartnership or other business entity, your Managing
Cwner must (i) own the largest percentage share of ownership in you, but in no event less t h a n l ^ , ( i i )
be authorized by you to bind you in any dealings with us and your authorized distributors, suppliers, and
contractors,(iii) be authorized by you to direct any actions necessary to ensure compliance with the
Agreements, and (iv)unless an Operating Partner is appointed, devote his or her full time and best efforts
tothe operations of theRestaurant and your operations under theDevelopment Agreement with no
operational or management commitments to other businesses. Your Managing Cwner must also satisfy
our training requirements. Except as may be permitted under the Agreements, the Managing Owner's
interest in you must remain free of any encumbrance (including any pledge, mortgage, hypothecation,
lien, charge, encumbrance, voting agreement, proxy,security interest or purchase right or options).
ff yourManagingOwner does not intendto devote full timeandbesteffortstothedaily
operation of the Restaurant and your operations under the Development Agreement, then you must also
designate an Operating Fartner.The Operating Partner must satisfy our training requirements and be
approved by us. Fhe Operating Partner must (i) be authorized by you to bind you in any dealings with us
and your authorized distributors, suppliers, and contractors, (ii) be authorized by the you to d i ^ ^
actions necessary to ensure compliance with the Agreements, and (iii) devote his or her full time and best
efforts to the operations of the Restaurant and your operations under the Development Agreement with
no operational or management commitments to other businesses. Fhe Operating Partner must also live in
theFerritoryandwithina lOO-mileradiusofeach Restaurant withintheFerritory. Fhe Operating
Partner need not have an ownership interest in you, but ifhe does, it must remain free of encumbrances
except as may be permitted under the Agreements. Even i f we permit you to designate an Operating
Partner to supervise your operations under the Agreements, we consider your Managing Owner
ultimately responsible fbrthe Operating Partner'sperformance.
FDD^5
7 ^ ^ ^ D ^ ^ S
45
YourManaging Owner, Operating Partner, and any otherofyonr Owners are generally not
required toindividnally guarantee y o n r o ^
you are in monetary default under the Agreements(even if eured),we reserve the right to require yo
Managing Owner to sign the OuarantyAgreement, in addition to our other rights and remedies under the
Agreements.
You eannot change your Managing Owner or Operating Partner without our prior written
consent.
We have the right to requireyou toohtaincovenantsagainsttheuseanddisclosureof any
confidential informationandcovenantsnottocompetefromyourOwners,managersandanyother
employees or agents who have received or will receive access to ourtraining or confidential information.
All ofthe required covenants must he substantially in the form attached to the agreements as Attachment
8
ITEMf6
^STÔTIONSONWHATTHEFRANOHISEEMAYSELL
You must use the Restaurant premises solely tor the operation ofthe Ohili'sRestaurant and must
keeptherestaurantopenand innormaloperationforthehoursanddays wespecity intheCPMor
otherwiseinwritingYou must refrain fromusing or permitting the premises tohe used for any other
purpose or activity at any time without first obtaining ourwritten consent.
Youmustmeet andmaintainthehighestapplicablehealth standardsandratings. You must
furnish to us,within5daysafrerreceipt,acopy of any inspection report,warning citation, certificate
and/or rating which indicatesyou failedto meetor maintain thehighestapplicablehealth or safety
standards in operating the Restaurant, ffyou fail to meet or maintain the health and safety standards or, if
there isapublichealth, safety and/orsanitationemergency involving theRestaurant, thenyoumust
temporarily close the Restaurant immediately upon receipt of written noticefrom us and you shall not
reopen the Restaurant until you have (a) cured such health and safety deficiencyîes)and/or resolved
such emergency(ies)and(b)received written permission from us to reopen the Restaurant.
Toensurethatthehighestdegreeof qualityandserviceismaintained,youmustoperatethe
Restaurantinstrictconformitywiththemethods, standards, and specifications we require in the C^
it is amended in our discretion.
You must maintain in sufficient supply, and use and/or sell at all times, only the menu items,
ingredients, products, materials, supplies, and paper goods that meet our standards and specifications,
and must refrain from deviating from those standards by using or offering non-conforming items, without
first obtaining our written consent. You are required to offer or sell only the menu items, products, and
services ashavebeenexpressly approved for saleinwriting by us;to offer or sell all types of menu
items, products, and services specified by us; torefrain fromany deviationfromourstandardsand
specifications without first obtaining our written consent; and to discontinue selling and offering for sa
any menu items, products, or services which we may,in our discretion, disapprove in writing at any time.
Wemay change the goods and services you are authorized to sell at any time in our discretion, and there
arenolimitsonourrighttodoso.
You have discretion as to the prices to be charged customers for the offer and/or sale of any
menu item, products, and/or services, subject to our reasonable rules, limitations and regulations
regarding such pricing.Tothe fullest extent permitted by applicable law, we reserve the righ^
FDD2^
7 ^ ^ ^ ^ D ^
46
maximum, mmimum, or o t h e r s
produce or services offered at the Restaurant
You are required to offer or sell authorized products and services only at the Re^^^
refrain from offpremises sales or catering unless expressly authorized hy us in writing
You areprohihitedfrom installingor permitting tohe installedonorahout theRestaurant
premises, any fixtures, furnishings, equipment, computer software, decor, signs, games, vending
machines,or other itemsnot previously approved as meeting our standards and specifications without
first ohtaining our written consent.
Youmay only employadvertisingmaterialsandpromotionalactivitieswhichconformtothe
standards and specifications listed in the CFM or otherwise and which have heen approved hy us.
You may not advertise, promote, post or list information relating to the Restaurant on the Internet
(through the creation ofaWehsite or otherwise)without our prior written consent.
We do not impose any other restrictions in the Agreements or otherwise, as to the goods or
services which you may offer or as to the customers to whom you may sell.
FFFMFB
R E ^ W A ^ T E R ^ H N A T I O ^ T R A N S F E R A L DISRUT^
This tahle lists certain important provisions of the franchise agreements Yon shonid read
these provisions in the franchise agreement attached to this disclosure documents
THEFRANCHISFRFEATICNSHIF
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a. Length of the term of the 2.1
Franchise
Term will begin on the effective date of your
Franchise Agreement and, unless terminated sooner,
will expire on the last day of last calendar month of
the 20 year following the date on which the
franchised restaurant is opened for business.
th
b. Renewal or extension of the 2.2
term
The term of the successor franchise agreement will be
20 years.
FDD-2015
783265-v3\DALDMS
47
^^^^ ^ ^
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c. Requirements for
franchisee to renew or
extend
2.2(a) thru (h)
Your right to obtain a successor franchise agreement
permits you to remain as a franchisee after the initial
term of your franchise agreement expires. However,
to remain a franchisee, you must meet all required
conditions for obtaining a successor franchise,
including signing our then-current form of franchise
agreement, which may be materially different from
the form attached to this disclosure document^
including higher fees. Other conditions are: you
must give us notice at least 12 months (but not more
than 24 months) before the end of the initial term;
you must renovate and modernize your franchised
restaurant; you must not be in default of any
provisions of your Franchise Agreement; you must
have satisfied all monetary obligations owed to us or
our subsidiaries and affiliates; you must have the
right to remain in possession of your franchised
restaurant location for the entire term of the successor
franchise agreement; you must execute a general
release; and you must comply with our then-current
qualification and training requirements.
d. Termination by Franchisee
Not applicable
Not applicable
e. Termination by Franchisor
without cause
Not applicable
Not applicable
f. Termination by Franchisor
with "cause"
Article 14
Each of your obligations under the Franchise
Agreement is a material and essential obligation, the
breach of which may result in termination.
"Cause" defined - curable
defaults
7.5, 14.3, 14.4, If you: abandon the Franchised Restaurant for 3 or
more consecutive days unless the Franchised
and 14.5
Restaurant has been closed for a reason approved in
writing by us or due to governmental order or for
reasons beyond your control; breach your lease
agreement; lose the right to transact business; engage
in conduct that reflects unfavorably on us; fail to
comply with your Franchise Agreement, the System,
and/or any health, safety, or sanitation law, rule, or
regulation relating to cleanliness and sanitation,
failure to resolve any public health or safety
emergency; misuse the Chili's Marks; enter into a
subfranchise or similar agreement or a management
or consulting arrangement relating to your Franchise
Agreement and/or the Franchised Restaurant; fail to
FDD-2015
783265-v3\DALDMS
48
;
Category
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Summar)
,
pay amounts owed under the Franchise Agreement;
fail (or repeatedly fail) to comply with any provision
of your Franchise Agreement; fail to open the
Restaurant to the general public within 180 days after
signing the Franchise Agreement.
h. "Cause" defined - defaults
which cannot be cured
14.2 and 14.5
i. Franchisee's obligations on 15.1
termination/non-renewal
Assignment of contract by
Franchisor
13.1
If you: become insolvent or make a general
assignment for the benefit of creditors; make a
transfer in violation of the Franchise Agreement; file
a voluntary petition for bankruptcy (or an involuntary
petition involving you is filed); are adjudicated
bankrupt or insolvent in proceedings filed against
you; consent to a bill of equity or other proceeding
for the appointment of a receiver or other custodian;
have a receiver or other custodian appointed by any
court; have proceedings for a composition of
creditors instituted; have outstanding judgments
against you for over 30 days; are dissolved; have
execution levied against your business or property;
are sued (or otherwise proceeded against) to foreclose
any lien or mortgage against the Franchised
Restaurant (or equipment therein) and not dismissed
within 30 days; have real or personal property of
restaurant sold after levy; convicted of a felony or a
crime involving moral turpitude; submit
documentation containing any material
false/misleading statements or omitting any material
facts; violates or deal with anyone who violates any
anti-terrorism laws.
You must: immediately cease operating the
Franchised Restaurant; cease using the System, the
Chili's Marks, the CFM, and the Confidential
Information; de-identify the Franchised Restaurant;
return the CFM, Confidential Information, all written
materials bearing the Chili's Marks, and all computer
hardware and software which may have been
provided or licensed by us; cancel any assumed name
or equivalent registration which contains the Chili's
Marks and give us evidence of compliance; and pay
all amounts owed to us under this Franchise
Agreement.
We have the right to transfer or assign the Franchise
Agreement to any person or entity without restriction.
FDD-2015
783265-v3\DALDMS
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k. "Transfer" by Franchisee defined
13.2
Transfer includes selling, assigning, transferring,
conveying, giving away, pledging, mortgaging or
otherwise encumbering any direct or indirect interest
in the Franchisee, Franchise Agreement, Franchised
Restaurant, and/or Chili's Marks.
1. Franchisor approval of
transfer by Franchisee
13.2 and 13.3
You must obtain our written consent before
transferring any interest. We will not unreasonably
withhold our consent.
m. Conditions for Franchisor
approval of transfer
13.3
You must: pay all amounts due us or our subsidiaries
and affiliates; not be in default of your franchise
agreement; execute a general release; pay a transfer
fee; remain liable for pre-transfer obligations. Your
proposed transferee must sign a written agreement
agreeing to assume all obligations of your franchise
agreement; meet our criteria for becoming a Chili's
franchisee; sign our then-current franchise agreement;
remodel and/or upgrade the Franchised Restaurant;
complete our training program; if proposed transferee
is an entity, it must show us its compliance with the
representations and warranties and covenants in the
Franchise Agreement; and satisfy other reasonable
conditions that we reasonably require.
n. Franchisor's right of first
refusal to acquire
Franchisee's business
13.6 and
Attachment
"E"
Within 30 calendar days after notice, we have the
option to purchase the transferred interest on the
same terms and conditions.
o. Franchisor's option to
purchase Franchisee's
business
Within 30 days before expiration or termination of
15.2 and
your
Franchise Agreement we have the option (but
Attachment "F"
not the obligation) to purchase your building shell
including any or all of the furnishings, fixtures,
equipment, signs, supplies, or inventory related to
your Franchised Restaurant (excluding liabilities
related to you and/or the Franchised Restaurant).
p. Death or disability of
Franchisee
13.7
Upon death or permanent disability of any person
with interest in the Franchise Agreement and/or
Franchisee, a distributee must be approved by us, or
the franchise must be transferred to someone
approved by us within 12 months from death or for
permanent disability, 6 months after notice to you.
FDD-2015
783265-v3\DALDMS
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^
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Ca^go^
q. Non compefifion
covenants duringthe^rm
ofthe franchise
r. Non-compefifion
covenants after the
franchise is terminated or
expires
s. Modification of the
agreement
^ ^
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6^h)and(c)
20.1
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Yon are prohibited from: diverting or attempting to
divert any business or customer to any competitor or
taking any actions that injure or prejudice the Chili's
Marks and System; employing or seeking to employ
any person who is employed by us or any of our
developers; having any interest in any restaurant
business which is in the casual dining market segment
of the restaurant industry and hasaprimary menu
consisting ofhamburgers or other sandwiches, steaks,
salads, barbecue ribs, fajitas, or other Southwestern
or Mexican style cuisine, as well as any restaurant
business which is in the fast-casual market segment
oftherestaurantindustryand has hamburgers asa
primary menu item.
Foraperiodof^years after the termination or
expiration ofyonr Franchise Agreement andôr after
yon transfer all ofyonr interest in the Franchise
Agreement, yon are prohibited from: diverting or
attempting to divert any business or customer to any
competitor or taking any actions that injure or
prejudice the Chih'sMarks and System; employing
or seeking to employ any person who is employed by
us or any ofourfranchiseesor developers; having
any interest in any restaurant business located within
the United States which is in the casual dining market
segment ofthe restaurant industry and hasaprimary
menu consisting ofhamburgers or other sandwiches,
steaks, salads, barbecue ribs, faîtas, or other
Southwestern or Mexican style cuisine, as well as any
restaurant business located within the United States
which is in the fast-casual market segment ofthe
restaurant industry and has hamburgers asaprimary
menu item.
Except for changes we are permitted to make under
your Franchise Agreement, no amendment, change,
or variance from the Franchise Agreement will be
binding unless mutually agreed to and executed by
the parties.
FDD-2015
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Only the terms of the Franchise Agreement and other
related written agreements are binding (subject to
applicable state law). No other representations or
promises will be binding. We may not disclaim
representations made in the disclosure document.
t. Integration/Merger clause
20.1
u. Dispute resolution by
arbitration or mediation
21.2
Either party may submit claims or disputes to
non-binding mediation; the non-binding mediation
will be conducted through either an individual
mediator or a mediation service organization.
v. Choice of forum
21.3
Unless contrary to applicable state law, the venue for
all proceedings related to the Franchise Agreement is
under the jurisdiction of the State Courts of Texas,
located in Dallas County, Texas, and the United
States Federal District Court for the Northern District
of Texas, Dallas Division.
In addition to the provisions noted in this chart, the
Franchise Agreement contains a number of provisions
that may affect your legal rights, including a waiver
of jury trial, waiver of punitive or exemplary
damages, and limitations on when claims may be
raised. See Sections 21.7 and 21.8. We recommend
that you carefully review all of these provisions, and
the entire contract, with a lawyer.
w.
Choice of law
21.3
Unless contrary to applicable state law, the Franchise
Agreement shall be interpreted and construed under
Texas law (without regard to Texas choice of law
rules). Any State law regarding the offer and sale of
franchises, franchise relationships and/or business
opportunities will not apply unless the applicable
jurisdictional requirements are met.
FDD-2015
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This table lists certain important provisions of the development agreement. You should
read these provisions in the development agreement attached to this disclosure document.
.+
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a. Length of the term
Article 5
Term will expire (unless terminated sooner) on the
first to occur of (i) the date on which you complete
your Development Schedule and your last required
Franchised Restaurant is open and operating or (ii)
the date specified by us in the Development
Agreement.
b. Renewal or extension of
the term
Not applicable
Not applicable
c. Requirements for
Developer to renew or
extend
Not applicable
Not applicable
d. Termination by Developer
Not applicable
Not applicable
e. Termination by
Franchisor without
cause
Not applicable
Not applicable
f. Termination by
Franchisor with "cause"
Article 7
Each of your obligations under the Development
Agreement is a material and essential obligation, the
breach of which may result in termination of your
Development Agreement or modification of your
territorial rights or your Development Schedule.
g. "Cause" definedcurable defaults
Not applicable
Not applicable.
h. "Cause" defineddefaults which cannot be
cured
7.3,7.4 and 7.5
We may terminate you for cause based on certain
noncurable defaults, including if you, your Managing
Owner, Operating Partner, Owners, affiliates,
subsidiaries, successors, and/or assigns: become
insolvent; make a transfer in violation of the
Development Agreement; make a general assignment
for benefit of creditors; file a voluntary petition for
bankruptcy; are adjudicated bankrupt or insolvent in
FDD-2015
783265-v3\DALDMS
53
SMSC^MtfA*
Category
J
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Section
_ Summary
proceedings filed against you; consent to a bill of
equity or other proceeding for the appointment of a
receiver or other custodian; have a receiver or other
custodian appointed by any court; have proceedings
for a composition of creditors initiated; have
outstanding judgments against you for over 30 days;
are dissolved; have execution levied against your
business or property; are sued to foreclose any lien
or mortgage against the premises or equipment of
any Franchised Restaurant and not dismissed with 30
days; have real or personal property of restaurant
sold after levy; fail to comply with the Development
Schedule; fail to pay amounts owed under the
Development Agreement; fail to lease or purchase
and construct and open each Franchised Restaurant
within the required time period; are convicted of a
felony or crime involving moral turpitude; engage in
conduct that reflects unfavorably on us; fail to
maintain a positive credit rating; enter into a
subfranchise or similar agreement or a management
or consulting arrangement relating to your
development rights and obligations; submit
documentation containing any material
false/misleading statements or omitting any material
facts; repeatedly breach your Development
Agreement; fail to comply with any provision of
your Development Agreement, Franchise
Agreement, or any other related agreement; violates
or deal with anyone who violates any anti-terrorism
laws.
FDD-2015
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':yj\\-2s.i;
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Developer's obligations on 7.7
termination/non-renewal
j.
Assignment of contract by
Franchisor
k. "Transfer" by developer
- defined
Franchisor approval of
transfer by Developer
You must cease developing restaurants or, on a
partial termination of territorial or development
rights under 7.5(c), (d) or (e), continue to develop
only in accordance with any modified Development
Schedule; comply with all applicable confidentiality
and non-competition covenants; cease using the
System, the Chili's Marks (to the extent we have
granted you written approval to use the Chili's
Marks, if any), the CFM, and the Confidential
Information; return the CFM, Confidential
Information, and all written materials bearing the
Chili's Marks; and cancel any assumed name or
equivalent registration which contains the Chili's
Marks (to the extent we have granted you written
approval to use the Chili's Marks, if any) and give us
evidence of compliance. You must continue to
develop and operate any Restaurant if a Franchise
Agreement has been signed and delivered to you
before termination.
8.1
We have the right to transfer or assign the
Development Agreement to any person or entity
without restriction.
8.2(a)
Transfer includes selling, assigning, transferring,
conveying, giving away, pledging, mortgaging or
otherwise encumbering any direct or indirect interest
in the Developer, Development Agreement the
Franchised Restaurant and/or the Chili's Marks.
8.2
You must obtain our written consent before
transferring any interest. We will not unreasonably
withhold our consent.
FDD-2015
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You must: pay all amounts due to us or our
subsidiaries, affiliates, and third party suppliers; not
be in default of your Development Agreement;
execute a general release; pay a transfer fee; remain
liable for pre-transfer obligations. Your proposed
transferee must sign a written agreement agreeing to
assume all obligations of your Development
Agreement; meet our criteria for becoming a Chili's
developer; sign our then-current development
agreement; complete our training programs; if the
proposed transferee is an entity, it must show us its
compliance with the representation, warranties, and
covenants in the Franchise Agreement; and satisfy
other conditions that we reasonably require.
m. Conditions for Franchisor
approval of transfer
8.2
n. Franchisor's right of first
refusal to acquire
Developer's business
Within 30 calendar days after notice, we have the
8.4 and
Attachment "D" option to purchase the transferred interest on the
same terms and conditions.
o. Franchisor's option to
purchase Franchisee's
business
Not applicable
Not applicable.
p. Death or disability of
Developer
8.5
Upon death or permanent disability of any person
with an interest in the Development Agreement
and/or Developer, a distributee must be approved by
us, or the development rights must be transferred to
someone approved by us within 12 months from
death or for permanent disability, 6 months after
notice to you.
q. Non-competition
covenants during the term
of the Development
Agreement
9.3(a)
You are prohibited from: diverting or attempting to
divert any business or customer to any competitor or
taking any actions that injure or prejudice the Chili's
Marks and System; employing or seeking to employ
any person who is employed by us or any of our
developers; having any interest in any restaurant
business which is in the casual dining market
segment of the restaurant industry and has a primary
menu consisting of hamburgers or other sandwiches,
steaks, salads, barbecue ribs, fajitas, or other
Southwestern or Mexican-style cuisine, as well as
any restaurant business which is in the fast-casual
FDD-2015
783265-v3\DALDMS
56
^ *
* *
Category
.
.:
Section ,
^
.
market segment of the restaurant industry and has
hamburgers as a primary menu item.
Non-competition
covenants after the
Development
Agreement is terminated
or expires
9.3(b) and (c)
For a period of two years after the termination or
expiration of your Development Agreement and/or
after you transfer all of your interest in the
Development Agreement, you are prohibited from:
diverting or attempting to divert any business or
customer to any competitor or taking any actions that
injure or prejudice the Chili's Marks and System;
employing or seeking to employ any person who is
employed by us or any of our developers; having any
interest in any restaurant business located within the
United States which is in the casual dining market
segment of the restaurant industry and has a primary
menu consisting of hamburgers or other sandwiches,
steaks, salads, barbecue ribs, fajitas, or other
Southwestern or Mexican-style cuisine, as well as
any restaurant business located within the United
States which is in the fast-casual market segment of
the restaurant industry and has hamburgers as a
primary menu item.
s. Modification of the
agreement
15.9
Except for changes we are permitted to make under
your Development Agreement, no amendment,
change, or variance from the Development
Agreement will be binding unless mutually agreed to
and executed by the parties.
t. Integration/merger
clause
15.9
Only the terms of the Development Agreement and
other related written agreements are binding (subject
to applicable state law). No other representations or
promises will be binding. We may not disclaim
representations made in the disclosure document.
u. Dispute resolution by
Arbitration or Mediation
Not applicable
Not applicable.
FDD-2015
783265-v3\DALDMS
57
t
•Section
Category
,
^
v. Choice of forum
Summary
?
14.2
:
Unless contrary to applicable state law, the venue for
all proceedings related to the Development
Agreement is under the jurisdiction of the State
Courts of Texas, located in Dallas County, Texas,
and the United States Federal District Court for the
Northern District of Texas, Dallas Division.
In addition to the provisions noted in this chart, the
Development Agreement contains a number of
provisions that may affect your legal rights,
including a waiver of jury trial, waiver of punitive or
exemplary damages, and limitations on when claims
may be raised. See Sections 14.6 and 14.7. We
recommend that you carefully review all of these
provisions, and the entire contract, with a lawyer.
w. Choice of law
14.2
Unless contrary to applicable state law, the
Development Agreement shall be interpreted and
construed under Texas law (without regard to Texas
choice of law rules), except that any State law
regarding the offer and sale of franchises, franchise
relationships, and/or business opportunities will not
apply unless the applicable jurisdictional
requirements are met.
ITEM 18
PUBLIC FIGURES
We currently do not use any public figure to promote the sale of our franchises.
ITEM 19
FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC's Franchise Rule permits a franchisor to provide information about the actual or
potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable
basis for the information, and the information is included in the disclosure document. Financial
performance information that differs from that included in Item 19 may be given only if: (1) a franchisor
provides the actual records of an existing outlet you are considering buying; or (2) a franchisor
supplements the information provided in this Item 19, for example, by providing information about
performance at a particular location or under particular circumstances.
The following statement of Average Sales and Expenses of company-operated Chili's
Restaurants gives the average sales and expenses for the 12 periods ended June 26, 201125. 2014 ofthe
FDD-2015
783265-v3\DALDMS
58
£4-6810 company-operated Chili's Restaurants that were open for at least 30 months before June 3&2014 ("Sample Restaurants"). We do not have access to sufficient cost or otherfinancialdata of
our existing franchised restaurants to provide meaningful comparison between franchised Chili's
Restaurants and company-operated Chili's Restaurants for the information below.
The average length of time the Sample Restaurants have been open is 44T514.1 years. The
Sample Restaurants are located in the following states:
State
Number of Sample Restaurants
in State
Alabama
1
Arizona
%io
Arkansas
15
California
+44111
Colorado
36
Florida
4%126
Georgia
36
Kansas
1
Louisiana
28
Maryland
5
Michigan
17
Mississippi
10
Missouri
3
Nevada
9
New Jersey
18
New Mexico
16
New York
16
North Carolina
26
Oklahoma
28
Oregon
1
Pennsylvania
15
Tennessee
34
Texas
3#201
Utah
16
Virginia
1
West Virginia
5
FDD-2015
783265-v3\DALDMS
59
T y p i c a l company-opera^
The
location of a reâurant (whether eompany-operated or franehised) and the demographies of the
geographieareaeanhaveamateriai impact on sales and expenses.
All of the Sample Restaurants otfersnhstantiaiiy the same products and services to the pnhiie
thatfranchisedChili'sRestaurants are expected to offer.
STATEMENTCFAVERACESALESANÊ^RENSESCF
COlÂNYCRERATEDC^TLISRESTAURANTS
The following information is hased on the actual experience of company-operated Chili's
l ^ t ^ ^ n t s t h ^ t were open for at ^
not hased onthe actual experience offranchisedChili'sRestaurants. The average sales, costs and profits
stated in the analysis should not he considered the actual or potential sales, costs and profits that will he
realized hy any franchisee. Wedo not represent that anyfranchiseecan expect to attain such sales, costs,
or profits or any particular levelofsales,costs or profits. Additionally,we donot represent that any
franchisee will derive income that exceeds theinitial payment f^r or investment inaChili'sfranchise.
Wedonotmakeanyrepresentationsahoutyourfuturefinancial performance, and your future financial
results may vary significantly from the information in this Item 19.
Certain charges you must pay and other differences in the expenses you may incur (including
development fees, franchise fees, ongoing royalty fees, technical services fees, and advertising
contrihutions)are noted in the "Rases and Assumptions" for the data contained in this analysis(alsos^^
Items5and6). These items are not included in the calculation ofaverage results set forth helow because
ourcompanyoperated restaurants do not incur these expenses. Your sales and expenses in operatinga
Chili's Restaurant arelikely to he different from the sales and expenses of company-operated Chili's
Restaurants and will he directly affected hy many factors like location of the restaurant, compete
the market, the quality of your management and service at the restaurant, your contractual relations
with lessors and vendors, the extent to which you finance the operation ofthe restaurant, your attorney,
accounting and other professional fees, fn addition, certain benefits and economies ofscale we may have
derived asaresult of operating multiple Chili'sRestaurants onaconsolidated basis may not be available
toyou. Accordingly,thisanalysisis provided as reference information only for your use with other
information.
Some outlets have sold this amount. Your individual results may differ. There is no assurance
that you will sell as much. We encourage you to consult with your financial, business, tax, accounting
and legal advisors about the information set forth in this analysis.
This information does not include any estimates ofthe federal income tax that would be payable
on the net income fromarestaurant or state or local income taxes that may be applicable to the particular
communityinwhicharestaurant may be located. You are strongly encouraged to consult with your tax
advisor regarding the impact that federal, state and local taxes will have on the amounts shown in this
information.
We will make written substantiation of the data used in preparing this analysis available upon
reasonable request.
AYERACESALESAlÊÊNSESCFT^SA^LERESTAURANTS^
(UNAUDITED (NoteA)
^Wee^sEnded
FDD^5
60
ôf
June 26,201325,
2014<H>
2
3
$ale < >
S
3
(In thousands)
Sales (Note B)
34401066
Gross Profit (Note C)
3#*2ZZ2
Total Operating Expenses (Note
D)
•490L1M
mm.
Total Non-Controllable Expenses
(Note E)
Restaurant Contribution (Note F)
$$±2M
nîM.
%
%
2±+±22
%
4jU-lS.4
Depreciation (Note G)
456132
4^1%
EBITDA (Note H)
<mm
3^211
%
Ofthe U t m Sample Restaurants, 3%375 or 46% met or exceeded (and 435 or 54% were below)
the average Saks figures for the 52 weeks ended June 25. 2014 ("FY 2014"); 372 or 46% met or exceeded
(and 438 or 54% were below) the average SaJesfiKossJI'roOf: figures for the 52 weeks ended June 26, 2013
("FY 20l3nPY 2014: -4^377 or 47% met or exceeded (and 433 or 53% were below) the average Gfessfeofit figuroo for FY 2013; 385 or 17% met or oxooeded (and 131 or 53% were below) the average
Restaurant Contribution figures for FY 50442014: and 390381 or 4$£Z% met or exceeded (and 426422 or
* a i % were below) the average EBITDA figures for FY 34^2014.
FDD-2015
783265-v3\DALDMS
61
(1)
IMPORTANT NOTE:See applied
seofiom
(2)
Ourfi^yearisbasedon52or53we^^^
(3)
W e e d e d 44 undêrformm^
^ ^ ^ m ^ C h ^ ^ ^ u ^ ^ ^
^ ^ 4 T ^ 5
closed reâurants were locatedmArizonaOahforn^
^ d T e ^ W ^ s o c l ^
The r e l o a d
restaurants were located in Florida andTexas Thefinaneial performance ahoveexeludes all closed
restaurants hecause we did not own dêserestanrantstheinitial4underper^rmin^ restaurants as we did
not operate these restaurant for the ^11 y e ^ Additional^ tlê financial performance above excludes
relocated restaurant because the^reûrantsêre not operated^^same^^^
Têlunderperforming restaurant closed on the last dav of our fiscal year is included in the ^
performance abovebecausewe did ooeratethisrestaurantforthe full year
Rases and Assumptions
A.
Ourcompanyoperated Chili'sRestaurants useauniform accounting system and the data pertaining
to these restaurants was prepared by our in-house accountants onabasis consistent with generally
accepted accountingprinciples during the period covered. The informationcontained in the
foregoing statement has not been audited.
R.
Sales include the total of all in-restaurant,"togo^ and catering food and beverage sales, includm^
beer,wine and liquor sales. Sales also include the dollar amount tor discounts, coupons, and other
promotional discounts. ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^
0.
Cross profit is calculated by subtracting Cost of Sales from Sales. Cost of Sales includes the total
costs of all in-restaurant,"togo,"and catering food and beverage sales, including beer,wine and
liquor sales. Wepurchasemanyitemsusedintheoperationof the Chili's Restaurants under
arrangements^contracts negotiated with suppliers and distributors which may have permitted us to
purchaseandhave such items delivered atavolume discount. Totheextentthese arrangements are
changed or are not available to you, these costs could vary significantly.
D.
Total Operating Expenses include hourly labor costs, restaurant expenses, facility costs, and
miscellaneous items, ffourly labor costs include employee wages and benefits, employee training
expenses, payroll taxes and vacation pay. Other benefits which you elect to provide your
employees, like the amount of vacation time and vacation pay,are factors thatwill affect labor cost.
Restaurant expenses include such items as restaurant supplies, catering supplies, to go containers,
tableware, linen, uniforms, credit card fees and bank charges. Third party credit card processing
fees and bank charges are separately negotiated with credit card processors and banks. These fees
and charges will vary depending on both the actual and projected volume of transactions and the
total dollar value of individual transactions. Therefore, you may experience relatively higher costs
for these items. Facility costs include such items as telephone expenses, dues ^ licenses,
equipment rentals, exterminators,variablerepairs^maintenance expenses, maintenance contracts,
utilities, security, sales tax, and corporate insurance allocations for group health, generals
property and workers'compensation. The costs ofproviding group health insurance for employees,
general liability, property and workers' compensation insurance will vary depending on many
factors, including the extent and amount ofcoverage provided, the loss experience ofthe group, and
FDD20^
^ ^ ^ D B ^ D ^
62
which msurance provider is chosen Therefore, Franchisees may encounter higher revive costs in
obtaining comparable insurance coverage.
Miscellaneous operating expenses include
complimentary meals, coupon expenses, gift certificate income, office costs, merchandise sales and
expenses, and miscellaneous income and expenses.
F.
Non-Controllable Costs are those expenses that on site management does not have the ability to
control directly. Non-Controllable expenses include manager salaries, rent, property taxes,
depreciation(explainedinCbelow), and miscellaneous items. Manager Salaries include salaries,
payrolltaxes,bonuses,andbenefits for the store management team. Rent consists of minimum
rents,percentage rents, common area maintenance charges, and any sales or other taxes imposed
thereon and paid by us. For fee simple properties, an allocated interest charge in lieu of rent has
been included. That charge was not added back in calculating
for comparability purposes
between owned and leased restaurants. FropertyFaxesconsistofreal estate taxes and assessments
levied against the property upon which the restaurant is located. The amount or rate of taxation
varies ftomjurisdictiontojurisdiction, and you should consult with your tax advisors regarding the
impact that these taxes will have on this analysis. Miscellaneous Non-Controllable costs include
fixed equipmentrentals,non-recurringrepair^maintenance,liquorlicensing^taxes,gain^loss on
the sale offurniture,fixturesandequipment, other small miscellaneous non controllable expenses
and pre-opening costs. These expenses do not include advertising or restaurant supervision
expenses. The franchise agreement requires you to payaroyalty fee ofl.25%of"Cross Sales" as
defined in the franchise agreement, a technical services fee of 2.75% of "Cross Sales", an
advertising production fee of 0.5% of "Cross Sales,"and to incur certain additional advertising
costs(as detailed in ftems6andll)none of which are reflected in the above information.
F.
Restaurant Contribution is the pre-tax profit for Chili'sRestaurants and is calculated by s
Cost ofSales,TotalCperating Expenses andTotal Non-Controllable Expenses from Sales.
C.
Depreciation consists ofdepreciationofproperty, equipment and leasehold improvements over the
lesser of the applicableleaseterm, inthe event ofalease,or the estimatedusefullives of such
assets, using the straight line method. Estimated useful lives are based on our experience with the
various types of assets aslimited by generally accepted accounting principles. We advise you to
consult withyouraccountingandtaxadvisorsregardingtheeffect, i f any,of any existing and
proposed tax legislation upon this information.
fT
EEfTDA is earnings before interest, taxes, depreciation and amortization.
Cther thanthe precedingfinancial performance representation, ErinkerlntemationalFayroll,
E.F.does not make any financial performance representations.Wealso do not authorize our employees
or representatives to make any such representations either orally or in writing, ffyou are purchasing an
existing outlet, however,we may provide you with the actual records of that outlet, ff you receive any
other financial performance information or projections ofyour future income, you should report it to the
ftanchisoBs management by contacting êffreyffoban at 6820ER^ Freeway, Dallas,Texas75240 or
(972) 980-9917,the Federal Trade Commission, and the appropriate state regulatory agencies.
FDD^5
7^^^^^D^S
63
ITEM 20
OUTLETS AND FRANCHISEE INFORMATION
Table No. 1
Systemwide Outlet Summary
For years 5044-2012 to 5O4420140)
Column 1
Column 2
Column 3
Column 4
Column 5
Outlet Type
Year
Outlets at the
Start ofthe Year
Outlets at the
End of the Year
Net Change
466475
44445 R
^-J2
Franchised
2QU2m
l
r
30^:
1 7 1\4%
D
\
-1?
)
•1
2013
458
^
*.
Company-Owne
d
±i • •
--'S'---
:
m#w
.
334821
smm
30442m
-15
443
-3
x^/^'^^*,^
•%
' , .-*• •
^ i ' - . ^ y .y^/'t^v ' ^
821
2013
822
"^.'oe
TV«
-
' J '
#
Total Outlets
+1
aow-aaz
#
#
-U3931.299
mm$
2013
#
+^L222
44=22
'
,279
emrngMFmmmg
^ ^ ^ ^ ^ ' " ' ^ ^ ^
-14
45^L2M
mmm
9% . V
j r . -
'
.
'
\-
Note 1: All numbers are as of our fiscal year ends. Our fiscal year ends for 2011, 2012, aad-2013 and
2014 are as follows respectively, June 3^22* June 272£ and June 2&2^
FDD-2015
783265-v3\DALDMS
64
Table No. 2
Transfers of Outlets from Franchisees to New Owners (other than the Franchisor)
For years 3W4#12 to 241320 WO
;
Column 1
Column 2
Column 3
State
Year
Number of Transfers
- • .0
7e&M&.!^
*
:
-
=\
;
f
X
/aw-^ ^
^
^
f
V
-4^
4.
•/.'"
2012
WisconsinElmda
i
V
A
4~
V
-m
2013
im-im
êtalWisconsin
2012
2013
y f i t W } ; - ^ - ^
...^.--î-zA-^'
B^'??;^.;?^:*^'
^. '*jr/':
Z^f
^ g&V:
M^W.'^
i ^ ^ . / , ; ^ ^ Vik/*
:=
^ / ^
^ ^ : ^ : ^ ' / i r } ^ k ; ^ ^ ; f ^ 2 m n f ' / A t ^ * y . ^ *V
*
L j ^ ^ t
1
•"
fc-
:
'; ,
• •" V' ..-•t
r
f
1
n.'-rt" "_.:a... -4*' Pi ";'.
-
.
\, , -
.
k / . ^ ^ ^ / ^ L . ^ . ^''--y
1. '"t":/ -K'-
*" - •'-\ *' • •' '
^ "yv-
:
L
Note 1: All numbers are as of our fiscal year ends. Our fiscal year ends for 2011. 2012, aftd-2013 and
2014 are as follows respectively, June &
29TZL
June 2726 andv;June 2&2L
-^v.&^'.ZOM;^:
r^;?
Note 2: The existing Franchise Agreement was terminated and a now Franchise Agreement was signed
in connection with a sale of the Restaurant.
FDD-2015
783265-v3\DALDMS
65
Table No. 3
Status of Franchised Outlets
For years 20112012 to 2013MM
Col. 1
Col. 2
Col. 3
Col. 4
State
Year
Outlets at
Start of
Year
Outlets
Opened
Alabama
50442fl
12
13
0
0
504420
13
0
13
0
Col. 5
Col. 6
(I)
Col. 7
Col. 8
Col. 9
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
End of the
Year
0
0
0
13
0
0
0
0
13
01
0
0
0
4412
Termina- Non-Rene
tions
wals
n
504422
Ii
:• /
K^WA&^K r^,W^
T
#
;
#
pX-
iGeW^
m
m
mm
1 Outlets - . TeTtriiHaT^ ;Non Rene
Opeiicd \ '•:v ^: ens";
- 'wek . ' ' .
Ye*f
m
Alaska
;. <•
y-Smi*
V-^'Yv:./^
;.':State -"^f.
-r*
•n <
.Operations:
- Othor^-n
Roaaons"
\0#e^
at End "
0^ranohioon;*
01
QAUW
41
12
jrv
'•H:
^
^y^X
2013
Arizona
4\
9
«>r
'
l
m
3444-20
12
1
u
..r^
0
:g
0
WBWI
0
#
-
«
FDD-2015
783265-v3\DALDMS
66
0
I
#
0
##
0
0
"
-A.'.; ^ . c . ^ v
'^*^l,fVk^r",<;'
r
0i
^nsipa&apf
0
mm
0
" +
3
f *,
G-Vi'
m #m
prf%v.
2013
«
f-r:,'^ ^
MfOUtJ&T
> i i..,-'
IV
0
Th
0
^
Mtge
#1
+2
0
SMf
'-<0S'9
0
v
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
End ofthe
Year
California
3044-20
61
4-0
01
01
%
H
r^rr,
fw,-
#
#
#
#
#
#
w##t
•
Colorado
zm-m
#
#
# G #
w.j^tNJ-s.s
i*m
2(*)
sx**. *
W*<'t
'. . / U
' "^' •
o
12
FDD-2015
783265-v3\DALDMS
67
'
/
.v" * y--
0
2013
, # #
5
.
^ ^ ^ ' ' ^
#
#
'
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
End of the
Year
•
#
am
#
2013
Connecticut
#3
^
0
#
^^r"%/fAGAn
n
-
^.V/^r.^P^
wmm
19
2013
#
#
#
Delaware
244420
H
W '•" •' Or
-4.*:^'
""V- \
0
- ^ y t k , ? * 'VY-ig-^lk*
mm*
Florida
mm
2013
ms
i?'
X.t-v.*:^
4*-
g^fir
^
^k.r^.f '
:
z/m.;
W'M*
13
^..^'^
0
2ffl
,••
.
•-. >:•. '}--
FDD-2015
783265-v3\DALDMS
68
2*)
0
t#M
r^'--?
- sif*^ , V
\% .
-Vt
I-
;
0
^#v:Y%#
44M
01
^ ^
-'.•••Z ••0
Bill!!
##a
0
^\
* • '-w-f
•WIS
0
0
m
-en-
?i'-A-y:-:••>•„:
02
02
^
mm
t -
-v".;r;-.f;
*0^-/^
.xtr.-j.
o
.r* -. . ^ ^ h -
m^###
•' '<
:;() w;.
0
%- ,
-tflfi
14
^m^k
01
0
v vâ
2013
(fX/f^'V^
0
^x"^G^\
19
0
fff:.
f'
^ " ^ ^ 4
A
'
"o-;
0
0
^ ' - V
m-^^
19
r;^:.;*^
15
3014-22
12
^ . ^ f k ' ^ W ^ :
^
01
iiWlW ' ^ ^ a ^ W ,
Georgia
0
i i ^ - - ^
19
r
„
L ^ - ' Z A } . >,-*rf,ll-.;\
mi^Q
12 .
mm@
0
'.3" ^ . " ^ . ' 5 '
V.,
t:^'^;
^
1^!%
0
^^4-
2013
'
0
"TGC 1 #
o
^.^^^.^
Â;,
0
0
o
^ywnwgT'Wt
m
A^^vg
/ ~ -'iz,. k
v&n
um
x
0
.> - #
3W4-2Q
.".VV:;' ./*
v
.
viV^'/TS-i
10
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
End of the
Year
Hawaii
3W42Q
6
0
0
0
0
0
6
n
%vyA\
'.S L s ^ i * aw
' zm'.'
Idaho
:
#
2013
6
0
2m-m
B.
%
2012
2013
m^F^
#
.V,
K&M
.
0
0
0
0
6
0
0
0
0
0
Jfi
7
0
0
0
0
0
7
7
0
0
0
0
0
7
4" '
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^
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#3
3044-22
52
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304422
14
Iowa
2012
2013
.• *
26
1
0
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0
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27
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0
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0
0
0
622
6
0
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30+4-22
%
un
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1
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783265-v3\DALDMS
69
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4512
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
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Reasons
Outlets at
End of the
Year
n
#30%%
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fe;
Maryland
f ^ ^ ' ^ h U-J
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Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
End ofthe
Year
n
mmmmmmmmmUKM mm
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tao-'
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12
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#
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#
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Missouri
• •- ":
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2013
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1
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71
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Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
End ofthe
Year
Montana
304422
12
l#G#f
fit
0
2013
Nebraska
a&oW
2013
afArv A ,
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0
u^'^.y?;
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FDD-2015
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72
1
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2013
0
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304422
12
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New
Hampshire
v f ^ f "Tfr"
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a
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'-J
Nevada
J * '
0
n
0
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Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
End of the
Year
New Jersey
30+4-22
11
10
##2
mw
%
2013
*
+
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10
0
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mw
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Carolina
0
^^y^^y/v
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15
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mmam;
14
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Dakota
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304422
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2012
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^ ^ / ; 0 ^ v i VA
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2013
Ohio
22
0
0
@1
0
0
441
16
16
FDD-2015
783265-v3\DALDMS
73
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
• End of the
Year
2013
16
0
0
0
0
0
tWÂfsR
K^^R
j t s i M , ? >;'••
ij&tSZ.'&S:
fsmar
Pennsylvania bTaxaGb
n
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qk?ruaf9. f y . * ^ y * * ^ ' * ? ^ ^ ^ /
0
2012
4-^2
0
0
0
iyt /=9
^j^?::^
^-fi'
Rhode Island
#m am •mm
19
2013
0
0
n
âW)
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2013
0
zm-m
0
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0
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0
6
n
0
0
mm
0
17
304422
22
0
1V +
0
^ ^ ^ - v ^ ^ k
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0
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Dakota
' rt. '.'
0
*
i
2013
^
19
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C'/'v'.
18
^ l
0
0
i> ' .
Sr^WpK ^
South
Carolina
a* --•-i'-""'''*"-'';
% W-blK/JV
6
a L t f t u r .JkJ
19
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m4-m
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0
0
0
2
0
0
0
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0
0
0
10
H
Texas
2012
0
FDD-2015
783265-v3\DALDMS
74
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
End of the
Year
2013
10
0
3«
0
0
0
7
Vermont
m
'#%^!^ ) ^ ^ ' % ^
2^ i Q - ; 'o: ;
Lf&.^jKA^
2
a#420
J2
0
0
0
2013
2
B
^
D
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33
20142Q
12
^m:
^
2013
0
wm
0
33
0
0
• Va
0
0
^yK^,;/
^'^''Jfy::^'^-^
' r
Washington
dTf.
::"
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• ,s.
4
204-1-22
0
4
gr/jwa?*
Wisconsin
304422
H
15
0
0
0
0
•" '
0
15
^r^v , y
•'.
-'^'^ .->u_
A;
'
0
0
33
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^<%\
4
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f .
.
'
.
v ^ ' ^ G ^ ^
0
0
0
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0
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1%' '
0
0
EM
. c j c a ^ i L
0
FDD-2015
783265-v3\DALDMS
75
0
4
0
15
^
0
'f^m^^
2013
NT ^ ?
t4 / . ^ f ^ j f t ' t A f .
:spy2v"'&
m%
a#
33
1
:
0
^
0
'%r.G
-T^r r -'?.'> • . -v JV'
n
2013
" -V :\.a^'; '
^ ^ ' ^ ^ Y '
i>m'i
2
•
0
0
0
, -\
0
&r
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##3
2
^'"r,'^-/"^
0
^
tM^K^y %
0
0
r( ^0%?.^-'
^#4^
Virginia
mmem.
^ ^ ^ ^
'
vy&.Jz^s: #
.^V.
0
#
:y.2#
^/ . / / w ^ ^
0
-f^
i 'iW^^-
^!
15
.. "AA . ^ ' . ^
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
State
Year
Outlets at
Start of
Year
Outlets
Opened
Terminations
Non-Rene
wals
Reacquired
by
Franchisor
Ceased
Operations
- Other
Reasons
Outlets at
End of the
Year
Wyoming
5044-22
n
#m
fâtKa^
2013
204422
4662
H
Totals
2012
475
2013
458
*XWr*S&P M r r t W :'4Z#(
'7#.;"
mm1133? # w
r"',!*
3fl
%
m
10
458
443
10
.^'^^v;
i i •''*i j;''V'#- ';
^ . ^ ^ ^
fc-yî
,
: *
J
: 2%'/'^''
m^'yt?
J
ii^ftS
=-1%:^
mm:
: All numbers are as of our fiscal year ends. Our fiscal year ends for 2011, 2012, 2013. and
2O442014 are as follows respectively, Juno 29, June 27, June 26 and June 2&2i* These numbers include
Kiosk locations of which there were approximately 16 as of June 29, 2011; approximately 8 as of June
27, 2012; and-approximately 5 as of June 26, 244-^2013 and approximately 4 as of June 25. 2014.
2r
The New London, CT Chili's Restaurant temporarily oensed operations duo to a fire.—Therostaurant was rebuilt and reopened January 21, 2011.
hi 2011, wo mutually terminated 1 franchise agrocmont in New York, 1 franchise agreement in
Pennsylvania, 1 franchise agreement in Texas and wo mutually agreed to allow 1 Kiosk in Illinois
to cease operations.
47
In 2012, we mutually tormiimtod 1fronchisoagreomont in each of the following states: California,
Florida, Illinois, New Hampshire, and South Carolina and we mutually terminated 2 franchise
agreements in Minnesota.
5T
In 2012, we also mutually agreed to allow 9 Kiosks to cease operations. 1 Kiosk was located in
California. 2 in Florida, 3 in Georgia and 3 in Illinois.
&
The Chili's Too Restaurant in Terminal C at St. Louis Airport temporarily ccasod operations due to
damage from the April tornado. Tho restaurant was rebuilt and reopened April 2, 2012.
FDD-2015
783265-v3\DALDMS
76
Z^'
3T
in 2013, wo mutually terminated 1 franchiso agroomont in each of tho following states: Florida,
Massachusetts. Nevada, North Dakota, and New York and we mutually terminated 2 franchise
agreements in Georgia and wo mutually terminated 3 franchise agreements in Texas,
&
In 2014;—2 fmnohiso agroomonts expired in California and 1 franchiso agrocmont oxpirod in
Colorado.
9T
In 2013, wo also mutually agreed to allow 3 Kiosks to coasc operations. 1 Kiosk was located in
California and 2 were located in Georgia.
Table No. 4
Status of Company-Owned Outlets
For years 3014-2012 to 2M32Mi
(1)
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
State
Year
Outlets
at Start
ofthe
Year
Outlets
Opened
Outlets
Reacquired
From
Franchisee
Outlets
Closed
Outlets Sold
to
Franchisee
Outlets
at End
ofthe
Year
Alabama
30442012
1
0
0
0
0
1
50442013
1
0
0
0
0
1
soman
1
0
0
0
0
1
5044-2012
#32
0
0
+2
0
32
30432013
32
0
0
0
0
32
20^2014
32
0
0
G2
0
Arizona
FDD-2015
783265-v3\DALDMS
77
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
State
Year
Outlets
at Start
ofthe
Year
Outlets
Opened
Outlets
Reacquired
From
Franchisee
Outlets
Closed
Outlets Sold
to
Franchisee
Outlets
at End
ofthe
Year
Arkansas
%m2m
15
xmim
15
15
34422flM
15
15
3<m-2012
118
California
15
0
44^116
92
^ A
^
: f«
'ifS
s
2013
^2QM%;y.
Â/yt'/
Colorado
Florida
116
^^m- %
^'MM-^
T^,
-A/.'^:
0
36
'f
304+2012
36
m^2on
36
36
am^zan
36
36
awmi
127
2013
407129
02
; s; v;
129
&%3QN
vtif^
Kansas
115
t,^.
0
^0WS^ ^ # 3 &
Georgia
0
2m-2mi
36
30+32012
36
50442014
36
#
- ,.
0
'". ^W^":^
<\ ;
^ ^ ' ' K A l ^ J
0
130
%ao9%'
A^^K^
A %
0
'.r: z
0
36
36
#12
01
50442012
204320n
30442014
Louisiana
30442212
28
28
30442212
28
28
FDD-2015
783265-v3\DALDMS
78
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
State
Year
Outlets
at Start
ofthe
Year
Outlets
Opened
Outlets
Reacquired
From
Franchisee
Outlets
Closed
Outlets Sold
to
Franchisee
Outlets
at End
ofthe
Year
50442014
28
01
0
0
0
2*22
2044-21112
5
0
0
0
0
5
30422013
5
0
0
0
0
5
40442014
5
0
0
0
0
5
40442012
17
0
0
0
0
17
40442013
17
0
0
0
0
17
40442014
17
0
0
0
0
17
40442012
10
0
0
0
0
10
40442013
10
0
0
0
0
10
40442014
10
0
0
0
0
10
50442012
3
0
0
0
0
3
50442013
3
0
0
0
0
3
40442014
3
0
0
0
0
3
50442012
9
0
0
0
0
9
50442013
9
0
0
0
0
9
40442014
9
0
0
0
0
9
40442012
19
0
0
01
0
#1&
20442011
491S
0
0
±0.
0
18
50442014
18
0
0
0
0
18
5044701%
16
0
0
0
0
16
30442012
16
0
0
0
0
16
Maryland
Michigan
Mississippi
Missouri
Nevada
New Jersey
New Mexico
FDD-2015
783265-v3\DALDMS
79
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
State
Year
Outlets
at Start
ofthe
Year
Outlets
Opened
Outlets
Reacquired
From
Franchisee
Outlets
Closed
Outlets Sold
to
Franchisee
Outlets
at End
ofthe
Year
3W42014
16
0
0
01
0
20442012
16
0
0
0
0
16
20422011
16
0
0
0
0
16
20442014
16
0
0
0
0
16
20+42012
27
0
0
0
0
27
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36*206
New York
North
Carolina
Oklahoma
Oregon
Pennsylvania
Tennessee
Texas
FDD-2015
783265-v3\DALDMS
80
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
State
Year
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at Start
ofthe
Year
Outlets
Opened
Outlets
Reacquired
From
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Outlets Sold
to
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at End
ofthe
Year
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Virginia
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Note 1: All numbers are as of our fiscal year ends. Our fiscal year ends for 2011, 2012, and 2013 are :as
follows respectively, Juno 29, June 27, June 26 and June QSrlS.
FDD-2015
783265-v3\DALDMS
81
Table No. 5
Projected Openings As Of June 26, 20132^1fll4
(1)
Column 1
Column 2
Column 3
Column 4
State
Franchise Agreements
Signed But Outlet Not
Opened
Projected New
Franchised Outlet in the
Next Fiscal Year
Projected New
Company-Owned Outlet
in the Next Fiscal Year
- X ^ ^ ^ : ' ^ ^ ^ : '
v - -^'•- --.^.-^^ .^^M
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Kentucky]
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#
#
#
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Texas
-.
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Total
?&
61
4*11
Note 1: All numbers are as of our fiscal year ends. Our fiscal year ends for 201 L 2012, 2013. and
56442014 are as follows respectively, June 29, June 27, June 26 and June 4&2^
The names, addresses and telephone numbers of our U.S. franchisees and their Restaurants as of
June 26. 201325. 2014 are attached as Exhibit G.
FDD-2015
783265-v3\DALDMS
82
The name, city and sta^ and c u r r e n t s
home telephone nnmher of every U.S, franchisee who has had a Franchise Agreement terminated,
cancelled, not renewed,or who otherwise voinntariiy or m^
Franchise Agreement during the most recently completed fiscal year, or has not commnnicated with ns
withinlOweeks of the date of issuance of this disclosure document are listed on Exhibits Ifyouhuy
this franchise, your contact information may he disclosed to other huyers when you leave the franchise
system.
As of the date of this disclosure document,we are not offering toaprospectivetranchisee any
outlets we currently control that were previously owned hyalranchisee. Ifwehegintoofleranysuch
outlet, specific inf^rmationahout the outlet willheprovidedtoyouinaseparate supplement to this
disclosure document.
As of June 26 20134^ 2014 we have no current or former tranchisees who have signed
provisions restricting their ability to speak openly to you ahouttheir experience with the C h i ^
system.
As of June 26 2013 25 2014 there are no trademark-specific franchisee organizations
associated with the Chili's^ranchise system.
1T^21
FINANC^STAT^^NTS
The financial statements listedhelow are attached to this disclosuredocument asFxhihit A
beginning on page F44J^
AnditedconsolidatedbalancesheetsofBJlandsubsidiariesasofJune 26 201325 2014and
June27 2012 26 2013 and the related consolidated statements of comprehensive income shareholders'
equity and cash ôws for each ofthe years in the 3^year period ended June 26, 2013.Also included are unaudited^
Bll has executedaGuarantee of Performance relating to our obligations under the Development
Agreements and Franchise Agreements. AcopyoftheCuaranteeofFertormance is included in Exhibit
A
FDD^5
7 ^ ^ ^ ^ D ^
83
ITEM 22
CONTRACTS
Attached as exhibits to this disclosure document are the following contracts and their
attachments:
1.
2.
Development Agreement (with attachments)
Franchise Agreement (with attachments and state amendments)
Exhibit B
Exhibit C
ITEM 23
RECEIPT
RECEIPTS
Attached as the last 2 pages of this disclosure document are duplicate Receipts. Please sign and
date both Receipts and return one to us.
FDD-2015
783265-v3\DALDMS
84
EXHIBIT A
FDD-2015
783265-v3\DALDMS
Exhibit A
iSSiP
KPMG LLP
Suite 3100
Dallas, TX 75201-6585
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
We have audited the accompanying consolidated balance sheets of Brinker International, Inc. and
subsidiaries (the Company) as of June 25, 2014 and June 26, 2013, and the related consolidated statements
of comprehensive income, shareholders* equity, and cash flows for each of the years in the three-year
period ended June 25, 2014. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overallfinancialstatement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Brinker International, Inc. and subsidiaries, as of June 25, 2014 and
June 26, 2013, and the results of their operations and their cashflowsfor each of the years in the three-year
period ended June 25, 2014, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Company's internal control over financial reporting as of June 25, 2014, based
on criteria established in Internal Control — Integrated Framework - 1992 issued by the Committee of
Sponsoring Organization ofthe Tread way Commission and our report dated August 25, 2014 expressed an
unqualified opinion on the effectiveness of the Company's internal control overfinancialreporting.
K f p ^ o LCP
Dallas, Texas
August 25, 2014
KPMQ LLP is o Delewete limited Itatiilitv M f t n o r s h i p .
Iho U.S. member firm of KPMG International Ccoperativo
("KPWG Intemotional "I, » Swija entity.
KPMG LLP
Suite 3100
Dallas, TX 75201-6585
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
We have audited Brinker International, Inc.'s (the Company) internal control overfinancialreporting as of
June 25, 2014, based on criteria established in Internal Control - Integrated Framework ~ 1992 issued by
the Committee of Sponsoring Organization of the Treadway Commission (COSO). The Company's
management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, Our responsibility is to express an
opinion on the Company's internal control over financial reporting based on our audit
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted, accounting principles. A company's internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation offinancialstatements in.accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors ofthe company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a
material effect on thefinancialstatements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of June 25, 2014 based on criteria established in Internal Control - Integrated Framework 1992 issued by COSO.
KPMG LLP is a Delaware limhed liability c i n n o r s h i p , .
the U.S. mombor firm of KPWG Irnornational Cooperative
('KPMG International"|. a Swiss entity.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of Brinker International, Inc. and subsidiaries as of
June 25, 2014 and June 26, 2013, and the related consolidated statements of comprehensive income,
shareholders' equity, and cash flows for each of the years in the three-year period ended June 25,2014, and
our report dated August 25, 2014 expressed an unqualified opinion on those consolidated financial
statements..
KVM.Gr LCP
Dallas, Texas
August 25, 2014
This marketriskdiscussion contains forward-looking statements. Actual results may differ materiallyfromthis discussion
based upon general market conditions and changes in domestic and global financial markets.
BRINKER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except per share amounts)
Fiscal Years
2013
2014
Revenues:
Company sales
Franchise and other revenues
Total revenues
Operating Costs and Expenses:
Company restaurants (excluding depreciation and amortization)
Cost of sales
Restaurant labor
Restaurant expenses
Company restaurant expenses
Depreciation and amortization
General and administrative
Other gains and charges
Total operating costs and expenses
Operating income
Interest expense
Other, net
Income before provision for income taxes
Provision for income taxes
Net income
2012
2,823,069 $
82,383
2,905,452
2,766,618 $
79,480
2,846,098
2,748,462
72,260
2,820,722
$
758,028
905,589
682,271
2,345,888
136,081
132,094
49,224
2,663,287
242,165
28,091
(2,214)
216,288
62,249
154,039 $
758,377
892,413
655,214
2,306,004
131,481
134,538
17,300
2,589,323
256,775
29,118
(2,658)
230,315
66,956
163,359 $
769,729
891,910
649,830
2,311,469
125,054
143,388
8,974
2,588,885
231,837
26,800
0,772)
208,809
57,577
151,232
Basic net income per share
$
2.33 $
2.28 $
1.93
Diluted net income per share
$
2.26 $
2.20 $
1.87
$
Basic weighted average shares outstanding
66,251
71,788
78,559
Diluted weighted average shares outstanding
68,152
74,158
80,664
$
(940) $
(940)
153,099 $
0 $
0
163,359 $
0
0
151,232
$
0.96 $
0.80 $
0.64
Other comprehensive income (loss):
Foreign currency translation adjustment
Other comprehensive loss
Comprehensive income
$
Dividends per share
F-13
BRINKER INTERNATIONAL, INC
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
2014
ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses and other
Income taxes receivable
Deferred income taxes
Total current assets
Property and Equipment:
Land
Buildings and leasehold improvements
Furniture and equipment
Construction-in-progress
$
Less accumulated depreciation and amortization
Net property and equipment
Other Assets:
Goodwill
Intangibles
Other
Total other assets
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt
Accounts payable
Accrued liabilities
Income taxes payable
Total current liabilities
Long-term debt, less current installments
Other liabilities
Commitments and Contingencies (Notes 9 and 14)
Shareholders' Equity:
Common stock—250,000,000 authorized shares; $.10 par value; 176,246,649 shares
issued and 64,558,909 shares outstanding at June 25, 2014 and 176,246,649 shares
issued and 67,444,099 shares outstanding at June 26, 2013
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Less treasury stock, at cost (111,687,740 shares at June 25,2014 and 108,802,550
shares at June 26,2013)
Total shareholders' equity
Total liabilities and shareholders' equity
149,184
1,483,894
593,344
32,844
2,259,266
(1,202,812)
1,056,454
$
$
59,367
44,082
24,628
65,584
4,930
0
198,591
147,581
1,435,426
580,115
20,588
2,183,710
(1,147,895)
1,035,815
133,434
30,090
18,841
40,931
223,296
1,490,604 $
142,103
24,064
10,696
41,334
218,197
1,452,603
27,884 $
102,931
328,017
7,278
0
466,110
832,302
129,098
27,596
93,326
269,465
0
845
391,232
780,121
131,893
17,625
484,320
(940)
2,306,532
2,807,537
17,625
477,420
0
2,217,623
2,712,668
(2,744,443)
63,094
$ 1,490,604 $
(2,563,311)
149,357
1,452,603
See accompanying notes to consolidated financial statements.
F-14
57,685 $
47,850
23,643
65,506
0
16,170
210,854
2013
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
Common Stock
Shares
Balances at June 29, 2011
Net income and comprehensive
income
Dividends ($0.64 per share)
Stock-based compensation
Purchases of treasury stock
Issuances of common stock
Excess tax benefitfromstockbased compensation
Balances at June 27,2012
Net income and comprehensive
income
Net income
Other comprehensive loss
82,938 $
0
0
0
(10,966)
2,370
0
74,342
Additional
Paid-ID
Capital
Amount
17,625 $
0
0
0
0
0
0
17,625
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
463,688 $2,013,189 $ (2,055,592) $
0
0
13,461
(2,901)
(9,175)
1,708
466,781
151,232
(51,563)
0
0
0
0
2,112,858
Total
0 s 438,910
0
0
0
0
0
151,232
(51,563)
13,461
(287,291)
43,416
(2J87,39I)
0
0
1,708
309,873
0
0
0
0
0
163,359
(58,594)
16,610
(333,384)
41,190
0
0
0
(284,390)
52,591
0
0
0
0
(9.176)
2,278
0
0
0
0
0
0
0
16,610
(5,565)
(10,709)
163,359
(58,594)
0
0
0
0
0
0
(327,819)
51,899
0
67,444
0
0
0
0
(5,079)
2,194
0
17,625
0
0
0
0
0
0
10,303
477,420
0
0
0
16,888
(6,103)
(23,067)
0
2,217,623
154,039
0
(65,130)
0
0
0
0
(2,563,311)
0
0
0
0
(233,494)
52,362
0
64,559 $
0
17,625 $
0
0
19,182
$
(2,744,443)
$
$
2,306,532
484,320
See accompanying notes to consolidated financial statements.
F-15
0
0
0
(940)
0
0
0
0
0
(940) $
10,303
149,357
154,039
(940)
(65,130)
16,888
(239,597)
29,295
19,182
63,094
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
2014
Cash Flows from Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Litigation reserves
Restructure charges and other impairments
Net loss (gain) on disposal of assets
(Gain) loss on equity investments
Other
Changes in assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other
Intangibles and other assets
Current income taxes
Accounts payable
Accrued liabilities
Other liabilities
Net cash provided by operating activities
Cash Flows from Investing Activities:
Payments for property and equipment
Proceedsfromsale of assets
Payments for purchase of restaurants
Insurance recoveries
Investment in equity method investee
Net cash used in investing activities
Cash Flows from Financing Activities:
Borrowings on revolving credit facility
Payments of dividends
Payments on revolving credit facility
Proceeds from issuances of treasury stock
Payments on long-term debt
Excess tax benefits from stock-based compensation
Proceeds from issuance of long-term debt
Payments for deferred financing costs
Net cash used infinancingactivities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
$
$
Fiscal Years
2013
2012
154,039 $
163,359 $
151,232
136,081
39,500
8,533
(23,041)
5,161
16,074
(328)
707
131,481
0
11,425
(4,793)
(6,905)
15,909
851
363
125,054
0
10,396
11,808
490
13,461
1,350
799
(5,372)
912
1,827
(3,397)
14,087
3,756
14,617
0,314)
359,842
5,398
908
82
(4,115)
749
(9,339)
(9,381)
(5,304)
290,688
608
(15)
(2,984)
489
(3,874)
12,188
(17,197)
(367)
303,438
(161,066)
888
0
0
0
(160,178)
(131,531)
17,157
(24,622)
1,152
0
(137,844)
(125,226)
8,112
(3,120)
0
(3,170)
(123,404)
(239,597)
120,000
(63,395)
(40,000)
29,295
(26,521)
18,872
0
0
(201,346)
(1,682)
59,367
57,685 $
(333,384)
110,000
(56,343)
(150,000)
41,190
(316,380)
8,778
549,528
(5,969)
(152,580)
264
59,103
59,367 $
(287,291)
40,000
(50,081)
0
43,416
(18,749)
1,406
70,000
(1,620)
(202,919)
(22,885)
81,988
59,103
See accompanying notes to consolidated financial statements,
F-16
BRINKERINTERNATIONAÎNC
NOTESTOCONSOLÂTED^NAÂLSTATEMENTS
L
NATUREOFOFERATIONSANDSUMMARYOFÔN^^
^Nat^ôpe^^
^^prmcip^yengagedmôw^
andMaggiano^L^h^y^Maggiano^âurant^
inthe Umted States and 30 coupes and two teôries outsit
(h) Basis ofFresentation
OnreonsoiidatedfinaneiaistatementsineiudetheaeeountsofBrinker I n t e r n a l
Ali intercompany aeeonnts and transactions have been ehminated in eonsoiidation.
êhavea5^3weekfiscai year ending on the iast Wednesday inJnne. Fiscal years20i^20i3,and20^^
J u n e ^ 2 0 i ^ J n n e ^ 2 0 i 3 , and J u n e ^ ^ O i ^ respectively each contained 52 wee^
Beginninginfiscal20lôthercomprehensiveincomeispresented on the newly titledconsolidateds^
comprehensive income.OnJune 1,2013,wecompletedtheacqnisitionofllChili^srestaur^
franchiseeandhaveincludedtheresnitsofoperationsof^
dateofacqnisitionThefbreigncurrencytransiationad^stmentincludedinc
oftranslatingthefinancialstatementsoftheCanadian restaurantsfromCanadian dollars, th^
This amount is not included in net income and would oniy he realized upon disposition ofthe hnsiness.Theac
comprehensive loss is presented on the consohdated balance sheets, Addidonally, certain prioryearha^
balance sheets have heen reclassified to conform with fiscal 2014 presentation. These reclassifications
income as previously reported and an immaterial impact on ourprioryear consolidated balance sheets.
Revenues are presented in two separate capfions on theconsolidatedstatements of comprehensive income to provide
clarityaroundcompany-ownedrestaurantrevenueandoperatingexpensetrends.Companysalesincludesrevenuesgen^
operation of company-owned restaurants including gifr card redemptions^ Franchise and other revenues includes royalties,
developmenttees,franchisefees, Maggiano^sbanquetserv^
îosk gaming revenue.
ê report certain laborandrelated expenses inaseparatecaption on the consolidatedstatements of comprehens^
titledrestaurantlabor.Restaurantlaborincludesallcompensation-relatedexpenses,includingben^
fr^rrestaurantteam members atthe general manager level and below. Labor-related expenses atfributah^
above-restaurant) supervision is included in restaurant expenses,
(c) UseofFstimates
The preparation oftheconsolidatedfinancialstatements in confr^rmitywithgenerallyacceptedaccound^^
United States ofAmericarequiresmanagementto make estimates andassumptionsthatafiecttherepo^
liabilitiesandthedisclosureofcontmgentassetsand^
amounts ofrevenues and costs and expenses duringthereportingperiod. Actual results could difierfromthose esti^^
(d) Revenue Recognition
êrecordrevenuefromthesaleoftbod,beveragesandalcoholasproductsaresold,lnitialfeesrece^^
establishanewfranchiseare recognized as income when we have performed our obligations required to assi^^
openinganew franchise restaurant,which is generally upon the opening of such restaurant. Fees received for devel^^
arrangements are recognized as income upon payment of the fees. Continuing royalties, which areapercentage of ne
franchised restaurants, are accrued as income when earned^
Proceeds from the sale of gifr cards are recorded as deferred revenue and recognized as revenue when the gifrcard^
redeemed bythe holder. Breakage income represents the value associated with the portion of gifr cards sold that will mo^^
neverberedeemed, Based onourhistoricalgifrcardredemptionp
dormancy fees, we can reasonably estimate the amountofgifr card balances fbrwhichredemptionisremote and record b^
income based onthisestimate.êrecognize breakage incomewithinfranchiseandotherrevenuesintheconsolida^
comprehensive income, ê update our estimate ofour breakage rate periodically and, ifnecessary,ad^
balance accordingly
F-17
^ F a i r Value Me^remen^
Fafrvaluelsdefined as the price that we
between market participants on the measurement date. In determimng^^^
hierarchy for inputs used in measuring fairvalue, as tbllows:
Level 1—inputs are quoted prices in active markets for identical assets or liabilities.
Levels—inputs areobservablefbrtheassetorliability,eitherdirectlyorindirectlyinclu^
markets for similar assets or liabilities.
Levels—inputs are unobservable and reflect our own assumptions.
^C^sh and Cash Equivalents
Cur pohcy is toinvest cash in excess of operating requirements inincome-producinginvestments.lncome-producing
investments with original maturities ofthree months or less are reflected as cash equivalents,
(Âccounts Receivable
Accountsreceivabie^netofthe allowance fordoubtfuiaccounts^representstheirestimatednetreaii^
doubtfulaccounts are recorded basedonmanagement^sûdgmentregardingour ability to collect as well as the age of the
receivables, Accounts receivable are written offwhen they are deemed uncollectible,
(h)Inventories
Inventories consist of food, beverages and supplies and are valued atthe lower of cost ormarket, During f i s c a l ^
began implementinganew restaurant information system for all company-owned restaurants and changedfromth^
averagecostmethodtothefirst^n,first-outor^lFC^method^hesystemimplementa^^^
fbrallChili^srestaurantsandinfrscal20l4^
FlEC method. As ofJune 26, 2013,inventories located at all Chiles as well as the converted lâggiano^s^^^^
usingtheFlPCmethodandinventoriesatnon-convertedâggiano^srestaurantsarestatedatweighte^
inventory valuationmethodsdidnothaveamaterial impact on our consolidated financial statements.
(^Propertyand Equipment
Propertyandequipmentisstatedatcost.Buildingsand^
overthelesserofthelifeofthe lease, includingrenewaloptions,ortheestimatedusefulliveso^
years, Furniture and equipmentaredepreciatedusingthe straight-line method overtheestimatedusefril^
rangefrom3tol0years,lûtinerepairandmaintenancecostsareexpensedwhenincurred,Môrrepla^^
are capitalized,
êreviewthe carrying amountofproperty and equipment semi-annually or when events or circumstances indicate tha
carryingamountmaynotberecoverable,lfthecarryingamountisnotrecoverable,werecordanimpairmentc
ofthecarryingamountovertheîrvalue, redetermine fairvaluebasedonproêcteddiscountedfu^
restaurants overtheirremaining service life usingarisk adjusted discountrate that is commensurate wi^^
currentbusinessmodel^lmpairmentchargesareincludedinothergainsandchargesintheconsolidatedsta^
income,
Ôperating Leases
Rent expense for leases that contain scheduled rent increases is recognized onastraight-line basis over th^
including cancelableoptionperiodswherefailuretoexercisesuchoptionswouldresultinaneconomicpenalty^^^
appearsreasonablyassured.Thestraight-linerentcalculationandrentexpenseincludestherenthol^^^
oftime between taking control ofaleasedsite and the rentcom
result of sales in excess of amounts stipulated in certain restaurant leases and are included in rent expense as t h e y ^
Landlord contributions are recorded when received asadeferred rent liability and amortized asare^
straight-line basis overthe lesser ofthe lease term, including renewal options, or20years,
(Âdvertising
Advertising production costs are expensed in the period when the advertising firsttakes place, Cther advert^^^
expensed as incurred,Advertising costs, netofadvertising contributionsfromfranchisees,were $92.2 milh^^
F18
$^4mônmiônmfi^
cements of comprehensive income
Ôoodwi^ and Other Intanês
Goodwin is not snhêet to amortization, hut is tested tor impairm
eirenmstaneesindieatethattheassetmight he impaired, Ooodwiiihasheenassigned to ^
testing, Ourtwo restaurant brands, Ohih^san
that the appropriate ievei to evaluate goodwill is at the operating segment ievei,The menu items, se^
preparation are virtually identical at each restaurant within the reporting unit and ourtargetedeustome
hrand,êmaintainacentralized purchasing department which manages all purchasing and distribution for our
addition, contracts forourfoodsupplies are negotiatedataconsolidated level in ordertosecurethe hestprices^^
quality across all ofour brands. Local laws, regulations and o
environments^ however, theoverallregulatorycl^
that aggregating components is appropriate forthe evaluation of goodwill,
Goodwill impairment tests consist ofacomparisonofeachreportingunit^sîrvalue with its carrying value,^
fair value based onacombinationofmarket based values and projected discounted tumre operating cash fiowsoft^^
brands usingarisk adjusted discountrate that is commensurate with the risk inherent in our currentbusiness model, lf^^
value ofareportingunit exceeds its fairvalue, goodwill is written down to its implied fairvalue,êdet^
goodwill impairmentduringourannualtestasthefairvalueofourreportingunitswassubstantiallyine^^^
No indicators ofimpairmentwere identified though the end offiscalyear2014,5eeNote5fbr ad
goodwill,
ê occasionally acquire restaurants from ourfranchisees. Goo
thebusinessacûiredoverthenetamountsassignedtoassetsacquired,includingidentifiableintangibleasse^^
franchise rights. In connection with the sale ofrestaurants, we will allocate goodwillfromthe reportingunit, or
thedisposalgroupinthedeterminationofthegainorlossonthedisposition.Theallocationishasedonthe
disposal group andthe portion ofthe reportingunitthatwas retained, Ifwedisposeofarestaurantbrandandallrelatedr^^^
the entire goodwill balance associated with the reporting unit or brand will be includedinthe disposal group for p
determiningthegainorlossonthedisposition.Add^
those assets in the gain or loss on the disposition,
Reacquiredfranchiserights are also reviewed for impairment annually or whenever events or changes in circumstances
indicate thatthecarryingamountmaynotberecoverabie,lfthecarryingamountisnotrecoverable,werecor^
for the excess ofthe carrying amount over the fair value. Impairment charges are included in other gains and
consolidatedstatementsofcomprehensiveincome,^determinedthattherewasnoimpairmentofre^
our annual test and no indicators ofimpairment were identified through the end offiscal year 2014,
(m) Liquor Licenses
Thecostsofobtainingnon-transferable liquor licensesfromlocal governmentagenciesareexpensedovert^^
ofthe license, The costs ofpurchasingtransferable^
authorized liquor licenses are capitalized as indefinite-lived intangible assets and includedm
Liquor licensesarereviewedfbrimpairmentsemi-annuallyorwhenevereventsorchangesincircumstances^
carryingamountmaynotberecoverable,lfthecarryingamountisnotrecoverable,werecordanimpairmentcharge
ofthecarryingamountoverthefairvalue.^determinefairvaluebased on prices intheopenmarketfb^
jurisdictions. Impairment charges are included in o ^
(n) Sales Taxes
Salestaxescollectedfromguestsareexcludedfromrevenues^Theobligationisincludedinaccruedliabil^^
are remitted to the appropriate taxing authorities,
(o)Se^nsnrance Program
ê are selfînsuredforcertain losses related to health, general liabilityand worked
coveragewiththirdpartyinsurerstolimitourtotalexposure.Theself-insuranceh^^^
ofclaims incurred and unpaid as ofthe balance sheet date. The estimated liability is not discounted and is establ^^
analysisofhistorical dataandactuarial estimates, and is reviewed onaquarterlybasistoensure^
actual trends, including the severity orfrequencyof claims, differ from our estimates, our financial results could be impacted.
Accrued and other liabilities include the estimated incurred but unreported costs to settle unpaid claims and estimated future claims.
(p) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
We record a liability for unrecognized tax benefits resultingfromtax positions taken, or expected to be taken, in an income tax
return. We recognize any interest and penalties related to unrecognized tax benefits in income tax expense.
(q) Stock-Based Compensation
We measure and recognize compensation cost at fair value for all share-based payments. We record compensation expense
using a graded-vesting schedule or on a straight-line basis, as applicable, over the vesting period, or to the date on which retirement
eligibility is achieved, if shorter (non-substantive vesting period approach).
Certain employees are eligible to receive stock options, performance shares, restricted stock and restricted stock units, while
non-employee members of the Board of Directors are eligible to receive stock options, restricted stock and restricted stock units.
Performance shares represent a right to receive shares of common stock upon satisfaction of company performance goals at the end
of a three-year cycle. Performance shares are paid out in common stock and are fully vested upon issuance. The fair value of
performance shares is determined on the date of grant based on a Monte Carlo simulation model. The fair value of restricted stock
and restricted stock units are based on our closing stock price on the date of grant
Stock-based compensation expense totaled approximately $16.9 million, $16.6 million and $13.5 million for fiscal 2014,2013
and 2012, respectively. The total income tax benefit recognized in the consolidated statements of comprehensive income related to
stock-based compensation expense was approximately $6.9 million, $6.6 million and $5.1 million during fiscal 2014,2013 and
2012, respectively.
The weighted average fair values of option grants were $14.75, $12.94 and $9.35 during fiscal 2014, 2013 and 2012,
respectively. The fair value of stock options is estimated using the Black-Scholes option-pricing model with the following weighted
average assumptions:
2014
Expected volatility
Risk-free interest rate
Expected lives
Dividend yield
47.7 %
1.6 %
5 years
2.2%
2013
53.4 %
0.7 %
5 years
2.4%
2012
56.7 %
0.9 %
5 years
2.6%
Expected volatility and the expected life of stock options are based on historical experience. The risk-free rate is based on the
yield of a Treasury Note with a term equal to the expected life of the stock options. The dividend yield is based on the most recent
quarterly dividend per share declared and the closing stock price on the declaration date.
(r) Preferred Stock
Our Board of Directors is authorized to provide for the issuance of 1.0 million preferred shares with a par value of $ 1.00 per
share, in one or more series, and to fix the voting rights, liquidation preferences, dividend rates, conversionrights,redemption
rights, and terms, including sinking fund provisions, and certain other rights and preferences. As of June 25, 2014, no preferred
shares were issued.
(s) Shareholders' Equity
In August 2013, our Board of Directors authorized a $200.0 million increase to our existing share repurchase program
resulting in total authorizations of $3,585.0 million. We repurchased approximately 5.1 million shares ofour common stock for
$239.6 million during fiscal 2014, As of June 25, 2014, approximately $307 million was available under our share repurchase
authorizations. Our stock repurchase plan has been and will be used to return capital to shareholders and to minimize the dilutive
impact of stock options and other share-based awards. We evaluate potential share repurchases under our plan based on several
F-20
factors, including our cash position, share price, operational liquidity, proceeds from divestitures, borrowings and planned
investment andfinancingneeds. Repurchased common stock is reflected as a reduction of shareholders' equity. During fiscal 2014,
approximately 1.2 million stock options were exercised resulting in cash proceeds of $29.3 million.
We paid dividends of $63.4 million to common stock shareholders duringfiscal2014, compared to $56.3 million in the prior
year. Additionally, we declared a quarterly dividend of $15.6 million, or $0.24 per share, in May 2014 which was paid on June 26,
2014.
(t) Comprehensive Income
Comprehensive income is defined as the change in equity of a business enterprise during a periodfromtransactions and other
events and circumstancesfromnon-owner sources. Fiscal 2014 comprehensive income consists of net income and foreign currency
translation adjustments. The foreign currency translation adjustment represents the unrealized impact of translating the financial
statements ofthe Canadian restaurantsfromCanadian dollars, the functional currency, to U.S. dollars. We reinvest foreign earnings,
therefore, United States deferred income taxes have not been provided on foreign earnings. Fiscal 2013 and 2012 comprehensive
income consists of net income.
(u) Net Income Per Share
Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number
of common shares outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted
net income per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and restricted
share awards, determined using the treasury stock method. We had approximately 113,000 stock options and restricted share awards
outstanding at June 25, 2014, 193,000 stock options and restricted share awards outstanding at June 26,2013, and 287,000 stock
options and restricted share awards outstanding at June 27,2012 that were not included in the dilutive earnings per share calculation
because the effect would have been antidilutive.
Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in
thousands):
2014
66,251
853
1,048
1,901
68,152
Dilutive stock options
Dilutive restricted shares
2013
71,788
955
1,415
2,370
74,158
2012
78,559
738
1,367
2,105
80,664
(v) Segment Reporting
Operating segments are components of an enterprise about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Two or more
operating segments may be aggregated into a single operating segment if they have similar economic characteristics and are similar
in the following areas:
The nature of products and services
Nature of production processes
Type or class of customer
Methods used to distribute products or provide services
The nature of the regulatory environment, if applicable
Our two brands have similar types of products, contracts, customers and employees and all operate as full-service restaurants
offering lunch and dinner in the casual-dining segment of the industry. In addition, we have similar long-term average margins
across our brands. Therefore, we believe we meet the criteria for aggregating operating segments into a single reporting segment.
F-21
2. ACQUISITION OF CHILI'S RESTAURANTS
On June 1, 2013, we completed the acquisition of 11 Chili's restaurants in Alberta, Canada from an existingfranchiseefor
$24.6 million in cash. The results of operations ofthe Canadian restaurants are included in our consolidated financial statements
from the date of acquisition. The assets and liabilities ofthe Canadian restaurants were recorded at their respective fair values as of
the date of acquisition. During fiscal 2014, we completed the valuation of the reacquiredfranchiserights and recorded the asset at an
estimated fair value of $8.9 million in intangibles on the consolidated balance sheet, with a corresponding decrease to goodwill. This
asset is amortized using the straight-line method over the estimated useful life of eleven years.
The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill. We expect the
majority of the goodwill balance to be deductible for tax purposes. The portion of the purchase price attributable to goodwill
represents benefits expected as a result of the acquisition, including sales and unit growth opportunities. As a result of the
acquisition, we incurred expenses of approximately $0.4 million during fiscal 2013, which are included in other gains and charges in
our consolidated statement of comprehensive income. Pro-forma financial information of the combined entities for periods prior to
the acquisition is not presented due to the immaterial impact of thefinancialresults ofthe Canadian restaurants on our consolidated
financial statements.
3.
INVESTMENTS AND OTHER DISPOSITIONS
(a) Investments
We have a joint venture agreement with CMR, 5.A.B. de C.V. to develop 50 Chili's restaurants in Mexico. At June 25,2014,
36 Chili's restaurants were operating in the joint venture. We account for the Mexico joint venture investment under the equity
method of accounting and record our share of the net income or loss of the investee within operating income since their operations
are similar to our ongoing operations. These amounts have been included in restaurant expense in our consolidated statements of
comprehensive income due to the immaterial nature of the amounts. The investment in the joint venture is included in other assets in
our consolidated balance sheets.
In fiscal 2011, we entered into a joint venture investment with BTTO Participacoes Ltda ("BTTO") to develop Chili's
restaurants in Brazil. During fiscal 2012, we made capital contributions of $1.6 million to the joint venture and opened one
restaurant. We accounted for this investment under the equity method of accounting until April 2012 when we purchased BTTO's
interest in the joint venture for approximately $ 1.5 million and began consolidating the entity's results. In the fourth quarter of fiscal
2013, we frilly impaired the property and equipment and recorded a charge in other gains and charges in the consolidated statement
of comprehensive income. The restaurant was subsequently closed in July 2013.
(b) Other Dispositions
In April 2013, we sold our remaining ownership interest in Romano's Macaroni Grill ("Macaroni Grill") for approximately
$8.3 million in cash proceeds. This amount was recorded as a gain in other gains and charges in the consolidated statement of
comprehensive income in fiscal 2013.
4.
OTHER GAINS AND CHARGES
Other gains and charges consist of the following (in thousands):
2014
$
Litigation reserves
Restaurant impairment charges
Restaurant closure charges
Severance and other benefits
Gain on the sale of assets, net
Loss on extinguishment of debt
Impairment ofliquor licenses
Other
$
F-22
39,500 $
4,502
3,413
2,140
(608)
0
0
277
49,224 $
2013
0 $
5,276
3,637
2,235
(11,228)
15,768
170
1,442
17,300 $
2012
0
3,139
4,655
0
(3,306)
0
2,641
1,845
8,974
Other gains and charges infiscal2014 includes charges of approximately $39.5 million related to various litigation matters
including a class action litigation pending in California. See Note 14 for additional disclosures.
Duringfiscal2014, we recorded restaurant impairment charges of $4.5 million related to underperforming restaurants that
either continue to operate or are scheduled to close. We also recorded $3.4 million of restaurant closure charges consisting primarily
of lease termination charges and other costs associated with closed restaurants. Additionally, we incurred $2.1 million in severance
and other benefits related to organization changes made during thefiscalyear. The severance charges include expense related to the
accelerated vesting of stock-based compensation awards. Furthermore, a $0.6 million gain was recorded primarily related to land
sales.
In June 2013, we redeemed the 5.75% notes due May 2014, resulting in a charge of $15.8 million representing the remaining
interest payments and unamortized debt issuance costs and discount. See Note 8 for additional disclosures related tofiscal2013
activity.
Duringfiscal2013, we recorded restaurant impairment charges of $5.3 million primarily related to the impairment of the
company-owned restaurant in Brazil which subsequently closed infiscal2014. We also recorded $3.6 million ofrestaurant closure
charges, consisting primarily of $2.3 million of lease termination charges and $0.9 million related to the write-down of land
associated with a closed facility. Additionally, we incurred $2.2 million in severance and other benefits related to organizational
changes. The severance charges include expense related to the accelerated vesting of stock-based compensation awards. In fiscal
2013, we also recognized gains of $11.2 million on the sale of assets, including an $8.3 million gain on the sale ofour remaining
interest in Macaroni Grill and net gains of $2.9 million related to land sales.
Duringfiscal2012, we recorded restaurant impairment charges of $3.1 million related to underperforming restaurants that
either continue to operate or are scheduled to close. We also recorded 2.6 million of impairment charges for the excess of the
carrying amount of certain transferable liquor licenses over their fair value. Additionally, we incurred $4.7 million of restaurant
closure charges primarily related to lease termination charges associated with restaurants closed in prior years and a long-lived asset
impairment charge of $0.4 million resultingfromclosures. Furthermore, a $3.3 million gain was recorded primarily related to land
sales during thefiscalyear.
The restaurant and liquor license impairment charges were measured as the excess of the carrying amount of property and
equipment or liquor licenses over the fair value. See Note 10 for fair value disclosures related to these impairment charges.
5. GOODWILL AND INTANGIBLES
The changes inthe carrying amount of goodwill for thefiscalyears ended June 25,2014 and June 26,2013 are as follows (in
thousands):
2014
Balance at beginning of year;
Goodwill
Accumulated impairment losses(a)
$
Changes in goodwill:
Additions(b)
Adjustments(c)
Foreign currency translation adjustment
Balance at end of year:
Goodwill
Accumulated impairment losses
$
(a)
(b)
(c)
2013
204,937 $
(62,834)
142,103
188,438
(62,834)
125,604
0
(8,387)
(282)
16,499
0
0
196,268
(62,834)
133,434 $
204,937
(62,834)
142,103
The impairment losses recorded in prior years are related to restaurant brands that we no longer own.
Additions for the prior year reflect the preliminary goodwill acquired as a result ofthe Canada acquisition.
The valuation ofthe reacquiredfranchiserightsassociated with the Canada acquisition was finalized during fiscal 2014
and a fair value of approximately $8.9 million was assigned to the intangible asset. There was no value assigned to these
F-23
rights in the preliminary purchase price allocation presented at June 26,2013. Intangibles was increased by approximately
$8.9 million with a corresponding decrease to goodwill.
Intangible assets, net for the fiscal years ended June 25, 2014 and June 26, 2013 are as follows (in thousands):
2014
Gross Carrying Accumulated
Amount
Amortization
Definite-lived intangible assets
Reacquiredfranchiserights
Other
$
$
Indefinite-lived intangible assets
Liquor licenses
$
9,107 $
872
9,979 $
2013
Net Carrying
Amount
(1,121)$
(292)
(1,413)$
10,275
7,986
580
8,566
Gross Carrying Accumulated
Amount
Amortization
$
$
$
560 $
364
924 $
Net Carrying
Amount
(241)$
(210)
(451)$
319
154
473
10,223
Amortization expense for all definite-lived intangible assets was $1.0 million, $0.2 million and $0.2 million infiscal2014,
2013 and 2012, respectively. Amortization expense for definite-lived intangible assets will approximate $0.9 million for the next five
fiscal years.
6. ACCRUED AND OTHER LIABILITIES
Accrued liabilities consist ofthe following (in thousands):
2014
Gift cards
Payroll
Litigation reserves
Sales tax
Insurance
Property tax
Dividends
Other
$
$
2013
104,378 $
77,585
39,500
19,622
20,652
14,209
15,625
36,446
328,017 $
91,893
77,238
0
18,613
17,743
14,119
13,511
36,348
269,465
2014
2013
Other liabilities consist of the following (in thousands):
$
Straight-line rent
Insurance
Landlord contributions
Unrecognized tax benefits
Other
$
F-24
57,462 $
36,352
23,404
5,247
6,633
129,098 $
57,129
38,602
24,029
5,055
7,078
131,893
7. INCOME TAXES
The provision for income taxes consists of the following (in thousands):
2014
Current income tax expense:
Federal
State
Foreign
Total current income tax expense
Deferred income tax (benefit) expense:
Federal
State
Foreign
Total deferred income tax (benefit) expense
$
$
2013
2012
66,170 $
15,219
3,550
84,939
46,852 $
11,800
2,879
61,531
27,707
7,056
5,098
39,861
(18,715)
(4,087)
112
(22,690)
62,249 $
7,344
(1,919)
0
5,425
66,956 $
16,520
1,196
0
17,716
57,577
A reconciliation between the reported provision for income taxes and the amount computed by applying the statutory Federal
income tax rate of 35% to income before provision for income taxes is as follows (in thousands):
2013
2014
Income tax expense at statutory rate
PICA tax credit
State income taxes, net of Federal benefit
Other
75,701
(18,116)
7,636
(%972)
62,249 $
80,610 $
(16,450)
6,368
(3,572)
66,956 $
2012
73,083
(16,609)
4,750
(3,647)
57,577
The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and
liabilities as of June 25, 2014 and June 26, 2013 are as follows (in thousands):
2014
Deferred income tax assets:
Leasing transactions
Restructure charges and impairments
Insurance reserves
Employee benefit plans
Gift cards
Other, net
Total deferred income tax assets
Deferred income tax liabilities:
Prepaid expenses
Goodwill and other amortization
Depreciation and capitalized interest on property and equipment
Other, net
Total deferred income tax liabilities
Net deferred income tax asset
F-25
$
$
2013
40,085 $
13,698
16,726
18,550
404
15,497
8,975
113,935
40,662
13,250
2,885
18,595
544
13,171
10,903
100,010
16,462
26,551
20,982
3,680
67,675
46,260 $
15,776
25,333
32,160
3,522
76,791
23,219
A reconciliation of unrecognized tax benefits for the fiscal years ended June 25, 2014 and June 26,2013 are as follows (in
thousands):
2014
Balance at beginning of year
Additions based on tax positions related to the current year
Additions based on tax positions related to prior years
Settlements with tax authorities
Expiration of statute of limitations
Balance at end of year
$
$
6,388 $
1,582
347
(339)
(603)
7,375 $
2013
7,336
754
7
(930)
(779)
6,388
The total amount of unrecognized tax benefits that would favorably affect the effective tax rate if resolved in our favor due to
the effect of deferred tax benefits was $4.9 million and $4.3 million as of June 25,2014 and June 26,2013, respectively. During the
next twelve months, we anticipate that it is reasonably possible that the amount of unrecognized tax benefits could be reduced by
approximately $0.5 million ($0.3 million ofwhich would affect the effective tax rate due to the effect of deferred tax benefits) either
because our tax position will be sustained upon audit or as a result of the expiration of the statute of limitations for specific
jurisdictions.
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal 2014,
we recognized a benefit of approximately $0.3 million in interest. During fiscal 2013 and 2012, we recognized an expense of
approximately $0.5 million and a benefit of $0.3 million, respectively, in interest due to the reduction ofaccrued interest from statute
expirations and settlements, net of accrued interest for remaining positions. As of June 25,2014, we had $2.5 million ($ 1.7 million
net of a $0.8 million Federal deferred tax benefit) of interest and penalties accrued, compared to $2.1 million ($1.5 million net of a
$0.6 million Federal deferred tax benefit) at June 26,2013.
8. DEBT
Long-term debt consists of the following (in thousands):
$
3.88% notes
2.60% notes
Term loan
Revolving credit facility
Capital lease obligations (see Note 9)
Less current installments
$
2014
2013
299,736 $
249,864
187,500
80,000
43,086
860,186
(27,884)
832,302 $
299,707
249,829
212,500
0
45,681
807,717
(27,596)
780,121
Our credit facility, which matures in August 2016, includes a $250 million revolver and a $250 million term loan. During
fiscal 2014, $120.0 million was drawnfromthe revolver to fund share repurchases. We repaid $40.0 million of the outstanding
balance leaving $170 million of credit available under the revolver as of June 25,2014. During fiscal 2014, we paid the required
term loan installments totaling $25.0 million bringing the outstanding balance to $187.5 million.
The term loan and revolving credit facility bear interest at LIBOR plus an applicable margin, which is a function ofour credit
rating and debt to cash flow ratio, but is subject to a maximum of LIBOR plus 2.50%. Based on our current credit rating, we are
paying interest at a rate of LIBOR plus 1.63%. One month LIBOR at June 25,2014 was approximately 0.15%.
In May 2013, we issued $550.0 million of notes consisting of two tranches - $250.0 million of 2.60% notes due in May 2018
and $300.0 million of 3.88% notes due in May 2023. We received proceeds totaling approximately $549.5 million prior to debt
issuance costs and utilized the proceeds to redeem the 5.75% notes due in June 2014, pay down the revolver and fund share
repurchases. The new notes require semi-annual interest payments which began in the second quarter of fiscal 2014.
Our debt agreements contain various financial covenants that, among other things, require the maintenance of certain leverage
and fixed charge coverage ratios. We are currently in compliance with all financial covenants.
F-26
Excluding capital lease obligations (see Note 9) and interest, our long-term debt maturities for the five years following
June 25, 2014 and thereafter are as follows (in thousands):
Fiscal Year
Long-Term Debt
2015
2016
2017
2018
2019
Thereafter
$
25,000
25,000
217,500
249,864
0
299,736
817,100
9. LEASES
(a) Capital Leases
We lease certain buildings under capital leases. The asset value of $39.0 million at June 25,2014 and June 26,2013, and the
related accumulated amortization of $20.1 million and $18.2 million at June 25,2014 and June 26,2013, respectively, are included
in property and equipment. Amortization of assets under capital leases is included in depreciation and amortization expense.
(b) Operating Leases
We lease restaurant facilities and office space under operating leases having terms expiring at various dates through fiscal
2093. The restaurant leases have renewal clauses of 1 to 30 years at our option and, in some cases, have provisions for contingent
rent based upon a percentage of sales in excess of specified levels, as defined in the leases. We include other rent-related costs in
rent expense, such as common area maintenance, taxes and amortization of landlord contributions.
Rent expense consists of the following (in thousands):
2Q14
$
Straight-lined minimum rent
Contingent rent
Other
Total rent expense
$
F-27
90,574 $
4,737
9,817
105,128 $
2013
88,773 $
3,637
9,296
101,706 $
2012
88,194
3,752
9,344
101,290
(c) Commitments
As of June 25,2014, future minimum lease payments on capital and operating leases were as follows (in thousands):
Capital Leases
Fiscal Year
2015
2016
2017
2018
2019
Thereafter
Total minimum lease payments(a)
Imputed interest (average rate of 7%)
Present value of minimum lease payments
Less current installments
$
$
(a)
5,692 $
5,806
5,709
5,521
5,202
36,968
64,898 $
(21,812)
43,086
(2,883)
40,203
Operating Leases
111,314
100,922
78,358
59,714
35,238
105,646
491,192
Future minimum lease payments have not been reduced by minimum sublease rentals to be received in the future under
non-cancelable subleases. Sublease rentals are approximately $35.5 million and $48.4 million for capital and operating
subleases, respectively.
10, FAIR VALUE DISCLOSURES
(a) Non-Financial Assets Measured on a Non-Recurring Basis
In fiscal 2014, long-lived assets with a carrying value of $5.8 million, primarily related to nine underperforming restaurants,
were written down to their fair value of $1.3 million resulting in an impairment charge of $4.5 million. In fiscal 2013, long-lived
assets with a carrying value of $5.6 million, primarily related to three underperforming restaurants including the company-owned
Chili's in Brazil, were written down to their fair value of $0.3 million resulting in an impairment charge of $5.3 million. We
determined fair value based on projected discounted future operating cash flows of the restaurants over their remaining service life
using a risk adjusted discount rate that is commensurate with the risk inherent in our current business model.
In fiscal 2014, we reviewed the transferable liquor licenses during our semi-annual impairment analysis and determined there
was no impairment. In fiscal 2013, one transferable liquor license with a carrying value of $0.3 million was written down to the fair
value of $0.1 million resulting in an impairment charge of $0.2 million. We determined fair value based on prices in the open
market for licenses in same or similar jurisdictions.
All impairment charges related to underperforming restaurants and liquor licenses were included in other gains and charges in
the consolidated statement of comprehensive income for the periods presented.
During fiscal 2014, we completed the valuation of the reacquiredfranchiserights related to the Canada acquisition and
recorded the asset at an estimated fair value of $8.9 million in intangibles on the consolidated balance sheet. Infiscal2014, we
reviewed the reacquiredfranchiserights during our annual impairment analysis and determined there was no impairment.
F-28
The following table presents fair values for those assets measured at fair value on a non-recurring basis at June 25,2014 and
June 26, 2013 (in thousands):
(Level 1)
Long-lived assets held for use:
At June 25,2014
At June 26,2013
Liquor licenses:
At June 25,2014
At June 26, 2013
Reacquiredfranchiserights:
At June 25,2014
Fair Value Measurements Using
(Level 3)
(Level 2)
Total
$
$
0 $
0 $
0 $
0 $
1,342 $
333 $
1,342
333
$
$
0 $
0 $
' 0 $
100 $
0 $
0 $
0
100
$
0 $
0 $
8,860 $
8,860
(b) Other Financial Instruments
Ourfinancialinstruments consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The
fair value of cash and cash equivalents, accounts receivable and accounts payable approximates their carrying amounts because of
the short maturity of these items. The fair value of the 2.60% notes and 3.88% notes is based on quoted market prices and are
considered Level 1 fair value measurements. At June 25,2014, the 2.60% notes had a carrying value of $249.9 million and a fair
value of $250.4 million and the 3.88% notes had a carrying value of $299.7 million and a fair value of $290.2 million. At June 26,
2013, the 2.60% notes had a carrying value of $249.8 million and a fair value of$244.2 million and the 3.88% notes had a carrying
value of $299.7 million and a fair value of $279.5 million. The carrying amount of debt outstanding pursuant to the term loan and
revolving credit facility approximates fair value as interest rates on these instruments approximate current market rates (Level 2).
11. STOCK-BASED COMPENSATION
Our shareholders approved stock-based compensation plans including the Stock Option and Incentive Plan and the Stock
Option and Incentive Plan for Non-Employee Directors and Consultants (collectively, the "Plans"). In November 2013, our
shareholders approved an amendment to the Stock Option and Incentive Plan increasing the number of shares authorized for
issuance by 2.0 million shares. The total number of shares authorized for issuance to employees and non-employee directors and
consultants under the Plans is currently 37.3 million. The Plans provide for grants of options to purchase our common stock,
restricted stock, restricted stock units, performance shares and stock appreciation rights.
(a) Stock Options
Expense related to stock options issued to eligible employees under the Plans is recognized using a graded-vesting schedule
over the vesting period or to the date on which retirement eligibility is achieved, if shorter. Stock options generally vest over a
period of 1 to 4 years and have contractual terms to exercise of 8 years. Full or partial vesting of awards may occur upon a change in
control (as defined in the Plans), or upon an employee's death, disability or involuntary termination.
Transactions duringfiscal2014 were as follows (in thousands, except option prices):
Number of
Options
2,725 $
223
(1,203)
(44)
1,701 $
1,113 $
Options outstanding at June 26, 2013
Granted
Exercised
Forfeited or canceled
Options outstanding at June 25, 2014
Options exercisable at June 25, 2014
F-29
Weighted
Average
Exercise
Price
23.13
42.89
24.35
25.15
24.80
20.58
Weighted
Average
Remaining
Contractual
Life (Years)
4.0 $
2.8 $
Aggregate
Intrinsic
Value
44,367
33,728
At June 25,2014, unrecognized compensation expense related to stock options totaled approximately $2.6 million and will be
recognized over a weighted average period of 1.9 years. The intrinsic value of options exercised totaled approximately $25.7
million, $22.4 million and $12.6 million during fiscal 2014, 2013 and 2012, respectively. The tax benefit realized on options
exercised totaled approximately $8.9 million, $8.1 million and $4.8 million during fiscal 2014, 2013 and 2012, respectively,
(b) Restricted Share Awards
Restricted share awards consist of performance shares, restricted stock and restricted stock units. Performance shares and most
restricted stock units issued to eligible employees under the Plans generally vest in full on the third anniversary ofthe date of grant,
while restricted stock units issued to eligible employees under our career equity plan generally vest upon each employee's retirement
from the Company. Expense is recognizedratablyover the vesting period, or to the date on which retirement eligibility is achieved,
if shorter. Restricted stock and restricted stock units issued to non-employee directors under the Plans generally vest in full on the
fourth anniversary ofthe date of grant or upon each director's retirement from the Board and are expensed when granted. Full or
partial vesting of awards may occur upon a change in control (as defined in the Plans), or upon an employee's death, disability or
involuntary termination.
Transactions during fiscal 2014 were as follows (in thousands, except fair values):
Number of
Restricted
Share
Awards
Restricted share awards outstanding at June 26, 2013
Granted
Vested
Forfeited
Restricted share awards outstanding at June 25, 2014
1,923 $
455
(703)
(167)
1,508 $
Weighted
Average
Fair Value
Per Award
21.15
39.81
12.93
32.65
29.39
At June 25,2014, unrecognized compensation expense related to restricted share awards totaled approximately $12.8 million
and will be recognized over a weighted average period of 2.4 years. The fair value of shares that vested during fiscal 2014,2013,
and 2012 totaled approximately $42.2 million, $22.0 million and $11.5 million, respectively.
12. SAVINGS PLAN
We sponsor a qualified defined contribution retirement plan covering all employees who have attained the age of twenty-one
and have completed one year and 1,000 hours of service. Eligible employees are allowed to contribute, subject to IRS limitations on
total annual contributions, up to 50% of their base compensation and 100% of their eligible bonuses, as defined in the plan, to
various investment funds. We match in cash at a rate of 100% ofthefirst3% an employee contributes and 50% of the next 2% the
employee contributes with immediate vesting. Infiscal2014, 2013, and 2012, we contributed approximately $7.4 million, $7.2
million, and $6.7 million, respectively.
13. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes is as follows (in thousands):
2014
Income taxes, net of refunds
Interest, net of amounts capitalized
$
w
48,379 $
25,476
2013
60,291 $
41,504
2012
47,514
24,455
^ Fiscal 2013 interest includes $15.3 million of interest paid upon retirement of the 5.75% notes in June 2013.
Non-cash investing and financing activities are as follows (in thousands):
2014
Retirement of fully depreciated assets
Accrued dividends
64,420 $
15,625
F-30
2013
55,427 $
13,511
2012
77,249
11,948
^COMMITMENTSANDCONTINGENCIES
^connecfionwith^êof^^
paymemÂsofJune2^2014andJune2^^^WehaveO^8nd^
and$l32^ minion, respecfively This amountrepresems^
These leases have been assigned to the buyers and expire^the end
throughfiscal2024. in the event of default, the in^
pursue andreeover damages incurred. No material liabilities have beenreeordedasofJune 2
the buyers on the assignment agreements was deemed to be less than probable.
We provide letters ofcreditto various insurers to collateralize obligations for outstandm^
had $26.1 million in undrawn standby letters ofcredit outstanding. All standby letters of credit are
The aggregate litigationreservesofapproximately$3^
thetermssetfbrthintheapplicableagreementsandourreasonableexpectationsregardingfiitureevents.^
relatedto litigationisacomplexprocess involvingsubjectivejudgmentonthepotentialoutcomeof^
resolutionoflitigatedclaimsmaydifferfromourcurrentanalysis. Accordinglywereviewtheadeq^^
pertaining to litigated matters each quarterinconsultafion with legal counsel and weassess the probability
losses associated with contingencies for potential accrual in the consolidatedfinancialstatements.
lnAugust2004,certaincurrentand former hourlyrestauran^
California Superior Court alleging violations of California labor laws with respect to meal ^
soughtpenaltiesandattomey^s fees and was certifiedasaclassacfionbythe trial courtmJuly2006.1nJuly
CourtofAppealdecertifiedtheclassactiononall claims withprejudice. InCctober200^theCaliforniaSupr^^
writtoreviewthedecisionoftheCourtofAppealandoralargu^
2011 CnApril 12,2012, theCalifbrniaSupremeCourtissuedanopinionaffirminginpart^reversinginpa
for further proceedings. The California Supreme Court's opinion resolved many ofthe legal standards^
breaks in our California restaurants. Cn September 26, 2013, the trial court granted plaintiffs'motion to certiâmeal period
subclass and denied our motion to decertify the rest period subclass.
CnApril8,2014,thepartiesparticipatedmmediat^
not achieved and significant issues remained outstanding. Cn August 6, 2014, the parties reachedapreliminary settlement
agreement, whichremainssubjecttocourtapproval,toresolveallclaimsmexchangefbrasettlementpaymentnott^
million. We establishedareserve of approximately $39.0 million related to this pending class action
amountofanysettlementpaymentcouldvaryfromourreserveandwillbesubjecttomanyfactorsincludingapprovalb
claims process, and othermatters typically associated with the potential settlement of complex class action h^^^
We are engaged in various other legal proceedings and have certain unresolved claims pending. Reserves have been
established based on our best estimates ofour potential liability in certain ofthese matters. Based upon con^
counsel,Managementisoftheopinionthattherearenomatterspendingorthreatenedwhichareexpectedtohaveamat^^^
effect, individually or in the aggregate, on our consolidatedfinancialcondition or results of operations.
^31
15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table summarizes the unaudited consolidated quarterly results of operations for fiscal 2014 and 2013 (in
thousands, except per share amounts):
Fiscal Year 2014
Quarters Ended
Dec. 25
Sept 25
Revenues
Net income
$
s
$
$
$
683,924
42,582
29,212
0.44
0.42
66,693
68,802
S
$
$
$
$
$
S
$
$
$
683,507
40,452
27,864
0.38
0.36
73,903
76,558
March 26
$
$
$
$
$
758,408
80,815
56,263
0.85
0.82
66,479
68,342
June 25
$
$
$
$
$
Fiscal Year 2013
Quarters Ended
March 27
Dec 26
Sept. 26
Revenues
Net income
704,395
57,713
39,744
0.59
0.58
66,811
68,628
$
$
$
$
$
689,764
55,226
37,177
0.51
0.50
72,560
74,720
$
$
$
$
$
742,759
72,814
51,951
0.73
0.71
71,067
73,341
758,725
35,178
28,820
0.44
0.43
65,009
66,824
June 26
$
S
$
$
$
730,068
61,823
46,367
0.67
0.64
69,607
71,999
Net income for fiscal 2014 included a $39.5 million charge in the fourth quarter to establish reserves for the potential
settlement of various litigation matters. Long-lived asset impairments of $ 1.3 million and $3.2 million were recorded in the second
and fourth quarters, respectively. Additionally, net income included lease termination charges of $0.2 million, $0.2 million, $0.9
million and $0.6 million in the four quarters offiscal2014 related to restaurants closed in the current year and adjustments for prior
year closures. Severance charges of $0.2 million, $0.2 million, $0.7 million and $1.0 million were incurred in the four quarters of
fiscal 2014.
Net income for fiscal year 2013 included a $15.8 million loss on extinguishment of debt in the fourth quarter. Long-lived
asset impairments of $0.7 million and $4,6 million were recorded in the second and fourth quarters, respectively. Severance charges
of $ 1.3 million and $ 1.0 million were incurred during the third and fourth quarters, respectively. Net income also included lease
termination charges related to previously closed restaurants of $0.4 million, $1.1 million and $0.6 million in the first, second and
fourth quarters, respectively. These charges were partially offset by an $8.3 million gain on the sale of our remaining interest in
Macaroni Grill in the fourth quarter and net gains of $2.3 million and $0.4 million related to land sales in the second and fourth
quarters, respectively.
F-32
Report ^ n d e p e n d ^ R e ^ ^
The Board o f D i r e o ^ and Shareholder
Brinker International, IneA
We have audited the aeeompanying consolidated halanee sheets of Brinker Internationa^^
ômpanyâsofJnne25,2014andJune26,2013,andtherelatedconsolidateds^
eqnityandeashfiowsfbreaehoftheyears inthe thr^^^
the responsibility ofthe Company management. Our responsibility is to express an opm^^
statements hased on our audits.
We conducted our auditsinaoeordanee with the standards ofthe I^hlie Company Aeeounting Oversight Boa^^
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
statementsarefreeofmaterialmisstatement.Anauditincludes examining, onatestbasis,evidencesupporfi^
disclosuresinthefinancialstatements. An audit also includes assessing the accounting principles used and s i ^
made by management, as well as evaluating the overallfinancialstatement presentation.We believe that our audits p ^ ^
reasonable basis for our opinion.
lnouropinion,theconsolidatedfinancialstatementsreterredtoabovepresentfairly,inall material
position ofBrinker International, Inc. andsubs^^
their cash fiows for each ofthe years in the three-year period ended June 25,2014, in confr^rmity with U.S. g
accountingprinciples.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company'sinternal control overfinancialreportingasofJune 25,2014, basedoncriteri^
issued bythe Committee ofSponsoring Organizations o ^
dated August25,2014expressed an unqualified opinion on the effectiveness of the Company's internal control over financial
reporting.
^^PMOLLP
Dallas, T^
August25,2014
P^
RepoôflndependentRe^^dPubhcAôunfingFirm
The Board o f D i ^ o r s and Shareho^s
Brinker Internationa^ IneB
WehaveauditedBrinkerinternational, IneBs^theômpanyînternaieon^
hased o n e r i t e r i a e s t a h i i s h e d i n B ^ ^ ^ C ^ ^ ^ ^ ^ ^ ^
oftheTreadway Commission (COSO^The^
financial reporting and for its assessment of the effectiveness of internal control over finane^^^
accompanyingManagement'sReportonlntemai Control CverFinanciaiReporting.Curresponsih^
the Company's internal control overfinancialreporting hased on onr audit.
We conducted our audit in accordance with the standards ofthe Puhiic Company Accounting Oversight Board
States). Thosestandardsrequirethatwepianand perform
control overfinanciaireportingwas maintained inallmaterialrespects.Curauditincludedohtaininganunde^^
controioverfinanciai reporting, assessing the risk thatamaterial weakness exists, and testing and eva
operating effectiveness ofintemal control hased on theassessedrisk.Curauditalso included perfb
we considered necessary in the circumstances. We helieve that ourauditprovidesareasonahlehasisfb^
^company's internal controloverfinancial reportingisaprocessdesigned toprovidereasonahleassuranceregardingth^
reiiahilityoffinancial reporting and the preparation offinancial statements for external purposes
accepted accounting principles Acompany's internal control overfinancialreporting includes those policies and pro^
(l)pertain to the maintenance ofrecordsthat, in reasonable detail, accurately and fairlyrefiectthetransact^^
the assets ofthe company^2) provide reasonable assurance that transactions are recorded as necessary to permit preparat^
financialstatementsinaccordancewithgenerallyaccepteda^
are being made only in accordance with authorizations ofmanagement and directors ofthe company^ and (3) provide reasonable
assuranceregardingpreventionortimelydetectionofunauthorizedacquisifion,use,ordispositionofth^
haveamaterial effect on thefinancialstatements.
Becauseofitsinherentlimitations, internal control overfinancialreportingmaynotpreventordetec^
projectionsofanyevaiuationofeffecfivenesstofu^
of changes in conditions, orthatthe degree of compliance with the policies orprocedures may deteriorate.
in ouropinion, the Companymaintained, in all material respects, effective internal control overfinancia^
June 25,2014, based on criteria established in ^ ^ ^ C ^ r ^ ^ g r ^
We also have audited, in accordance with the standards ofthe Public CompanyAccounting Oversight Board (Uni^^^
States), the consolidatedbalancesheetsofBrinkerlnte^
related consolidatedstatementsofcomprehensiveincome,shareholders'equity,andcashfiowsfbreachof^
periodendedJune25,20i4,andourreportdatedAugust25,20i4expressedanunqualifiedopiniononthoseconsolidatedfi^
statements.
^KPMCLLP
Dallas, T^
August25,20l4
MANAGEMENT'S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the reliability of the consolidated financial statements and related notes, which have been
prepared in conformity with U. S. generally accepted accounting principles and include amounts based upon our estimates and
judgments, as required. The consolidated financial statements have been audited and reported on by our independent registered
public accounting firm, KPMG LLP, who were givenfreeaccess to all financial records and related data, including minutes of the
meetings of the Board of Directors and Committees of the Board. We believe that the representations made to the independent
registered public accounting firm were valid and appropriate.
We maintain a system of internal control overfinancialreporting designed to provide reasonable assurance ofthe reliability
ofthe consolidatedfinancialstatements. Our internal audit function monitors and reports on the adequacy of the compliance with
the internal control system and appropriate actions are taken to address significant control deficiencies and other opportunities for
improving the system as they are identified. The Audit Committee of the Board of Directors, which is comprised solely of outside
directors, provides oversight to thefinancialreporting process through periodic meetings with our independent registered public
accounting firm, internal auditors, and management. Both our independent registered public accounting firm and internal auditors
have free access to the Audit Committee. Although no cost-effective internal control system will preclude all errors and
irregularities, we believe our controls as of and for the year ended June 25,2014 provide reasonable assurance that the consolidated
financial statements are reliable.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting. We have
assessed the effectiveness of our internal control over financial reporting based on theframeworkin Internal Control-Integrated
Framework-1992 issued by the Committee of Sponsoring Organizations ofthe Treadway Commission. Based on our assessment, we
concluded that our internal control over financial reporting was effective as of June 25,2014.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projection ofany evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
The effectiveness ofour internal control over financial reporting as of June 25,2014 has been audited by KPMG LLP, an
independent registered public accounting firm, as stated in its attestation report which is included herein.
/s/ WYMAN T. ROBERTS
WYMAN T.ROBERTS
Chief Executive Officer, President and President of Chili's Grill & Bar
/s/MARIE L. PERRY
MARIE L. PERRY
Senior Vice President, Treasurer, Controller and Chief Financial Officer
F-35
GUARANTEE OF PERFORMANCE
For value received, Brinker International, Inc., a Delaware corporation (the "Guarantor"),
located at 6820 LBJ Freeway, Dallas, Texas 75240, absolutely and unconditionally guarantees to
assume the duties and obligations of Brinker International Payroll Company, L.P., located at
6820 LBJ Freeway, Dallas, Texas 75240 (the "Franchisor"), under its franchise registration in
each state where the franchise is registered, and under its Franchise Agreement identified in its
September M , 2014 Franchise Disclosure Document, as it may be amended, and as that
Franchise Agreement may be entered into with franchisees and amended, modified or extended
from time to time. This guarantee continues until all such obligations of the Franchisor under its
franchise registrations and the Franchise Agreement are satisfied or until the liability of
Franchisor to its franchisees under the Franchise Agreement has been completely discharged,
whichever first occurs. The Guarantor is not discharged from liability if a claim by a franchisee
against the Franchisor remains outstanding. Notice of acceptance is waived. The Guarantor does
not waive receipt of notice of default on the part ofthe Franchisor. This guarantee is binding on
the Guarantor and its successors and assigns.
The Guarantor signs this guarantee at Dallas, Texas on the
day of September 2014.
Guarantor:
Brinker International, Inc.,
a Delaware corporation
r
By:
GUARANTEE OF PERFORMANCE
742029-v2\DALDMS
4
The Financial Statements for tho period ended March 26, 20H, have been prepared without an audit.
Prospective franchisees or sellers of franchises should bo advised that no independent Certified Public
Accountant has audited these figures or exprossod an opinion with regard to their content or
fefmrEXHIBIT B
DEVELOPMENT AGREEMENT
FDD-2015
783265-v3\DALDMS
Exhibit B
^
^
^^^^^^
^
^
^ 1 ^ ^^ u^^ ^ ^ ^^ ^
CHILI'S® GRILL & BAR
DOMESTIC DEVELOPMENT AGREEMENT
PAGE 1 -DA
T A ^ O F C O ^ N ^
A r f i ^ e L Territory and Development Schedule
Section Tl^
Section T2
Territory and Development Schedule
Territorial Exclusivity and Exceptions
Articled Development Fee Ohligations
Sections
Sections
Sections
Sections
Development Fee
Faymentsô Refunds
Interest on Eate Payments
Taxes
Articled Formation of Franchise Agreement
Sections
Sections
Sections
Sections
Sections
Development Agreement Only-^No Franchise or Suhfran^hise Rights
Franchise Agreement
Execution of Franchise Agreement
Franchise Fee
Control and Ownership of Franchisee
Articled Site Selection and Construction
Sections
Sections
Sections
Sections
Sections
Market Flan^ Site Selections and Site Approval
Developer^sFurchase Contract andôrEease Agreement
Fre^Construction Requirements
Construction and Authorization to Open
Release hy Developer
Articled Term
Articled Duties and Representations of the Parties
Sections
Duties of Franchisor
Sections
Representations of Developer
Sections
Managing Cwner and Operating Partner
Sections
Initial and Continuing Training
Sections
Confidential Information
Sections
Confidentiality Agreement
Sections
Chili^sFranchise Manual
Sections
Breach of Confidentiality
Sections
Compliance with Eaws and Industry Standards
SectionÔ EimitationsonDeveloper'sElêofChili^sMar^s
Sections
Internet and Electronic Commerce
Section
Outsourcing hy Franchisor
Section
Copyrights
OA
Article 7: Default and Termination
Section 7.1
Section 7.2
Section 7.3
Section 7.4
Section 7.5
Section 7.6
Section 7.7
Section 7.8
Section 7.9
Section 7.10
Obligations Material
Reliance by Franchisor
Default and Automatic Termination
Other Defaults by Developer
Remedies for Default by Developer
No Cure Period
Rights and Duties upon Termination
No Waiver
Remedies Not Exclusive
Default by Franchisor
Article 8: Assignment and Transfer
Section 8.1
Section 8.2
Section 8.3
Section 8.4
Section 8.5
Section 8.6
Section 8.7
Transfer by Franchisor
Transfer by Developer
Transfer for Convenience of Ownership
Right of First Refusal
Transfer Upon Death or Permanent Disability
Non-Waiver of Claims
Offerings by Developer
Article 9: No-Compete Clause and Related Covenants
Section 9.1
Section 9.2
Section 9.3
Section 9.4
Section 9.5
Section 9.6
Section 9.7
Section 9.8
Best Efforts
Receipt of Confidential Information
No-Compete Clause
Survival
Reduction in Scope
No Defense
Consent to Injunctive Relief
Guaranty of Developer's Obligations
Article 10: Notice Provisions
Article 11: Independent Contractor and Indemnification
Section 11.1
Section 11.2
Section 11.3
Section 11.4
Section 11.5
Section 11.6
Section 11.7
Section 11.8
Section 11.9
PAGE 3-DA
Independent Contractor
Indemnity
Notice to Franchisor
Settlement or Other Remedial Actions
Definition of Losses and Expenses
No Liability
No Requirement to Pursue Third Party
Indemnity and Insurance
Survival
Article 12: Approvals
Article 13: No Waiver
Article 14: Dispute Resolution
Section 14.1
Injunctive Relief
Section
Section
Section
Section
Section
Section
Consent to Jurisdiction, Venue, and Governing Law
Place of Execution of Development Agreement
Costs and Attorneys' Fees
Rights of Parties are Cumulative
Waiver of Punitive Damages and Jury Trial
Limitation of Claims
14.2
14.3
14.4
14.5
14.6
14.7
Article 15: General Provisions
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
15.1
Severability
15.2
No Benefit
15.3
Agreement to be Bound
15.4
Captions
15.5 Survival
15.6
Gender
15.7
References to Corporation or Partnership
15.8
Multiple Counterparts
15.9
Entire Agreement
15.10 Business Days
15.11 Developer's Responsibility For Developer's Owners
Article 16: Acknowledgements
Section
Section
Section
Section
16.1
16.2
16.3
16.4
Investigation by Developer and Developer's Owners
Receipt of Documents
Acknowledgement by Developer and Developer's Owners
Franchisor's Right to Vary the System and Other Standards
******
ATTACHMENT A
ATTACHMENT B
ATTACHMENT C
ATTACHMENT D
ATTACHMENT E
PAGE 4-DA
DEVELOPER'S OWNERS, MANAGING OWNER, AND OPERATING
PARTNER
CONFIDENTIALITY AGREEMENT
GUARANTY
RIGHT OF FIRST REFUSAL
CHILI'S® GRILL & BAR DOMESTIC FRANCHISE AGREEMENT
CH^^GRILL^BAR
DOMESTICDEVELOFMENT AGREEMENT
ThisGhih^Gri^^BarDomesficD^
entered into between Brinker tntemationai Eayroit Company E.E., a Delaware limited partnership
Êranehisor^ and
^Deveioper") to beeffeetive as of
^tbe
"EffeetiveDate^
Reeitais
^
Eranebisor(andôr its parent company,affiiiate5, and snbsidiariesâs tbe result of tbe
expenditure of time, skill, effort and money, bas developed and ownsaunique and distinctive
system ^the "System^relating to tbeestablisbmentandoperationof restaurantsunder such
tradenames as Gbilfs^Grill and Bar and GbilfsToo^ôllectivelyB'Gb^^^
^
Tbe distinguishing ebaraeteristies of the System include, without limitation, distinctive ext^^
and interior design, decor, color scheme, furnishings^ special recipes and menu items^ uniform
standards, specifications, and procedures for operations^ quality and uniformity of products and
services offered^ procedures for inventory and management controls training and assistances and
advertising and promotional programs^ all o f w h i c h maybe changed, improved, and further
developed by Franchisor from time to time.
D
Franchisor identifies the System by means of certain tradenames, service marks, trademarks,
logos,emblemsand indiciaoforiginîncluding,but not limitedto,Ghilfs® Grill andBarand
such other tradenames, service marks, and trademarks as are now designatedând may hereafter
bedesignated)byEranchisorforuseinconnectionwith theSystem^collectively, the^Ghili's
Marks^
. ^
Franchisor continues to develop and use(and control the use of) the Ghili'sMarks in order to
identify for the public the source of services and products marketed thereunder and under the
System, and to represent the System'shigh standards of quality,appearance and service.
^
Franchisor has establishedahigh reputation andapositive image with the public as to the quality
ofproducts and services available at Ghili'sRestaurants,which reputation and image have been
and continue to be unique benefits to Franchisor and its franchisees.
^
Developer desires to acquire development rights to obtain licenses to establish and operate
Ghili'sRestaurants under the SystemintheTerritory specified in A r t i c l e l o f this Development
Agreement.
NGWTHEREFGRE, with the intent ofbeing legally bound hereby,in consideration of the mutual
covenantsandpromiseshereinafterset forth, and othergoodand valuableconsideration, whichthe
parties aclôwledge is sufficient to createalegally binding agreement, the parties agree as set forth
herein.
P A ^ 5 DA
ARTICLE 1
TERRITORY A N D DEVELOPMENT SCHEDULE
Section L I
Territory and Development Schedule. Subject to this Development Agreement
Franchisor hereby grants to Developer, and Developer accepts, certain rights to develop Chili's
Restaurants (the "Franchised Restaurant(s)") in the "Territory" set forth in Section 1.1(a) and in
accordance with the "Development Schedule" set forth in Section 1.1(b).
(a)
Description of Territory.
[to be inserted]
(b)
Development Schedule. Recognizing that time is of the essence. Developer
agrees to exercise each of the development rights granted hereunder in accordance with this
Development Agreement and the "Development Schedule" set forth below. Developer's failure to
comply to the Development Schedule shall constitute a material event of default under this Development
Agreement as provided in Article 7.
CUMULATIVE
TOTAL
NUMBER
OF
FRANCHISED
RESTAURANTS WHICH DEVELOPER SHALL HAVE OPEN
AND IN OPERATION IN THE TERRITORY
Section 1.2
Territorial Exclusivity and Exceptions. Except as set forth below and otherwise
subject to Developer's compliance with this Development Agreement and any Franchise Agreement,
Franchisor shall not develop, nor license anyone other than Developer to develop, a Chili's Restaurant
under the System in the Territory during the term of this Development Agreement.
(a)
Franchisor, any franchisee of Franchisor, and any other authorized person or
Entity (defined below) may, at any time, advertise or promote the System and fulfill customer orders in
the Territory. The term "Entity" means a corporation, general partnership, joint venture, limited
partnership, limited liability partnership, limited liability company, trust, estate or other business entity.
(b)
Franchisor (on its behalf and on behalf of any other Entity which it may acquire,
or be acquired by, or otherwise become affiliated with) retains all rights not expressly granted in this
Development Agreement and reserves the right to establish other restaurants in the Territory (except a
Chili's Restaurant under the System in the Territory during the term of this Development Agreement).
(c)
Franchisor reserves the right to develop and establish other tradenames, service
marks, trademarks, logos, emblems and indicia of origin which may be similar to, or different from, the
Chili's Marks (collectively, the "Other Marks"). The Other Marks shall be separate and distinct from the
Chili's Marks referenced i n this Development Agreement; therefore, (A) Developer shall have no rights to
the Other Marks, and (B) Franchisor (on its behalf and on behalf of any other entity which it may acquire,
or be acquired by, or otherwise become affiliated with) reserves the right to establish, develop, construct,
PAGE 6-DA
open, and operate restaurant other fo^^
at anyloeation inside a n d o n t s i d e t h e T e r r ^
venture or any other arrangements The Other Marks may include, without limitation, hrand extensions
or related brands of Chili'sRestaurants such as counter-service restaurants, quick-service
other such restaurants, and the Other Marks may include such restaurants operating under the tradename
"Chil^sExpress"or others similar tradename.
( ^
The following locations are excluded from the Territory (even if any such
location(s)fall within the geographic boundaries of theTerritory): airports, railroad and railway stations,
schools (including institutions of higher learning), government institutions, military installations,
stadiums, sports arenas, casinos,"big box" retail stores, and other locations within institutional or p
service operations. Accordingly,Franchisor shall be entitledto establish Chili'sRestaurants and other
restaurants in airports, railroad and railway stations, schools (including institutions of higherlearrung)^
government institutions, military installations, stadiums, sports arenas, and other locations within
institutional or publicservice operations in theTerritory whether directly or through o n e o r m o r e
franchisees.
(d^)
Franchisormay offer and sell(or authorize any person or entity to offer and sell)
products and services displaying the Chili's Marks or other tradenames and trademarks (e.g.,
prepackaged foodandbeverageitems,T-shirtsandother memorabilia) i n t h e T e r r i t o r y t o t h e public
through other methods of distributionother than a Chili's Restaurant (e.g., internet sales, etc.) and
Developer acknowledges such products or services may be similar to those offeredby Franchised
Restaurant(s).
ARTICLED
DFVFLOFMFNTFFFOB^CATIONS
Section 2Bt
Development Fee, i n consideration of the development rights granted herein.
Developer shallpaytoFranchisoruponexecutionofthisDevelopmentAgreementanonrefundable,
aggregate "Development Fee" in the sum of
ândOO^lOO dollars^
) The aggregate
Development Fee shall be fully earned by Franchisor upon execution of this Development Agreement for
administrative and other expenses incurred by Franchisor and for the development opportunities lost or
deferred asaresult of the rights granted Developer herein.
Sections
Fayments^No Refunds. Under no circumstances will any amounts paid or
payable to Franchisor under this Development Agreement be refunded by Franchisor for any reason. A l l
amounts owed to Franchisor pursuant to this Development Agreement shall be paid to and received by
Franchisor on or before the date such amount is due. All such payments must be made by wire transfer,
electronic payment or other mecharusm as designated from time to time by Franchisor, and each payment
shall be accompanied by the electronic, digital or other reports as specified byFranchisor. Developer
shall not withhold, retain, deduct, credit, andôr offset any amounts which may be owed by Franchisor to
Developer(andôr its affiliates or subsidiaries) against any amounts due from Developer to Franchisor.
Sections
Interest on Late Payments. In the event Franchisor does not receive payments
when due under this Development Agreement, the unpaid balance due to Franchisor shall bear interest at
arate equal to the lesser of (i) eighteen percent (18^)or(ii) the highest permissible rate under applicable
law.
PAGE^ OA
Sedion^
Taxes. Developer sha^promp^y pay
levied or assessed (Including wlthoul llmltallon, gross receipts taxes, franchise taxes, sales taxes,
withholding taês,valne added taxes, andôran^
other indebtedness of every kind incurred hy Developer under this Development Agreement
(collectively, "Taês"). In the event of any bona fide dispute as to Developers liability forTaxes,
Developer may contest the validity or the amount of suchTaês in accordance with procedures of the
taxing authority or applicable law; however, in no event shall Developer permitatax sale or seizure by
levy of execution or similar writ or warrant, or attachment by a creditor, to occur against this
DevelopmentAgreement.
(a)
A l l payments made by Developer to Franchisor under this Development
Agreement shallbepaid inU.S.Dollarsandshallbegrossed-upandpaidby Developer toFranchisor
withoutanyretention, deduction, credit, andôr offset for anyTaxes. Developershall,atits sole cost, pay
directly to theappropriatetaîngauthorityallTaêsonanyamountspaidbyDeveloper under this
Development Agreement or otherwise imposed on Franchisor by any taking authority in theTerritory.
(b)
It is the parties' intention that all payments by Developer to Franchisor
hereunder shall be grossed-up (and without any retention, deduction, credit, andôr offset) for anyTaês
in order forFranchisor to receive the entire Development Fee andôr other amounts due to Franchisor
under this Development Agreement without any retention, deduction, credit, andôr offset for any Tês.
(c)
AnyTaxes imposed upon or with respect to this Development Agreement or any
materials, supplies or specifications acquired by or provided to Developer pursuant to or in connection
with this Development Agreement shall be paid by Developer.
(d)
In the event Franchisor is required under applicable law or otherwise elects (all
as determined by Franchisor in its sole discretion) to pay any Taês to the appropriate taxing
authority(ies) in the Territory arising out of this Development Agreement, then Developer shall
immediately pay to Franchisor an amount equal to any amount(s) so paid by Franchisor to such taxing
authority(ies).
ARTICLF3
FDRMATIDNDFFRANCHISFAGRFFMFNT
^ction^Bt
Development Agreement Duly No Franchise or Subfranchise Rights. This
Development Agreement isnotafranchiseagreement or subfranchise agreement. ThisDevelopment
Agreement does not grant ar^y right to use (or license the use of) the Chili'sMarks or the System. This
Development Agreement does not grant any right to operate Franchised Restaurants. Developer or any
of Developer's Owners shall not enter into any subfranchise agreement, management agreement,
operahng agreement, consulting arrangement, subcontracting arrangement, outsourcing arrangement, or
any other similar arrangement relating to therights and obligations of Developer hereunder. This
Development Agreement (including the rights, obligations, duties, and benefits hereunder) is intended
solely for the parties hereto, and no other person or entity shall have any rights, obligations, duties, and
benefits under this Development Agreement.
Sections
specific locations i n theTerritory to be designs
OA
Fach Franchised Restaurant shall be established at
(the'Tmnc^se A g r e e m e n t " )
action
E x e e n t i n n e f F r a n c h ^ A g r ^ m ^ t Developer shall exercise each development
right granted herein only hyexeeutmgaseparate Franchise Agreement for each Franchise
asite approved hyFranchisorinthe Territory as hereinafter provided. The Franchise Agreement for each
development right exercised hereunder shall he in the form of the Franchise Agreement attached hereto
as AttachmentFand shall he executed hyDeveloper(or an affiliated entity of Developer) as "Franchisee"
at least 10 days prior to the commencement of construction of the Franchised Restaurant.
Sections
Franchise Fee. In connection with each Franchise Agreement, Developer shall
pay to Franchisor an initial Franchise Fee on or hefore the commencement of construction of the
Franchised Restaurant as set forth in Section 4.1 of the Franchise Agreement. The Franchise Fee shall he
fully earned hy Franchisor when paid and is not refundable.
Sections
Control and Ownership of Franchisee. In the event Developer will not he the
"Franchisee"signingaparticnlarFranchiseAgreenient,then Developer must own and control noless
than fifty one percent (51^) of the voting equity of Franchisee in question and otherwise subject to all
other criteriaandrequirementsconcermng(includingFranchisor^sapproval of) the ownership structure,
approval, and qualification of Franchisee and Franchisee's Owners (as that term is defined in the
Franchise Agreement).
ART1CLF4
SITFSFLFCTIONANDCONSTRUCTION
Sectional
Market Flam Site Selectiom and Site Approval. Developer assumes all cost,
liability, expense, and responsibility for locating, obtaining, and deveiopingsites for eachFmnchised
Restaurant and for constructing, equipping, and operating Franchised Restaurants at such sites.
Developer'sproposed development ofaFranchised Restaurant at any site is subject to Franchisor'sprior
written approval in accordance with Franchisor'sthen-existing site approval procedures including, but
not limited to, the procedures set forth below.
(a)
Market Flan Within t h i r t y ^
prepare and deliver to Franchisoramarket plan ( i n a f o r m and manner prescribed by Franchisor) which
incorporatesaproposedbuild-out plan for theTerritory in accordance withthe Development Schedule
and addresses such items as target trade areas in theTerritory, development priority and timing,
demographic considerahons, advertising strategy,market demand analysis, traffic patterns, site selecti^^
and availability,and similar items(the "Market Flan").
(b)
Site Selection and Site Approval. Frior to acquisition by lease or purchase o f a
site foraFranchised Restaurant in the Territory,Developer shall submit to Franchisor for each Franchised
Restaurant, in the form prescribed by Franchisor, financial proformas,adescription of the site,amarket
feasibility study for the site (which shall include, but not be limited to, demographic i n f o r m a t i o n , ^
count andpattems, site plans, relationship of the site topotentialcompetition as well as relationship of
the site to existing Chili'sRestaurants and other information requested by Franchisor), and such other
informationormaterialsasFranchisormayreasonahlyrequire, together withaletter of intent or other
evidence satisfactory to Franchisor, which confirms Developer'sfavorable prospects for obtaining the s ^
Recognizing that time is of the essence, Developer agrees that it must submit such information and
PAGE^ OA
material for each proposed sitet^
Franchisor shall have 30 days
after receipt of such informahon and materials frorn Developer to approve or disapprove the pro
site as the location foraFranchised Restanrant^which approval shall not he nnreasonahly withheld. No
site shall he deemed approved unless ithasheen expressly approved in writing hy Franchisor.
(c)
Fxecntion of Franchise Agreement At least 10 days prior to the commencement
of construction of the Franchised Restaurant (hut only after (i) the location foraFranchised Restaurant is
approvedhyFranchisor,(ii)such location isleased or acquired by Developer in accordance withthe
requirements of this A r t i c l e ^ a n d (iii) Developer has otherwise complied with this Article^Develop
shallexecuteaFranchiseAgreementrelatingto the Franchised Restaurant and its street address shall be
recorded in the Franchise Agreement.
S^tinn^
Developer's Purchase Contract a n d ^ o r ^ a s ^ A g r ^ m ^ n t . If Developer will
purchase the premises for anyFranchisedRestaurant^then upon request byFranchisor,Developer shall
deliveracopyof the finalpurchase contract toFranchisor prior toils execution. Within three (3) days
after requesthy Franchisor, Developer shall furnish to Franchisor acopy of the executed purchase
contract. If the Developer will occupy the premises of any Franchised Restaurant under a lease
agreement, thenuponrequestbyFranchisor,Developershalldeliveracopyofthefmal lease agreement
toFranchisor prior t o i l s execution. Withinthree (3) days after request byFranchisor,Developer shall
furnish to Franchisor a copy of the executed lease agreement. Unless Developer has obtained
Franchisor'swritten consent to the exclusion ofarequired provision, each lease agreement shall include
the terms set forth in clauses(a)-(h) below.
(^
Fhat the premises shall be used for the operation of the Franchised Restaurant.
(h)
That lessor consents to the use of such Chili's Marks and signs, decor, color
scheme and related components of the System as Franchisor may prescribe for the Franchised Restaurant.
(c)
That lessor agrees to furnish Franchisor with copies of any and all letters and
notices sent to Developer pertaining to the lease and the premises, at the same time that such letters and
notices are sent to Developer.
(d)
ThatDeveloper (or tenant) may notsubleaseor assignallor any partof its
occupancy rights, or extendthe term of or renew the lease,withoutFranchisor'sprior written consent,
which shall not he unreasonably withheld.
(e)
That Franchisor shall have the right to enter the premises to make any
modification necessary to protect the Chili's Marks or to cure any default under the lease, this
Development Agreement, or the Franchise Agreement.
(f)
ThatDevelopershallhave the right toassignthe lease toFranchisorandthe
Franchisor shall have the option (but not the obligation) to assume Developer'soccupancy rights, and the
right to sublease, for all or any part of the term of the lease, without the lessor having any right to impose
conditions on such assignment or assumption or to obtain payment in connection therewith.
(g)
That Developer and lessor shall not amend orotherwisemodifytheleaseinany
marmer that would materially affect any of the foregom^
consent.
PAGÔDOA
(h)
That lessor acôwledges and a g r ^
personal property maintained hy Developer on the leased premises, whether leased or owned hy
Developer, are not the property of lessor and shall he snhjeet to Franehlsor'spnrehase option provided
f o r h e r e m o r m t h e Franchise Agreement for s n e h ^
default nnderthelease or thlsDevelopment Agreement or such Franchise Agreement, a n d m a y h e
removedatexpirationorterminationof the lease,solongas such removal is accomplished without
damage to the leased facility.
Sections
Fre-Construction Requirements. Before commencing any construction of a
Franchised Restaurant,Developer, at its expense, shall comply,toFranchisor'sreasonahle satisfaction,
with all of the following requirements:
(a)
Developer shallemployaqualified architect andengineer who arereasonably
acceptable to Franchisor to prepare, for Franchisor'sapproval,preliminary plans and specifications for
site improvement and construction of each Franchised Restaurant hased upon prototype drawings
furnished byFranchisor. The prototype plans provided by Franchisor shall not be used as construction
plans or blue-prints for the Franchised Restaurant, hut only as required design concepts,which shall be
adapted by Developer and its architect, engineer and contractor to Developer'ssite.
(i)
The standard plans and specifications andôr prototype
drawingsprovidedtoDeveloper are proprietary andconfidential information
belonging to Franchisor, may not he copied or reproduced except to the extent
necessary by Developer'sarchitects, engineers or contractors in the performance
of theirduties. Franchisor may requirethatsuchplans and specificationsbe
returned to Franchisor after the opening of the Franchised Restaurant.
(ii)
Developerherebyreleases and shall hold Franchisor harmless
(including its suhsidiaries,officers,directors,employees,andagents) fromany
and all liability,loss, or damages relating to Developer'sdesign, construction, and
use of the Franchised Restaurant including,without limitation, liability,loss, or
damages related to design or structural flaws in the construction of the
Franchised Restaurant and the standard plans and specifications andôr
prototype drawings provided to Developer.
(b)
Developer shall be responsible for obtaining all zoning classifications and
clearances which may be required hy the state,provincialorlocal laws, ordinances, or regulations or
which maybenecessary or advisahleowingtoany restrictive covenantsrelating to eachFranchised
Restaurant location. Afterhaving obtained such approvals andclearances,Developer shall submit to
Franchisor^forFranchisor'sapproval, final plans for construction based upon the preliminary plans a^
specifications. Once approved by Franchisor, such final plans shall not thereafter he materially changed
or modified without the prior written permission of Franchisor.
(c)
Developer shall obtain all permits and certifications required for the lawful
construction and operation of each Franchised Restaurant and shall certify in writing to Franchisor that
all such permits and certifications have been obtained.
PAGE^ OA
(d)
Developer shall e m p l o y a q u a h f ^
aeeeptahle toFranehlsor to eeoslrueteaehFranehlsed Restaurant and
Developer shall obtain and maintain In foree during the entire period of
equivalent loeal) insurance and performance and completion bonds in forms and amounts and written
acarrierorcarriersreasonablysatisfactory to Franchisor.
(e)
Developer shallemployaqualified person who is responsible for the purchasing
of materials,equipment andsuppliesfor theFranchisedRestaurant. fnthatregard^Developer shall
require thisperson to attendanorientationatFranchisor'shomeofficeinDallas,Texas, concerning
information and issues related to the procurement and distribution of necessary items for the opening of
the Franchised Restaurant.
Sections
Construction and Authorization to D p e m D ^ l o p e r shall c o n i n i e n c e ^ r r n ^
every diligent attempt toward commencementof^constructionof aFranchisedRestaurant(including
acquisition of all necessary permits and licenses) within 150 days after approval by Franchisor of
Developer'ssiteor,ifthe approved location is occupied hy an existing tenant on the date of execution of
the lease for the premises, then immediately upon obtaining possession of the premises.
(a)
Developer shallprovide written notice toFranchisor of the date construction of
each Franchised Restaurant commenced within 10 days after commencement. Construction shall be
deemed to commence on the date on which excavation for footings is begun or other initial construction
or remodeling work is commenced. Developer agrees that Franchisor and its agents shall have the right
to inspect the construction at all reasonable times for the purpose of ascertaining that all work complies
withthe finalplans approved byFranchisor. However, Developer shall assume full responsibility for
completing construction of the Franchised Restaurant in accordance with the approved plans, employing
its architect, as necessary,to oversee such construction in accordance withthe plans. Developer shall
warrant andcertify toFranchisor upon completion of construction that the structure has been built in
accordance with the Franchisor-approved plans and specifications, with suchexceptions, subject to
Franchisor approval, as are noted in such certification.
(b)
Developer shall maintain reasonably continuous construction of each Franchised
Restaurant and its premises and shall complete construchon (including all exterior and interior carpent^
electrical, painhng, and finishing work, and installation of all furniture, fixtures, equipment and signs) i ^
accordance with the approved finalplans, at Developer'sexpense,within 210 days after commencement
of construction (exclusive of time lost hy reason of strikes, lockouts, fire, other casualties, acts of Cod,
weather and other factors beyond the reasonable control of Developer).
(c)
Developer shall notify Franchisor of the date of completion of construction and,
w i t h i n a reasonable time thereafter, Franchisor may at i t s o p t i o n c o n d u c t a f i n a l i n s p e c t i o n o f each
Franchised Restaurant and its premises.
(d)
FriortoopeningaFranchisedRestaurantforbusiness, Developer shall comply
with all opening requirements set forth in this Development Agreement,the Franchise Agreement, the
Chili'sFranchiselVlanual(definedbelow),andôr elsewhere inwriting byFranchisor. Franchisee shall
not, in any event, openaFranchised Restaurant to the public for business until Franchisee has received
authorization to open from Franchisor.
FAGE^ÔA
^tmn^5
Rêase by D e v e l o p s As
above, Develops a ^ u m e s ^ c o ^ h a b i h ^
expense, and responsibility for locating, obtaining, and dev^^
and for eonstrneting, equipping, and operating Franebised Restaurants at sueb sites. Developer
acknowledges tbat Franchisor's approval of a prospective site and tbe rendering of assistance in
connectionwitbtbe foregoing does not constitutearepresentation,promise,warranty,or guarantee by
Franchisor tbataFrancbised Restaurant operated at tbat site will be profitable or otherwise successful.
Accordingly,Developer releases Franchisor and shall hold Franchisor harmless (including its subsidiaries,
officers, directors, employees, and agents) from any and all liahility,loss, or damages wluch may ari
Developer'slocating, obtaining, and developing sites for each Franchised Restaurant and for constructing,
equipping, and operating Franchised Restaurants at such sites.
ARTICLF5
TFRM
Unless sooner terminated in accordance with the provisions of this Development Agreement, the
term of this Development Agreement (and all rights granted by Franchisor hereunder) shall expire on the
first to occur of (i) date on which Developer has completed the Development Schedule in accordance with
the terms hereof and the last Franchised Restaurant required by this Development Agreement is open and
operating, or(ii)
^20
(the^Ferm")
ARTICLF^
DUTIES AND RFFRFSFNTAT1DNSDFTHFFART1FS
Sections
Duties of Franchisor. Franchisor shall furnish to Developer the following:
(a)
Promptly after the Effective Date, site selection guidelines and criteria related to
Chili'sRestaurants and such site selection counseling and assistance as Franchisor may deem advisable.
Additionally,Franchisor will from time to time, atits option, make available to Developer, atareasonable
cost, reports containing demographic and market data and real estate analyses.
(b)
One (1) construction^design evaluation of the first Franchised Restaurant
developed by Developer or the first''special''(i.e.''non-prototype'') restaurant developed by Developer
as well asone(l)constructior^designevaluationofthesecond Franchised Restaurantdevelopedby
Developer,at no charge(except for reimbursement of Franchisor'sreasonahle expenses).
(c)
Additional evaluation as Franchisor may deem advisable in response to
Developer^srequests for siteapproval;providedthat Franchisor shall not provide evaluation forany
proposedsitepriorto the receiptof all required information andmaterials concerning suchsite. If
additional evaluation is requested by Developer, then Developer shall payareasonable fee for each such
evaluation and shall reimburse Franchisor for all reasonable expenses incurred hy Franchisor in
cormection with such evaluation, including, without limitation, the cost of travel, lodging and meals.
(i)
Regardless of Developer's requests for such evaluation,
Franchisor reserves the right to evaluate Developer's constructior^design
process and any such evaluationwill be at Franchisors sole cost and expense
(unless such evaluation is required due to Franchisor'sreasonable concerns with
Developer's construction^design process and, in such event. Developer shall
reimburse Franchisor for all reasonable expenses incurred by Franchisor in
PAGE^ OA
connexion withsuch evaluahon^ includm^ without hmitafion, the cost of
tmvei, lodging and meais).
(d)
Within a reasonahie period after the Effective Date, standard plans and
specifications for the construction of aCh^
layout, fixtures, furnishings and signs for use hy Developer i n accordance with Section
Sections
Representations of Developer. Developer makes the following representations,
warranties and covenants and accepts the following obligations:
(a)
Developer shall comply with all terms and conditions set forth in this
DevelopmentAgreement. If Developer isacorporation, limited liability company,orparmership, then
Developer is duly organized and validly existing under the state law of its formation.
(b)
If Developer isacorporation, limitedliability company, or partnership, then
Developer is duly qualified and is authorized to do businessineach jurisdiction in which its business
activities or the nature of the properties owned by it require such qualification.
(c)
Developers corporate charter, articles of organization, articles of incorporation,
shareholder agreements, or written parmership agreement shall at all times provide that the activities of
Developer are confined exclusively to developing and operating Franchised Restaurants unless otherwise
consented to by Franchisor in writing.
(d)
The execution of this Development Agreement and the performance of
Developer'sobligations hereunder have been duly authorized by Developer and are within Developers
corporate power or permitted under Developer^spartnership or limited liability company agreement.
(^
If Developer isacorporation, then Developer has delivered to Franchisor copies
of Developers articles of incorporahon, bylaws, resolution of the board of directors authorizing entry int^
and performanceofthisDevelopmentAgreement,othergovemingdocumentsandany amendments
thereto.
(f)
If Developer i s a l i m i t e d liability company, then Developer has deliveredto
Franchisor copies of Developers articles of organization, operating agreement, membership transfer
agreement, a resolution of the members or manager authorizing entry into and performance of this
Development Agreement, other governing documents and any amendments thereto.
(g)
IfDeveloperisapartnership, then Developer has delivered to Franchisor copies
of Developers writtenpartnershipagreement,evidence of consent or approvalof the entry into and
performance of this Development Agreement by the requisite number or percentage of partners (if such
approval or consent is required by Developers partnership agreement), other governing documents and
any amendments thereto.
(h)
AttachmentAcontainsacompletelistofallowners of any type of interest in
Developer and such individuals andôr entities shallbe deemed as "Developer's Owners" f o r t h e
purposes of this DevelopmentAgreement. A t all times. Developer shall maintain acurrent list of
Developer'sOwners and such list shall be cerhfied by the Managing Owner and furnished to Franchisor
PAGE^ OA
upon request Ifnecessary, Developer shall execute an addendum to Attachments to ensure the
Information contamedmAttachmentAeompl^s with this Development Agreement.
(l)
If Developer isaeorporahon. Developer shall malntam stop-transfer Instructions
against the transfer on its records of any equity securities of Developer and each stock certificate
corporation shall have conspicuously endorsed upon its face a statement in a form satisfactory to
Franchisor that it isheldsuhject to, and thatfurther assignment or transfer thereof i s s u h j e c t t o a l l
restrictions imposed upon assignments hy this Development Agreement.
(^
If Developer isalimitedliahilitycompany,its operating agreement, memhership
transfer agreement,andany other relevant agreement,shallprovidethatownership of an interest in
Developer is held subject to all restrictions imposed upon assignments by this Development Agreement.
(k)
If Developer isaparmership, then Developer's written partnership agreement
shall provide that ownership of an interest in the partnership is held subject to and that further
assignment or transfer is subject to all restrictions imposed upon assignments by this Development
Agreement.
(I)
If any officer or director of Developer shall cease to serve as such or any
individual shall be elected as anofficer or director of Developer subsequent to the executionof this
Development Agreement, then Developer agrees to provide Franchisor with notice thereof within ten (10)
days after such change. In the event such newly elected officer or director isa"ManagingOwner"or
"Operating Farmer",then Developer shall cause such newly elected officer or director to comply with the
relevant portions of this Development Agreement.
(m)
Developer acknowledges and agrees that therepresentations, warranties and
covenants set forth in Sections ^.2(a)(l) are continuing obligations of Developer andthat any failure to
comply with such representations,warranties and covenants shall constituteamaterial event of default
under Article^pursuant to which Franchisor may terminate this Development Agreement in addition to
such other rights and remedies available to Franchisor hereunder. Developer shall cooperate with
Franchisor in any efforts made byFranchisor to verify Developer^scompliance with such representations,
warranties and covenants.
Sections
ManagingDwnerandDperatingFartner.
(a)
Managing Owner. Developer shall designate and retain an individual to serve as
the^Managing Owners of theFranchisedFestaurant. The ManagingOwner(i) shallbe deemed asa
"Franchisee'sOwner" hereunder and must have the largest share of unencumbered equity ownersln^
Developer, (ii) must be authorized hy the Developer to bind the Developer in any dealings with Franchisor
and authorized distributors, suppliers, and contractors of Developer, (iii) nmstbe authorized by the
Developer to direct any actions necessary to ensure compliance with this Development Agreement, and (iv)
mustdevote l ^ s f u l l h m e and best efforts towardthesatisfachon of Developer's obligations under this
DevelopmentAgreement. Managing Owners interest in Developer shall be and shall remain free of any
pledge, mortgage, hypothecation, lien, charge, encumbrance,voting agreement, proxy,security interest or
purchase right or options.
(i)
Developer has not taken and agrees that it will not hereafter take,
whether directly or indirectly,any action to avoid the authority requirements of
PAGE^ OA
the Managing Owner though the
agreements amendment of governing doen^
arrangement. Developer agrees to fnmish Franchisor with such evidence as
Franchisor may request from time to time for the purpose of assuring Franchisor
that the Managing Owners authority remains as represented herein.
(b)
Operating Farmer, ff the Managing Owner does not intend to devote his full time
and hest efforts toward the sahsfachon of Deveioper'sohligations under this Development Agreement (as
referencedinciause(iv) of Section ^.3(a^then Developer must also designate an individual Ôperating
Farmers who must he approved by Franchisor and the Operating Farmer (i) shall he deemed as a
"Franchisee'sOwner" hereunder and must he authorized hy the Developer to hind the Developer in any
dealings with Franchisor and authorized distributors, suppliers, and contractors of Developer, (ii)mu^
authorized by the Developer to direct any actions necessary to ensure compliance with this Development
Agreement, and (iii) m u s t d e v o t e h i s f u l l time andhesteffortstowardthesatisfactionof Developer's
obligations under this Development Agreement with no operational or management commitments to other
businesses.
(i)
The Operating Farmer must live within theTerritory.Fxcept as
may otherwise be provided in this DevelopmentAgreement, the Operating
Fartner'sinterestinDevelopershallbeandshallremainfreeof any pledge,
mortgage,hypothecation, lien,charge, encumbrance, votingagreement,proxy,
security interest or purchase right or options.
(c)
Developer shall not change the Managing Owner andôr Operating Partner
without theprior written consent of Franchisor. Any sale, transfer or assignment of the Managing
Owner'sinterestinDeveloper,orany portionthereof,shallbe subject totherestrictionsontransfer
described in ArticleSand any failure to comply with such requirements shall he deemedamaterial event
of default byDeveloper under Articled. Any sale,transfer or assignment of the Operating Farmers
interestinDeveloper, or any portion thereof (if any), shallhesubjectto therestrictionson transfer
described in ArticleSand any failure to comply with such requirements shall be deemedamaterial event
of default hy Developer under Articled.
S^ction^
Initial and Continuing Training. Developer, Managing Owner, and Operating
Partner shall complete, to Franchisors satisfaction, all initial and continuing training required by
Franchisor under this Development Agreement or any Franchise Agreement and Developer shall bear all
expenses (including trairung materials, travel, lodging and food) of such training.
Sections
Confidential Information. DeveloperandDeveloper'sOwners shall not, during
the termofthisDevelopment Agreement a n d f o r a p e r i o d o f f i v e ( 5 ) y e a r s t h e r e a f t e r , communicate,
divulge or use for the benefit of any other person, parmership, association, or corporation any
confidenhal information, trade secrets, l ^ o
Chili'sFranchise Manual (defined below), and methods of development and operation of the Franchised
Restaurant (collectively, the "Confidential Information"). Theforegoingitems shallhedeemed as
Confidential Information regardless of whether such items are disclosed to Developer under a
"confidentiality notice". In addition to the foregoing, any and all information, drawings, Imowledge,
l ^ o w how and techniques used in or related to the Franchised Restaurants including, without l i m i t a ^ ^
software licensed or provided by Franchisor, recipes, training materials, construction plans and
FAGE^ OA
specifications m a r k e h n g i ^
deemed as "Confidential informations
(a)
Developer and Deveioper'sCwners^shaii disclose Confidential Information
only to snch of Developers employees as mnst have access to it in order to develop andoperate the
FranchisedRestanrant(s^(ii) shall not copy,dnplicate, record, or otherwise reproduce the Cor^^
lnformation,inwhole or in part, nor otherwise make the same available to any unauthorized person, and
(iii) shall he solely responsible to ensure that Developer'smanagers, employees, agents, or independent
contractors ofDeveloperhavingaccess to Confidential Information comply with this Articleând do not
communicate, divulgeoruse Confidential Information in violation of this Articled
Sections
Confidentiality Agreement. In addition to Developer's obligations under
Section^5(a), Franchisor may request thatDeveloperrequireDeveloper^sCwnersanditsmanagers,
employees, agents, orindependentcontractorshavingaccess to Confidential Information to executea
"Confidentiality Agreement" in the form contained in Attachments
Sections
Chili'sFranchiseManuahThe term "Chili'sFranchise Manual" o r " C F M " ( a ^ ^
the Manual of Operating Data or the MOD Manual) means the manuals, policies, specifications,
standards, checklists, evaluation forms, spreadsheets, guides, recipes, handbooks, documents^ and other
informationdesignatedby Franchisor from timeto-time regarding the System andChili'sRestaurants.
For convenience, the ManualofCperatingData,MCDManual,andtheChili'sFranchise Manual are
collectively referenced in this Franchise Agreement as the CFM. The CFM is part of the System and may
he updated, modified, andôr revised byFranchisor from time-totime in its sole discretion. The CFM
also includes such other manuals, policies, specifications, standards, guides, documents, and other
information as may be designated by Franchisor in the future with respect to Chili'sRestaurants.
(a)
During theTerm,Developer shall remain in strict conformity with the System
and the CFM and Developer shall also develop the Franchised Restaurants in strict conformity with the
CFM and this Development Agreement.
(b)
Franchisor has the right, at its option,to furnish the CFMtoDeveloper in the
form of paper copies, electronic copies, on computer diskette or CD-Rom, or electronic copies accessed
through the internet, designated wehsite(s), or other media. The CFM (in whole or in part) is currently
located at the following website (https^franchise.brinker.com), but Franchisor may update, modify,
andôr revise such website from time-to-time in its sole discretion.
(c)
Franchisor has the right to update, modify,andôr revise the System andôr the
CFM in the future to reflect changes to Chili's Restaurants and changes in the System, image,
specifications, standards, procedures, approved products, and other items. In such event, Developer shall
thereafter comply with the System andôr CFM, as updated, modified, andôr revised.
Sections
Breach of Confidentiality. Developer acknowledges that any failure to comply
with the requirements of Sections ^.5, ^,andôr^.7shallconstituteamaterial event of default under
Articleând will cause Franchisor irreparable injury. Therefore (in addition to any other remedies under
Article 7), Developer agrees to pay all court costs and reasonable attorneys'fees incurred by Franchisor in
obtaining specific performance of, or an injunction against violation of, the requirements of such Sections.
FAGEtÔA
Sections
Compliance with Laws and Industry Standards Developer shaii comply with
all requirements of federal, state and local laws, n^les and regulations and shall he respons^^^^
costsassociated withsuchcompliance. D e v e l o p e r s h a l l , a t i t s s o l e c o s t , c o m p l y ^ with rules and
regulations promulgated hy industry groups,trade associations, and similar nongovernmental (andôr
quasi-governmental) organizations so long as Franchisor'scompany-owned Chili'sRestaurantsalso
comply with such rules and regulations andôr(ii) rules and regulations promulgated hyFranchisor
which are reasonably consistent with rules and regulations promulgated hy industry groups, trade
associations, and similar non-governmental (andôr quasi-governmental) organizations so long as
Franchisor'scompany-owned Chili'sRestaurants also comply with such rules and regulations.
Section
Limitations on Developer's Use of Chili's Marks. As referenced in Section 3.1,
this Development Agreement does not grant any right to use(or license the use of) the Chili'sMarks or
the System. Accordingly,Developer agrees that:
(a)
Franchisor is the owner or licensee of all right,title and interest in andto the
Chili'sMarks and the goodwill associated withand symbolized hy them.
(h)
The Chili'sMarks are valid and serve to identify the System and those who are
authorized to operate under the System.
(c)
Developer shallnot directly or indirectly contest the validity or Franchisors
ownership ofthe Chili'sMarks.
(d)
Developer^suseîf any andsuhjecttoprior written approvalof Franchisor for
each such use)of the Chili'sMarks under this Development Agreement does not give Developer any
ownershipinterestorotherinterestinortotheChili'sMarks.
(e)
Any and allgoodwill arising from Developers use of the Chili'sMarks under
this Development Agreement shall inure solely and exclusively to Franchisors benefit, and upon
expirationor termination of thisDevelopment Agreement, no monetary amount shallbe assigned as
attributable to any goodwill associated with Developer^suse of the Chili'sMarks.
(f)
The right and license of the Chili'sMarks granted hereunder to Developer (if any
andsubject toprior written approvalof Franchisor for each such use)is non-exclusive, and Franchisor
thus has and retains the rights, among others:
(i)
To use the Chili's Marks itself in connection with selling
products and services;
(ii)
Togrant other licenses for the Chili'sMarks,inaddition to those
licenses already granted to existing franchisees;
(iii)
Todevelop and establish other systems using the same or similar
Chili'sMarks, or other Chili'sMarks, and to grant licenses or franchises thereto
without providing any rights therein to Franchisee; and
PAGE^ OA
^
Todevelop and estahhsh the
Marks from the Chilis Marks porsnant to and in aeeordaneewit^
of this Development Agreement.
Sectional
Internet andElectronic Commerce. Developershall not advertise or usethe
Chili'sMarks over thelnternetôranyother form of electronic commerce andôr electronic media)
without Franchisor'sprior written consent. Developer shall not develop, create, estahlish,andôr use any
wehsite or other electronic media which uses, andôr creates any association with, the System andôr the
Chili'sMarks (including any ahhreviation, acronym, phoneticvariation, or visual variation).
(a)
A l l domain names using, andôr creating any association with, the System andôr
the Chili'sMarks (includinganyahhreviation, acronym, phoneticvariahon, or visual variation) shallbe
registered inFranchisor's name. Franchisor may grant toDeveloperanon-exclusivelicense to use
domain name(s) selected hy Franchisor for Developer's use in accordance with this Development
Agreement. Developer shall not register any domain name in any class or category that uses or creates
any associationwiththeSystemandôr Chili'sMarks (including any ahhreviation,acronym,phonetic
variation, or visual variation) without Franchisor^sprior written consent.
(h)
Developeragreesthatanyconsenthy Franchisor to develop,create, establish,
advertise, register, andôr use any of the Chili'sMarks over the lntemet(or any other form of electronic
commerceandôr electronic media)shallhe subject to certainconditions including, without limitation,
requirements as to form, content, and appearance; requirement of a hypertext link to Franchisor's
website(s);prohibihons on hypertext lird^s to third-party websites; and other requirements, restri^^
and prohibitions deemed necessary by Franchisor.
(c)
Cnterminationorexpirationof thisDevelopment Agreement (or intheevent
Developer fails to comply w i t h t h i s S e c h o n ^ l l ) , t h e n Franchisor shall have the right (in addition to
Franchisor'sother rights andremedies hereunder) torevokeits consent toDeveloper'sdevelopment,
creation, establishment, advertisement, registrahon,andôr use any of the Chili'sMarks over the Interna
or any other form of electronic commerce andôr electronic media (including^ without limitation,
wehsite(s) and domain names) and, in such event, Developer shall immediately cease all such activities
and shall immediately take all actions reasonably required to disassociateDeveloper from all such
activities.
Section ^ 2
Dutsourcing by Franchisor. Franchisor may, in its sole discretion, elect to
outsource andôr subcontract certain of Franchisor'sobligations set forth in this Development Agreement
tosubsidiaries,affiliates,contract employees, third-party vendors,andôr other thirdparty suppliers;
provided (i) any such outsourcing andôr subcontracting shall not discharge Franchisor from its
obligations under this Development Agreement, and (ii) any such outsourced or subcontracted
obligations shall he performedinaccordance with the terms of this Development Agreement.
Section
Copyrights. Developer acknowledges that Franchisor or its affiliates ownthe
worldwide copyright and other ownership rights to the CFM, and all components of the System that are
written, electromc,andôr magnetic media subjects
Developeracknowledges and agreesthat it mayonly make modificationstothe Copyright Materials
upon receiving the prior written consent of Franchisor. Developer agrees to use proper copyright and
other proprietary nohcesincormectionwithallCopyright Materials or translations,modifications or
adaptations of the Copyright Materials and conform to Franchisors standards for protecting its rights.
PAGE^ OA
Developer agrees to promptly eause the exeeotion of any assignments, waivers of rights, or other
documents, and take any further actions needed or advisable to ensure that Franchisor has snch
and other rights descrlhedlnthis Section ^13.
ARTICLED
DEFAULTAND TERMINATION
Sections
Ohligations Material Developer acknowledges and agrees that eachof the
Developer'sohllgahonsdescrlhedlnthls Development Agreement isamaterlal and essential ohllgafi^
of Developer; that nonperformance of such ohllgahons will adversely and substantially affect Franchisor
and the System; and agrees that the exercise by Franchisor of the rights and remedies set forth herein are
appropriate and reasonable.
Sections
Rellancehy Franchisor. Therightsgranted toDeveloperlnthisDevelopment
Agreementhavebeengranted mrehanceonDeveloper'srepresentatlonsthatDeveloper will timely
perform and discharge Developer'sohllgatlons under this Development Agreementmaccordance with
the terms of this Development Agreement.
Sections
Default andAutomatlcTermlnatiom
(^
Developer shallbe deemed to belndefault under this Development Agreement,
and all rights granted herein, at Franchlsor'soptlon, shall automatically terminate without notice to
Developer, if Developer shall hecomeinsolvent or makeageneral assignment for the benefit of creditors;
o r i f Developer filesavoluntarypetitionunder any section or chapter of federal bankruptcylaws or
under any similar law or statute of the United States or any state thereof, or admits in writing its inability
to pay its debts when due; or if Developer is adjudicatedahankrupt or insolventinproceedings filed
against Developer under any section or chapter of federal bankruptcy laws or under any similar law or
statute of the United States or any state thereof; or if a b i l l inequity or other proceedingfor the
appointment ofareceiver of Developer or other custodian for Developer'sbusiness or assets is filed and
consentedtohyDeveloper;orifareceiverorother custodian (permanent or temporary) of Developer's
assets or property, or any part thereof, is appointed by any court of competent jurisdiction; or if
proceedings foracomposition with creditors under any state or federal law should be instituted by or
againstDeveloper; or i f a f i n a l judgment remains unsatisfied or of record for 30 days or longer (unlessa
supersedeas or other appeal bond is filed); or if Developer is dissolved; or if execution is levied against
Developer'shusiness or property; o r i f suit toforecloseany lienor mortgageagainstthepremises or
equipmentofanyFranchisedRestaurant developed hereunder is instituted against Developer and not
dismissed within 30 days; or if the real or personal property of any Franchised Restaurants developed
hereunder shall be sold after levy thereupon by any sheriff, marshal or constable.
(b)
Developer or any of Developer'sOwners(i) violates any"Anti-Terrorism Laws",
as defined below,(ii) is listed under any such Anti-Terrorism Laws, (iii) has any dealings with any
listed under any such Anti-Terrorism Laws, andôr(iv) assets are blocked under any such Anti-Terrorism
Laws.
(i)
The term"Anti-Terrorism Laws" means Executive Order 13224issued by
the Fresidentofthe United States, theTerrorism Sanchons Regulations ( T i t l e 3 1 , F a r t ^
of the U.S.Oode of Federal Regulations), the ForeignTerrorist Organizations Sanctions
Regulations (Title 31, F a r t ^ o f t h e U S O o d e of Federal Regulations), the Cuban
DA
As^Con^Regu^fions^^
t h e u s A F A T R I O T A C t and a^ o t h e r s
ordinances regulafions, policies hsts and any othe^
Authority (incinding, without limitation, the United States Department of Treasury
Office of Foreign Assets Control) addressing or in any way relating to terrorist acts and
acts of war.
(e)
Any purported assignment, transfer, conveyance, give away, gift, pledge,
mortgageor other eneumhrance (hy operationof law or otherwise)hyDeveloperandôr Developer's
Owners which does not comply with Articled
Sections
Other Defaults hy Developer. Each of the following shall he deemed an event
of default hy Developer under this Development Agreement.
(a)
Developer fails to comply with the Development Schedule.
(h)
Developer fails to pay the Development Fee andôr any other amounts due
hereunder.
(c)
Developerfailstoleaseor purchase andconstructandopen each Franchised
Restaurantpursuantto the time limits as provided in Article^hereof.
(d)
f f Developer or any of Developer's Owners is convicted (regardless of any
pendingappeal) of afelony, a crime involvingmoral turpitude, or any other crimeor offense that
Franchisor helieves is reasonably likely to have an adverse effect on Franchisor, the System, the Chili's
Marks, andôr the goodwill associated therewith.
(e)
Developer oranyofDeveloper'sOwners engages in conduct that is deleterious
or reflectsunfavorahly on Franchisor, theSystem, theChili'sMarks, andôr thegoodwill associated
therewith including,without limitation, conduct which exhihitsadisregard for the physical and mental
well-heingofemployees, customers, Franchisor'srepresentatives, the public at large(e.g.,hattery,ass
sexual harassment, discrimination, and other forms of threatening, outrageous, or socially unacceptable
behavior).
(f)
Failure by Developer to maintainaresponsible credit rating hy failing to make
prompt payment of undisputed hills, invoices and statements from suppliers of goods and services to
Developer (including where such supplier is Franchisor).
(g)
Oeveloper oranyofDeveloper'sOwners enters intoasuhfranchise agreement,
management agreement, consulting arrangement, subcontracting arrangement, outsourcing arrangement,
or any other similar arrangement relating to the rights and obligations ofDeveloper hereunder.
(h)
Submission by Developer or any of Developer's Owners of a franchise
application andôr management commitment form (or other documentation required under this
Development Agreement) which contains any material false or misleading statements or omits any
material fact.
FAGE^t OA
(i)
cured after notice.
Repeated breaches of provisions^
^
Failure by Developer, Deveioper'sOwners, Managing Owner, andôr Operating
Partner to comply with any other provisions of this Development Agreement.
(k)
Developer (including affiliates, subsidiaries, successors, and assigns),
Developer'sOwners, Managing Owner, andôr Operating Parmer fail to comply with the terms of any
other agreement between Developer and Franchisor (including any Franchise Agreement).
(I)
The "Franchisee" underaFranchise Agreement fails to comply with the terms of
any Franchise Agreement(and such failure is not cured within the applicable cure period, if any,set forth
in such Franchise Agreement).
Sections
Remedies for Default by Developer. In the event ofadefault under Sections,
then Franchisor may,atits option, elect any one or more of the following remedies.
(a)
Franchisor may terminate thisDevelopment Agreement andallrightsgranted
hereunder, effective immediately upon notice to Developer.
(h)
If Developer shall fail to comply with the Development Schedule (as referenced
in Section7.4(a) above), then Franchisor shall have the right, at its sole option, to temporarily forbear the
pursuit of its other remedies under this Section7.5by requiring Developer to pay Franchisor the sum of
Ten Thousand and 00^00 United States Dollars (US^,000) per month for up to on^
long as Developer is making these payments as they become due, then Franchisor will not terminate this
Development Agreement during such temporary forbearance period. If Developer is still not in
compliance with the Development Schedule upon expiration of such temporary forbearance period, then
Franchisor shall he entitledto all other rights and remedies set forth in this Sections. Franchisor and
Developer agree that (i) the foregoing sum isareasonableeshmate of the lost royalhes and other fees which
would have otherwise been paid to Franchisor under Franchise Agreement(s) in the event Developer had
openedandoperatedFranchisedRestaurant(s) inaccordance with theDevelopmentScheduleand (ii)
Franchisor'srights under this Section7.5(b)are reasonable under the circumstances.
(c)
Franchisor may modify,reduce,andôr accelerate the Development Schedule.
(d)
Franchisor may terminate, modify, andôr reduce any territorial exclusivity
granted Developer in Section 1.2.
(e)
Franchisor may modify andôr reduce theTerritory granted toDeveloper in
SectionlBl(a).
(f)
Franchisor may elect any other right or remedy available to Franchisor under this
Development Agreement, at law,or in equity.
Sections
No Cure Period. Developer acknowledges there is no cure period for any of the
events of default described above, f f any applicable law or rule requiresanotice period andôracure
period, then the notice period andôr cure period required under such law or rule shall be substituted for
the requirements herein.
PAGE^ OA
Sîon^
^hândDuûponTerm^^
^
Upon termination of this DevelopmemAgreement^De^^
this Agreement shaii immediately terminate and Developer shaii have no r ^
FranehisedRestanrantêêeptanysnehresta^
and delivered to Developer prior to such termination; (ii) Developer and Deveioper'sDwners shall not
identify themselves asadeveloper or franchisee of the System, except pursuant to rights which may he
granted under any Franchise Agreement which is then in effect, and remains in effect; and (iii) Developer
andDeveloper'sOwnersshallcomply with Section^5regarding Confidential Information. Without
limiting Sections 3 . l o r ^10 of this Development Agreement,Developer and Developer'sDwners shall
also comply with the following obligations:
(i)
Developer shall immediately and permanently cease to use, in any
marmer whatsoever, the System,the Chili'sMarks (if any and subject to the prior,written approval of
Franchisor for each suchuse), theCFM, and the Confidential lnformation,except pursuant torights
w h i c h m a y h e g r a n t e d u n d e r a n y Franchise Agreement which is thenineffect and remainsin effect
following the termination of this Development Agreement. In connection with the promotion,
advertising, marketing, ^ndôr operation of any other business conducted by Developer andôr
Developer's Cwners, Developer andDeveloper'sCwners shallnot, under any circumstances,useany
reproduction, counterfeit, copy or colorable imitation of the Chili's Marks which is likely to cause
confusion,mistake,or deception,or which is likely to dilute Franchisor'srights in a n d t o t h e Chili's
Marks. Developer and Developer'sCwners shall notuseanydesignationof origin, description, or
representation which falsely suggests or represents an association andôr connection with Franchisor.
(ii)
Developer shall immediately deliver to Franchisor the CFM, Confidential
Information, all written materialsbearing the Chili's Marks, andallother records, files,instructions,
correspondence, brochures, agreements, invoices,andothermaterialsrelating to the development of
Franchised Restaurants. Developer shall retainno copy or record of any of the foregoing, except
Developer'scopy of this Development Agreement and copies of any correspondence between the parties.
(iii)
Developer shall take such action as maybe necessary to cancel any
assumed name or equivalent registration which contains the Chili'sMarks (if any and subject to the prior,
written approval of Franchisor for each such use)^ except pursuant to rights which may be granted under
any Francluse Agreement which is then i n effect and remains in effect following the termination of this
Development Agreement; Developer shall furnish Franchisor with evidence satisfactory to Franchisor of
compliance with this obligation within five (5) days after termination or expiration of this Development
Agreement.
(b)
If Franchisor exercises any of the remedies in Sections7.5(c), 75(d), andôr7.5(e),
then Developer shall remain ohligatedunder this Development Agreement and shall comply with the
terms hereof(as such terms may have been revised pursuant to Franchisor'sexercise of such remedies).
(c)
If Franchisor exercises any of the remedies in Sections7.5(a),7.5(d),andôr7.5(e),
then Franchisor shall he entitled to establish, and to license others to establish, Chili'sRestaurants
formerTerritory or in the portion thereof no longer p a r t o f theTerritory or pursuant toany other
modifications of Developer's territorialexclusivity, except asmayheotherwiseprovided under any
Franchise Agreement which is then in effect between Franchisor and Developer.
PAGE^-DA
Sections
No Waived Franchiso^sexercise of its options under Secfion 75 shallnot
event ofadefanlteonstimteawaiverhy Franchisor to exercise its option to termm^
Agreement at any hme with respect to any subsequent event of default ofasimilar or different
Sections
Remedies Not Fxctusive. No right or remedy herein conferred upon or reserved
to Franchisor is exclusive of any other right or remedy provided or permitted hy law or in equity.
S e c t i o n 7 ^ Default By Franchisor. If Franchisor defaults in the performance of any term of
this Development Agreement, then Developer shall deliver written notice of such default to Franchisor
within tl^rty (30) days after such default and such notice shall clearly and definitively specify each act or
omission constituting such default If Developer does not helieve that Franchisor has cured such default
w i t h i n s i x t y ^ O ) d a y s a f t e r d e l i v e r y o f s u c h d e f a u l t notice toFranchisor, then Developer shall notify
Franchisor that Developer believes such default has not been cured. If Developer fails to notify
Franchisor within suchÔ-dayperiodthat such default has not been cured,then such default shall be
deemed as cured.
ART1CLF8
AS^GNMFNTANDTRANSFFR
Section ^Bt
Transfer by Franchisor. Franchisor shall have the right to transfer or assign this
Development Agreement and a l l o r any part of its rights or obligations herein to any person orlegal
entity. Specifically,and without limitation to the foregoing, Developer agrees that Franchisor may sell its
assets, the Chili'sMarks, andôr the System t o a t h i r d party; may offer its securihes privately or p u b ^
may merge, acquire other corporations or be acquired by another corporation; may undertake a
refinancing,recapitalizahon,leveraged buyout or other economic or financial restructuring; andwith
regard to any or all of the above sales, assignments and dispositions. Developer expressly and specifically
waives any claims, demands, or damages against Franchisor arising from or related to the transfer of the
Chili'sMarks (or any variation thereof) andôr the System from Franchisor to any other party. Nothing
containedinthisDevelopment Agreement shall requireFranchisor to offer any services or products,
whether or not hearing the Chili's Marks, to Developer if Franchisor assigns it rights under this
Sections
Transfer hy Developer. Developer agrees therights and duties set forthinthis
Development Agreement are personalto Developer and that Franchisor entered into this Development
Agreement in reliance on the business skill, financial capacity and personal character of the Developer
andDeveloper'sCwners.
(a)
Developer andôrDeveloper'sCwners(i) shall not sell, assign, transfer, convey,
give away, gift, pledge, mortgage or otherwise encumber any direct or indirect interest in this
Development Agreement andôr the Chili'sMarks and (ii) shall not grantasecurity interest or collateral
interest in this Development Agreement andôr Chili'sMarks. Developer andôrDeveloper'sCwners
shall not sell, assign, transfer, convey,giveaway,pledge, mortgage or otherwise encumber any direct or
indirect interest in DeveloperandôranyFranchisedFestaurant without theprior writtenconsent of
Franchisor which Franchisor may condition upon any or all of the requirements set forth in this Section
8.2(as determined by Franchisor inits sole discretion).
FACE^-OA
(b)
Any purposed assignment transfer conveyance, give away, gift, pledge,
mortgage or other enenmbranee(byope^
Owners which does not comply with this Article 8 (inclnding, without limitation, the prior written
consent of Franchisor^shall he null and void and shall constitute an event of default under Section 73(c^
(c)
Franchisor shall not unreasonahly withhold its consent to a transfer of any
interest in Developer or in this Development Agreement Franchisor may,in its sole discretion, require
any or all of the following as conditions of its approval:
(i)
A l l of Developers accrued monetary obligations and all other
outstandingohligations toFranchisor, its subsidiaries audits affiliates andthird-party
suppliers shall have been satisfied.
(ii)
Developer is not in default of any provision of this Development
Agreement, any amendment hereof or successor hereto, or any other agreement between
Developer and Franchisor, or its subsidiaries and affiliates.
(iii)
Developer, Developer'sOwners, and theproposed transferor shall have
executedageneralrelease,inaform satisfactory toFranchisor, of any and allclaims
against Franchisor, its subsidiaries and affiliates, successors and assigns and their
respective
officers, directors, shareholders,
partners,
employees,
servants,
representatives and agents, in their corporate and individual capacities, including,
without limitation, claims arising under this Development Agreement and federal, state
and local laws, rules and ordinances.
(iv)
Theproposedtransfereeshall,at Franchisor's election, consistent with
then current Franchisor policy, either (a) enter into a written agreement, in a form
satisfactory to Franchisor, assuming full, uncondihonal, joint and several liability for and
agreeing to perform from the date of the transfer, all obligations, covenants and
agreements contained in thisDevelopment Agreement or (h)execute,foraterm ending
on the expiration date of this Development Agreement the standard form development
agreement then being offered to new System developers and such other ancillary
agreements as Franchisor may require; and if proposed transferee is a corporation,
limited liability company orapartnership,transferee'sshareholders, members, parmers
orotherinvestors,asapplicable, shall execute such agreements as transferee'sprincipals
and shall guarantee the performance of all such obligations, contracts and agreements in
writing i n a f o r m satisfactory to Franchisor. If such transferee is required to executea
newdevelopment agreement, then such agreement shall supersede thisDevelopment
Agreement and its ancillary documentsinall respects and the terms of such agreements
may differfrom the terms of this DevelopmentAgreement.
(v)
Theproposed transferee shalldemonstrate toFranchisor'ssatisfaction
thattransferee and transferee'sowners meet the criteria considered by Franchisor when
reviewingaprospectivedeveloper'sapplication for development rights, including but
not limited to Franchisor'seducational, managerial and business standards; transferee's
good moralcharacter, business reputation andcredit rating; transferee'saptitude and
ability to perform Developer'sobligations under this Development Agreement (as may
beevidencedbypriorrelatedhusinessexperienceorotherwise); transferee's ability,
PAGE^ OA
financial resources i n f r a s ^ ^
operateamnlfi-nnitrestanranth^
Restanrants owned or operated hy transferee and the territories or areas wi^^
which transferee is obligated to develop Chilfs Restaurants pursuant to any
development agreement between Franchisor and transferee, in relation to development
of the Franchised Restaurants hereunder.
(vi)
The proposed transferor shall remain liable for all of the obligations to
Franchisor in connection with the development activities prior to the effective date of the
transfer and shall execute any and all instruments reasonably requested by Franchisor to
evidence such liability.
(vii)
At the proposed transferee's expense, the transferee, the transferee's
managing owner and the transferee's operating partner shall complete any training
programs then in effect for System developers upon such terms and conditions as
Franchisor may reasonably require.
(viii)
Developer shall paya"TransferFee"of ^5,000.00 or such greater amount
as is necessary to reimburse Franchisor for its reasonable costs and expenses associated
with reviewing the application to transfer this Development Agreement, including,
without limitation, legal and accounting fees (in addition to any other transfer fees that
may he payable under applicable Franchise Agreements provided that the total
transfer fees payable to Franchisor inconnection withany single transfer shall not
exceed^,000.00).
(ix)
If the transferee is a corporation, limited liability company or a
partnership, the transferee shall make and will be bound by any or all of the
representations, warranties and covenants set forth at Section ^.2. Transferee shall
provide toFranchisor evidence satisfactory to Franchisor that the terms of Section ^.2
have been satisfied and are true and correct on the date of transfer.
(^
Developer, Developer's Owners, and the proposed transferor and
transferee shallcomply with any other conditions that Franchisor reasonably requires
from time to time as part of Franchisor'stransfer policies including,without limitation,
evidence of landlord consent, subordination of purchase price to monetary obligations
under this Development Agreement, any Franchise Agreement(s), execution of
confidentiality and non-compete agreements, etc.
(d)
Developer acknowledges and agrees that each condition that must be met by the
transfereeisreasonahleandnecessary toassure such transferee'sfullperformance of the obligations
hereunder.
Sections
Transfer for Convenience of Ownership. Any proposed assignment andBor
transfer of this Development Agreement hy Developer to an affiliated or subsidiary corporation or other
entity formed hy Developer solely for the convenience of ownership shall he subject to Franchisors prior
written consent which Franchisor may condition upon any or all of the requirements set forth in Section
8.2 (as determined byFranchisor in its sole discretion). With respect to any proposed assignment or
transfer under this Section 8.3, Developer shall he the owner of all of the voting stock or interest of such
PAGE^ DA
corporation or entity and if
proportionate ownership i n t e r e s t i n g
the transfer.
S^tionS^
Right of First RefnsaL The "Right of First Refusal attached hereto as
AttaehmentDisherehy incorporated into this Development Agreement.
Sections
Transfer Upon Death or Permanent Disahihty.
(a)
Upon the death of any person with an interest in this Development Agreement
andôr Developer (the^Deceased^the executor, administrator or other personal representative of the
Deceased shall transfer such interest t o a t h i r d party approved hy Franchisor within twelve (12) months
after the death. If no personal representative is designated or appointed or no prohate proceedings are
instituted with respect to the estate of the Deceased, then the distrihutee of such interest must be
approved hy Franchisor. If the distrihutee is not approved by Franchisor, then the distributeeshall
transfer such interest t o a t h i r d party approved by Franchisor within twelve (12) months after the death of
the Deceased.
(b)
Upon the permanent disability of any person with an interest in this
Development Agreement or Developer, Franchisor may,in its sole discretion, require such interest to he
transferredtoathird party in accordance with the condihons described in this ArticleSwithin six (^)
months after notice to Developer. ^Permanent disability^shall mean any physical, emotional or mental
injury,illness or incapacity which would preventaperson from performing the obligations set forth in
this Development Agreement or in the Guaranty attachedto this Development Agreement for at least
ninety consecutive days and from which condition recovery within ninety days from the date of
determination of disability is unlikely. Permanent disability shall be determined hyalicensed practicing
physician selected by Franchisor upon examination of the person; or if the person refuses to submit to an
examination, then such person shall be automatically deemed permanently disabled as of the date of such
refusal for the purpose of this Article 8. The costs of any examination required by this Section 8.5(b)shall
be paid byFranchisor.
(c)
Upon the death or claim of permanent disability of any person with an interest in
this Development Agreement or Developer, Developer orarepresentative of Developer must promptly
notify Franchisor of such death or claim of permanent disability. Any transfer upon death or permanent
disability shall be subject to the same terms and conditions as described in ArticleSfor any inter vivos
transfer. If an interest is not transferred upon death or permanent disability as requiredinthis Section
8.5, then Franchisor may terminate this Development Agreement.
Sections
Non-Waiver of Claims. Franchisor'sconsenttoatransfer of any interest in the
Developer or in this Development Agreement granted herein shall not constituteawaiver of any claims it
may have against the transferring party,nor shall it he deemedawaiver of Franchisor'sright to demand
e^xact compliance with any of the terms of this Development Agreement hy the transferee.
Section 8.7
Offerings hy Developer. Securities or interests in Developer may be offered to
third parties, by public offering, hy private offering, or any other type of offering ordy with the pri^
written consent of Franchisor (regardless of whether Franchisor'sconsent is required under this Article
8), which consent shall not be unreasonahly withheld. All materials required for such offering by federal
or state law shall he submitted to Franchisor f o r a l i m i t e d review as discussed below prior to their being
PAGE^ OA
filed with ^ny governmentalageney; and any materials t o h e n s e d l n any exemptofferingshallhe
submitted to Franchisor for sneh review prior to their nse. No Developer offering shall imply (hy use of
the Chili'sMarks or otherwise) that Franchisor is parfieipafing in an underwriting, issuance or of^^
Developer or Developer securities; and Franchisor'sreview of any offering shall he limited solely to the
suhjectof therelationshiphetweenDeveloperandFranchisor. Franchisor may,at its option,require
Developer'soffering materials to containawritten statement prescribed byFranchisor concerning the
limitations descrihedinthe preceding sentence. Developer and the other participantsintheoffering
mnst fully indemnify Franchisor in connection with the offering. For each proposed offering, Developer
shall pay to Franchisoranon-refundable feeofFen Thousand and 00^00 Dollars
shall give Franchisor written notice at least 30 days prior to the date of commencement of any offering or
other transaction covered by this Section 8.7.
ARTICLED
NDCDMFFTFCLAUSFANDRFLATFDCDVFNANFS
Section ^Bt
Best Efforts. During theFerm, Developer, Managing Dwner, and Operating
Fartneragreetodevotefull timeandbest efforts toDeveloper'sohligations under thisDevelopment
Agreement.
Sections
Receipt of Confidential Information. Developer andDeveloper'sCwners agree
(i) they will receivevaluable specialized training andConfidentialtnformationwhichisbeyondtheir
present skills and experience, and (ii) that such training and Confidential Information provide a
competitive advantageandwill he valuable tothem i n t h e development andoperation of Franchised
Restaurant(s), (iii) access to such training andconfidential Information isaprimary reason for entering
into this DevelopmentAgreement, (iv) such training and Confidential Informationare providedby
Franchisor for the benefit of the System and each Chili'sRestaurant under the System and (v) that the
System and each such restaurant individually and mutually benefit from all Developer^scompliance with
the covenants described below.
Sections
No-Compete Clause. In consideration for such training and Confidential
Information (and the other benefits provided to Developer hy this Development Agreement), Developer
and Developer'sCwnersagree as follows:
(a)
During the Term, Developer and Developer's Cwners shall not directly,
indirectly,or in any manner whatsoever:
(i)
Divert or attempt to divert any business or customer of Chili's
Restaurantstoany Competitive Restaurant (definedhelow) or otherwise take
any action injurious or prejudicial to the goodwillassociatedwiththe Chili's
Marks and the System.
(ii)
Employ or seek to employ any person who is at that time
employed by Franchisor or hy any other developer of Franchisor, or otherwise
directly or indirectly induce such person to leave his or her employment.
(iii)
Cwn,maintain,develop,operate,or have any interest in any
Competitive Restaurant.
PAGE^ DA
Theterm "CompefiriveRestauram" shaiihe deemed tomean
any broadmem^ easnai-dimng restaurant featnringhambnrger^ sandwiches,
steaks, saiads,harheenerihs,fajitas,and^rMexieanênthwesternenism^
primary menu item ineinding, without iimitatien, such restaurants as
Appiehee's,BeefCBrady's,8ennigan's,8TsRestaurant and Brewpuh, Buffalo
Cafe, Buffalo Wild Wings, Cheddar'sCasuai Cafe, Cooker B a r ^ G r i i i , ^ ^
Restaurant^Puh, Hooter's, Hops Crillhouse^Brewery,Houlihan's, Island's,
Johnny Rocket's, Logan's Roadhouse, Longhom Steakhouse, Ma^ ^ Erma's,
Ninety-Nine, C ' C h a r l e ^ C n The Border Mexican C r i l l ^ C a n h n a , R a f f e r t y ^
RedRohin,RJCator'sFioridaFoodnFun,RoadhouseCriii,RuhyTuesday,
Texas Roadhouse, TCf Friday's, and Tumhieweed. The term "Competitive
Restaurant"shaii also he deemedto mean any fast-casual restaurant featuring
hamburgers as a primary menu item, including, without limitation, such
restaurants as Five Cuys Burgers and Fries and Smashhurger.
(h)
Commencing on (i) the expiration or termination of this Development
Agreement or (ii) on the date of an approved transfer of all of Developer'sinterest in this Development
Agreement a n d c o n t i n u i n g f o r a p e r i o d o f two (2) years after such date,Developer shall not directly,
(i)
Restaurants to any Competitive Restaurant or otherwise take any action
injurious or prejudicial to the goodwill associated with the Chili'sMarks and the
System.
(ii)
employed byFranchisor or hy any other developer of Franchisor, or otherwise
(iii)
Cwn, maintain, develop, operate, or have any interest i n a n y
Competitive Restaurant located in the United States of America.
(c)
Commencing on (i) the expiration or termination of this Development
Agreement or (ii) on the date which an individual or entity ceases to satisfy the definition of "Developer's
Cwner"and continuing foraperiod of two (2) years after such date, such Developer'sCwner(s) shall not
directly,indirectlyôr in any manner whatsoever:
(i)
injurious or prejudicial to the goodwill associated with the Chili'sMarks and the
System.
(ii)
employedbyFranchisor or byanyother developer of Franchisor,or otherwise
(iii)
Cwn, maintain,develop, operate,orhaveany interest in any
FAOE^ DA
(d)
In addifion to any other rights^
Development Agreement and in the event ofaviolation of Sections
Franchisor may eieet, in its sole discretion, to require Developer to pay to Franehi^^^
t h r e e ^ t i m e s the annual salary of the person(s)invoived in such violation pins an amount equal to co
and attorney'sfees incurred hy Franchisor in connection with such violation and such amounts shall he
deemed as liquidated damages.
Sections
Survival. The terms of this Article^shall survive the termination, expiration, or
any transferof thisDevelopment Agreement.The parties agree this A r t i c l e ^ s h a l l h e construed as
independent of any other provision of this Development Agreement.If all or any portion of this Articled
is held unreasonahle or unenforceahlehyacourt or agency having valid jurisdiction in an unappealed
final decision to which Franchisor isaparty,Developer andDeveloper'sCwners expressly agree to he
hound hy any lesser covenant suhsumed within the terms of such covenant that imposes the maximum
duty permitted hy law, as if the resulting covenant were separately stated in and madeapart of this
Articled
Sections
Reduction i n Scope. Developer andDeveloper'sCwners agree; that Franchisor
shallhavetheright, in its sole discretion, to reduce the scope of any provision, or portion thereof,mthis
Articled without their consent,effectiveimmediately upon notice toDeveloper;andDeveloperand
Developer'sCwners agree that they shallcomply forthwith with any provision as so modified,which
shall he fully enforceable notwithstanding Section 15^.
Sections
No Defense. Developer and Developer's Cwners expressly agree that the
existence of any claims they may have against Franchisor, whether or not arising from this Development
Agreement, shall not constituteadefense to the enforcement byFranchisor of the provisions of this
Articled In addition to anyotherrights and remedies. Developer andDeveloper'sCwners agree to pay
allcosts and expenses (including reasonable attorneys^ fees) incurred by Franchisor in connection with
the enforcement of this Articled.
Sections
Consent to Injunctive Relief. Developer and Developer'sCwners acknowledge
thataviolahonofthe terms o f t h i s A r t i c l e ^ w o u l d result in irreparable injury to Franchisor for which no
adequate remedy at law may be available, and Developer and Developer'sCwners accordingly consent to
the issuance of an injunction prohibiting any conduct hy Developer or Developer'sCwners in violation of
the terms of this Articled
Sections
Guaranty of Developer's Dbligations. Managing Cwner, Operating Farmer,
and any other of Developer'sCwners shall not be obligated to execute the Guaranty in the form set forth
on Attachment C; provided that, in the event ofamonetary default under this Development Agreement
(even if such monetarydefault is cured),Franchisormay,at its options require the Managing Cwner to
signthe Guaranty in the form set forth on Attachment C, in addition toFranchisor'sother rights and
remedies hereunder.
ARTICLED
NCTICFFRGVISfCNS
Any and all notices, reports and payments permitted or required to he delivered hy the
provisions of tl^s Development Agreement shall be (i) personally delivered, (ii) delivered hy overnight
OA
delivery s e r v i c ^ ^ d e f i v e ^
by email, eleetromedeiivery^prepai^
this clause (iv) by sendingaeoîrmationeopy by overnight del^^^
returureeeiptrequested,witbmoue(l)busiuess day after transmission
tbe addresses listed below. Solong as any notice is prepared, addressed, and deliveredinaecordanee
with this Article 10, then any such notice shall be deemed to have been received (i) at tbe time of p e ^
delivery, (ii) at the time of transmissionin the caseof email,electronicdelivery, facsimile or telex,
provided confirmation is sent as described above, (iii) on the next business dayinthe case of overnight
delivery service, or (iv) within three (3) business days after mailing in the case of registered or certified
mail. The parties may change their notice information below hy delivery of written notice to the other
party in accordance with this Article 10 with new notice information. Franchisor may elect (in its sole
discretion) to deliver copies of any notices to Developer under this Development Agreement to
Developer'slender(s),landlord(s), and other similar parties.
NoticesToFranchisor:
wâcopyto:
Brinker International Payroll Company,L.F.
ÔLBJFreeway
Dallas, Texas 7^40
Attn: Chili'sGrill^Bar Franchise Department
Brinker International Payroll Company,L.F.
ÔLBJFreeway
Dallas, Texas 7^40
Attn: General Counsel
NoticesToDeveloperand
Developer'sCwners:
Attn:
ARTICLED
1NDFPFNDFNTCCNTRACTDRAND1NDFMN1F1CAT1CN
Sectional
Independent Contractor. The parties agree that Developer is an independent
contractor, thisDevelopment Agreementdoesnotcreateafiduciaryrelationshipbetweenthem, and
nothing in this Development Agreement is intended to designate either party as an agent, legal
representative, suhsidiary,jointventurer,parmer, employee, or servant of the other for any purpose
whatsoever.
(a)
Oaring the Term, Developer shall hold itself out to the public as an independent
contractor developing Franchised Restaurant(s) under this Development Agreement and operating such
restaurantsunderFranchiseAgreementswithFranchisor Developer agrees to take suchactionas maybe
necessaryto do so, including, without limitahon,exhibihnganohce of that factinaconspicuous place in
the Franchised Restaurant(s), the contentofwhichFranchisorreserves the r i g h t t o s p e c ^
(b)
The parties agree that nothing in this Development Agreement authorizes
Developer or any ofDeveloper'sCwners to make any contract, agreement, warranty,or representation on
PAGE3t OA
Franchisor b e h a l t o r t o i n c u r
shall in no event assume hahiht^
shall Franchisor he llahlehy reason of any act or omission of Developer or D e v e l o p
claim orjudgmentarisingtherefromagainstDeveloper, any of Developer'sCwners or Franchisor.
(c)
Developer shall he the sole and exclusive employer of its employees with the sole
right tohire, discipline, and dischargesuchemployees and thesolerighttoestahlishwages,hours,
benefits, employment policies, and other terms and conditions of employment for such employees all as
determined hy Developer i n its sole discretion without consultation or approval byFranchisor.
Section
Indemnity. Developer is responsible for all liability,losses,damages, claims,
costs, expenses, andôr debts related to Developer'sobligations under this Development Agreement and
the development and operation of Franchised Festaurant(s). Developer shall, at all times, indemnify and
hold Franchisor (including its subsidiaries, affiliates, successors and assigns and their respective o ^
directors, attorneys, shareholders, partners, agents, representatives, independent contractors and
employees^collectivelyreferencedhereinafteras''Indemnitees'') harmless to the fullest extent p e r m i t
b y l a w (without regard to the cause thereof or the negligence of Indemnitees) from all liability,losses,
damages, claims, costs, expenses, andôr debts related to Developer'sobligations under this Development
Agreement and the development and operation of Franchised Restaurant(s) including, without limitation,
liahility,losses, damages, claims, costs, expenses, andôr debts related to the following matters:
(a)
Fhe infringement, alleged infringement, or any other violation or alleged
violation hy Developer or any of Developer's Cwners of any patent, mark or copyright or other
proprietary right owned or controlled by third parties (except as such may occur with respect to any right
touse the Chili'sMarksor other proprietary information granted hereunder).
(b)
Fhe violation, breachor asserted violationorbreachby Developer orany of
Developer'sCwnersof any federal,stateor locallaw^regulation,ruling, standardordirective orany
industry standard (including,without limitation, anyclaims related to the employment of Developer's
employees).
(c)
Libel, slander or any other form of defamation of Franchisor, the System or any
developer or Developer operating under the System, by Developer or by any of Developer'sCwners;
(d)
Fhe violation or breach byDeveloper or by any of Developer'sCwners of any
provision of this Development Agreement or in any other agreement between Developer, its subsidiaries
and affiliates and Franchisor, its subsidiaries and affiliates or the officers, directors, shareholders,
parmers, agents, representatives, independent contractors and employees thereof.
(e)
Acts, errors, or omissions of Developer, any of Developers subsidiaries or
affiliates and any of Developer's Cwners and the officers, directors, shareholders, partners, agents,
representatives, independent contractors and employees of Developer and its subsidiaries and affiliatesin
connection with the development and operation of Franchised Festaurant(s).
Section LtB3
Notice to Franchisor. Developer and each of Developer'sCwners agree to give
Franchisor notice of any such action, suit, proceeding, claim, demand, inquiry,or investigation. At the
expense and risk of Developer and eachof Developer'sCwners, Franchisor may elect to assume (but
under no circumstance is obligated to undertake)or associate counsel of its own choosing with respect to,
PAGE^ DA
the defense andêr setdement of any snch action, snit, proceeding, ciahn, demand, inquiry or
inveshgation. Such an undertaking hy Franchisor shaii, in no marmer or form, diminish
Developer and each of Deveioper'sOwners to indemnify the Indemnitees and to hold them harmless.
Sections
Settlement or Other Remedial Actions.ln order to protect persons or property^
or its reputation or goodwill, or the reputation or goodwill of others, Franchisor may,at any time and
withoutnotice, as it, in its judgment deems appropriate, consent or agree to settlements or take such other
remedialorcorrectiveactions itdeemsexpedient with respect to the action,snit,proceeding, claim,
demand, inquiry or investigation if, in Franchisors sole judgment, there are reasonable grounds to
believe that (i) any of the acts or circumstances enumerated in Section
have occurred or (ii) any act,
error, or omission as described in Section lL2(e) may result directly or indirectly in damage, injury,or
harm to any person or any property.
(^
All losses and expenses incurred under this Article 11 shall he chargeable to and
paid byDeveloper or anyof Developer'sCwners pursuant toits obligations of indemnity under this
Section, regardless of any actions, activity or defense undertaken by Franchisor or the subsequent success
or failure of such actions, activity,or defense.
Section 11.5
D e f i n i t i o n o f Lossesand Expenses. A s u s e d i n t h i s A r t i c l e l l , thephrase
"liability,losses,damages, claims,costs, expenses, andôrdebts"shall include, without limitation,all
losses, compensatory, exemplary or punitive damages, fines, charges, costs, expenses, lost profits,
reasonable attorneys fees, court costs, settlement amounts, judgments, compensation for damages to the
Franchisors reputation and goodwill, costs of changing, substituting or replacing the same, and any and
all expenses of recall, refunds, compensation, public notices and other such amounts incurred in
connection with the matters described.
Section 11.^
No Liability. Indemnitees d o n o t assume any liability whatsoever for actsB
errors, or omissions of those with whom Developer, any of Developer'sCwners, Developer^ssubsidiaries
and affiliates or any of the officers, directors, shareholders, parmers, agents, representatives, independem
contractors andemployees of Developer,itssuhsidiariesor affiliates may contract,regardlessof the
purpose.
Sectionll.7
No Requirement to Fursue Third Farty. Under no circumstances shall
Indemnitees be required or ohligatedto seek recovery from thirdparties or otherwise mitigate their
losses in order to maintainaclaim against Developer or any of Developer'sCwners. Developer and each
of Developer'sCwners agree that the failure topursue such recovery or mitigate loss will in no way
reduce the amountsrecoverahle from Developer oranyofDeveloper'sOwners by the Indemnitees.
Section 11.8
Indemnity and Insurance. Developer's obligations under this A r t i c l e l l a r e
separate and distinct from any obligations to maintain insurance under this Development Agreement or
any Franchise Agreement. Furthermore,Developer's ohligationto indemnify andholdlndemnitees
harmless shall not he limited by the amount ofDeveloper'sinsurance(or lack thereof).
Section 1 1 ^
Survival. Fhe terms of this Article 11 shall survive the termination, expiration,
or any transfer of this Development Agreement.
FAGE^ OA
ARTICLED
APPROVALS
Whenever thisDevelopmem A g r e e d
Developer shall makeahmely written request toFranchisor ther^^
expressly provided herein, any approvalor consent granted shall he in writing. Franchisor makes no
warranties or guarantees upon which Developer or Developer's Owners may rely, and assumes no
liahility or obligation to Developer or such persons, hy providing any waiver, approval, advice, consent,
orservices to Developer or Developer'sOwners in connection with this Development Agreement, or hy
reason of any neglect, delay,or denial of any request therefor.
ARTICLED
NOWA1VPR
No failure of Franchisor to exercise any power reserved to it in this Development Agreement or
to insist upon compliance hy Developer or Developer'sCwners with any obligation or condition in this
Development Agreement, and no customer practice of the parties at variance with the terms hereof, shall
constituteawaiver of Franchisor'srights to demand exact compliance with the terms of this Development
Agreement. Waiver byFranchisor of any particular default shall not affect or impair Franchisor'sright
with respect to any subsequent default of the same or of a different nature; nor shall any delay,
forbearance, or omission of Franchisor to exercise any power or right arising out of any breach or default
by Developer orDeveloper'sOwnersofanyoftheterms, provisions, or covenants of this Development
Agreement affect or impair Franchisor'srights; nor shall such conshtuteawaiver by Franchisor of any
rights hereunder or rights to declare any subsequent breach or default.
ARLTCLF^
DISPUTFRFSOLUTfON
Section l^Bt
InûnctiveRelieL Developer agreesthatFranchisormayhave temporary or
preliminary injunctive relief without bond,but upon due notice,andDeveloper'ssole remedy inthe
event of the entry of such injunctive relief will be the dissoluhon of the injunctive relief, if warranted
upon hearing duly had(all claims for damages hy reason of the wrongful issuance of any injunction being
expressly waived).
Section 1^2
Consent to Jurisdictiom Venne. and Governing Law. Developer and
Developer'sOwnersirrevocahly (i)suhmit themselves to the jurisdiction of the State Courts ofFexas,
located in Dallas County,Fexas, and the United States Federal District Court for the Northern D i s t r ^
Fexas, Dallas Division; (ii) waive all questions of personal jurisdiction for the purpose of effectuating this
provision; (iii) agree that service of process may be made upon any of them in any proceeding relating to,
or arising out of, this Development Agreement (including the relationship contemplated hy this
Development Agreement) by any means allowed byFexas or Federal law; and (iv) agree that venue for
any proceeding relating t o , o r arising out of,this Development Agreement shall he in Dallas County,
Fexas; provided Franchisor may bring an action for injunctive or other extraordinary relief in any State or
Federal District Court which has jurisdiction. With respect to all claims, controversies, disputes, andôr
actions, this DevelopmentAgreement shallheinterpreted and construed underFexas law (without
regard to Fexas choice of law rules), except that any State law regarding (i) theoffer and sale of
franchises, (ii) franchise relationships, andôr(iii)businessopportunitieswillnot apply unless the
applicable jurisdictional requirements are met independently without reference to this paragraph.
PAGE^ DA
Developed Developed Owners and Franchisor acknowledge the terms of this Section 14.2
provide each of the parties with the mutual henefit of uniforminterpretation of this Development
Agreement and any dispute arising out of the relationship contemplated hy this Development
Agreement. Developer, Developer'sCwners, and Franchisor acknowledge the receipt and sufficiency of
mutual consideration for such henefit.
Sectionl4^
Place of Execution of Development Agreement. Developer, Developer's
Cwners, and Franchisor acknowledge (i) this Development Agreement was executed in Dallas County,
Texas; and (ii) performance of certainohligations of Developer andDeveloper'sCwnersunder this
Development Agreement, including payment of monetary sums due hereunder, shall occur at
Franchisor'sprincipal offices in Dallas, Texas.
Section 14.4
Costs and Attorneys'Fees. Frior to the commencement of litigation, arhitration,
or other dispute resolution procedure and in the event Franchisor incurs costs and expenses (including
attorneys' fees) inconnectionwithDeveloper's failure to comply with(andôrfailureto timely pay
amounts owing to Franchisor under) this Development Agreement, then Developer shall promptly
reimburse Franchisor for such reasonable costs andexpenses. In the event of litigation, arbitration, or
other dispute resolution procedure between the parties to enforce this Development Agreement, the
prevailing party in any such action shall be entitled to recover reasonable costs and expenses from the other
party,including,withoutlimitation,courtcosts, attorneys^ fees, and discovery costs.
Sectionl4.5
Rights of FartiesareCumutative. Franchisor's and Developer'srights under
thisDevelopmentAgreementarecumulativeandthe exercise or enforcement of any right or remedy
under this Development Agreement will not preclude the exercise or enforcement byaparty of any other
right or remedy under thisDevelopment Agreement which it is entitled by law or thisDevelopment
Agreement to exercise or enforce.
Section 1 ^
Waiver of Punitive Damages and JuryTrial. Tothe fullest extent permitted by
law,the parties waive any right to, or claim for, any punitive or exemplary damages against the other
party. The parties also agree that,inthe event ofadispute between them, the party makingaclaim will
he limited to recovery of actual damages, if any. In addition, the parties irrevocably waive trial by jury in
any action, proceeding, andôr counterclaim brought by either party.
Sectionl4.7
Limitation of Claims. Any and all claimsarisingoutof or relating to this
Development Agreement or the relationship among the parties to this Development Agreement will be
barred unless an action or proceeding is commenced withinone year from the dateDeveloper or
Franchisor knew or should have known of the facts giving rise to such claim.
ARTICLED
CENERAEPRCV1S1DNS
Section 1^.1
Severability. Except as expressly provided to the contrary herein, each portion,
section, part, term, andôr provision of this Development Agreement shall be considered severable; and
if, for any reason, any section, part, term, andôr provisionhereinis determined t o b e i n v a l i d and
contrary to, or in conflictwith, any existing or future law or regulation byacourt or agency having valid
jurisdiction, such shall not impair the operation of, or have any other effect upon, such other portions,
sections, parts, terms, andôr provisions of this DevelopmentAgreement as may remain otherwise
DA
i n ^ i g i b l e and legacy enfo^^
the parses h e ^ o ; and said invalid
to he pari of this Development Agreement
Section 15.2
No Benefit Except as expressly provided to the contrary herein, nothinginthis
Development Agreement is intended, nor shall he deemed,to confer npon any person orlegal entity
other than Developer, Franchisor, Eranchisor'sofficers, directors, managers and employees, and such of
Developer'sand Franchisor's respectivesoccessors and assigns as may he contemplated (and, as to
Developer, permitted) hyArticleShereof, any rights or remedies under or by reason of this Development
Agreement
Section 15.3
Agreement t o h e Bound. DeveloperandDeveloper'sOwners, as applicable,
expressly agree to he bound by any promise or covenant imposing the maximum duty permitted by law
which is subsumed within the terms of any provision hereof, as though it were separately articulated in
and made a part of this Development Agreement, that may result from striking from any of the
provisions hereof any portion or portions whichacourt may hold to he unreasonable and unenforceable
i n a f i n a l decision to which Franchisor isaparty,or from reducing the scope of any promise or covenant
to the extent required to comply with suchacourt order.
Section 1^.4
Captions. All captions in this Development Agreement are intended solely for
the convenience o f t h e parties and none shall be deemedto affect the meaning or construction of any
provision hereof.
Section ^5.5
Survival. Any obligation ofDeveloper or Developer'sCwners that contemplates
performance of such obligation after termination or expiration of this Development Agreement or the
transfer of any interest of Developer or Developer'sCwners shall be deemed to survive such termination,
expiration or transfer.
Section ^5.^
Cender. A l l references herein to the masculine, feminine, neuter, or singular
shall be construed to include the masculine, femirune, neuter, or plural, where applicable, and vice vers^^
and, without limiting theohligahonsindividuallyundertakenhyDeveloper'sCwnershereunder,all
acknowledgments, promises, covenants, agreements, and ohligationsherein made or undertakenby
Developer shallbe deemedjointlyandseverally undertaken by allthose executing this Development
Agreement on behalf of Developer.
Section 15.7
References to Corporation or Partnership. Each reference in this Development
Agreement toacorporation or parmership shall he deemed to also refer toalimited liability company
and any other Entity or organization similar thereto. Each reference to the organizationaldocuments,
owners, directors, and officers ofacorporation in this Development Agreement shall he deemed to refer
to the functional equivalents of such organizational documents, owners, directors, and officers, as
applicable, in the case ofalimited liability company or any other Entity or organization similar thereto.
Section 1^5.8
Multiple Counterparts. Fhis Development Agreement may he executed in one
or more counterparts and each counterpart copy so executed shall he deemed an original.
Section 1 ^
Entire Agreement. Fhis Development Agreement,the documents referredto
herein, and the Attachments hereto, constitute the entire, full, and complete agreement between
Franchisor and Developer concerning the subject matter hereof and shall supersede all prior agreements,
PAGE^ OA
discussions correspondent u ^
parties hereto with respect to the snhject matter hereof Except for those permitted to he made
nniiateraiiy hy Franchisor hereunder, no amendment, change, or variance from this Development
Agreement shall he hinding on either party unless mutually agreedtohy the parties andexecutedhy
their authorized officers or agents in writing. In entering into this Development Agreement, no party is
r e l y i n g o n a n y promise, warranty, inducement or representationof the other party other thanthose
expressly set forth herein; provided, however, that nothing in this Development Agreement is intended to
disclaim any representations madehy Franchisor in the franchise disclosure document provided to
Developer hy Franchisor.
Section 1^10
Business Days. The term"husmessdays"means any days excluding Saturday,
Sunday and the following national holidays: New Year'sDay,MartinEuther King Day,Fresidents'Day,
Memorial Day, Independence Day, Eahor Day, Columhus Day, Veterans' Day, Thanksgiving and
Christmas.
Section 15.11
Developer'sResponsihilityForDevetoper'sDwners. Developer shall he solely
and completely responsible to ensure (and cause) each of Developer'sCwners to comply with the terms
of this Development Agreement. Developer agrees that any violation of the terms of this Development
Agreement hy Developer'sCwners shall constitute an event of defaultunder Articled.
ARTICLE 1^
ACKNDWLFDCMFNTS
Section 1^.1
Investigation hy Developer and Developer's Cwners.
Developer and
Developer'sCwners acknowledgethattheyhave conducted an independent investigation of the business
venture contemplated hy this Development Agreement and recognize that such business venture involves
substantial business risks and that Developer's success will he largely dependent upon the ability of
Developer and Developer'sCwnersas independent business people. Franchisor expressly disclaims the
making of, and Developer and Developer'sCwners acknowledge not having received, any warranty or
guarantee,expressorimplied,as to thepotentialvolume,profits,or success of the business venture
contemplated hy this Development Agreement.
Further, Developer and Developer's Cwners
acknowledge thatFranchisorhasmadeno representations that theDeveloper orany of Developer's
Cwners may or will derive income from any ChilfsRestaurant developed hereunder.
Section 1^.2
Receipt of Documents. Developer andDeveloper'sCwners acknowledge they
have receivedacopy of Franchisor's franchise disclosure document and have h a d a f u l l and adequate
opportunity to be thoroughly advisedof the terms and conditions of this Development Agreement by
counselof their own choosing at least fourteen (14) calendar days prior to its execution and is entering
into this Development Agreement after having made an independent investigation of Franchisor's
operations and not upon any representation as to the profits andôrsales volume which Developer might
he expected to realize.
Sections
Acknowledgment hv Developer and Developer'sCwners. Developer and each
ofDeveloper'sCwners acknowledges they have read and understood this Development Agreement, the
Attachments hereto, and agreements relating hereto, if any,and that Franchisor has accorded Developer
and each of Developer'sCwners ample time and opportunity to consult with advisors of Developer'sor
suchDeveloper'sCwners own choosingabout thepotentialbenefits andrisks of enteringinto this
PAGE^ DA
Section 16.4
Franchisor's Right to Vary the System and Other Standards. Developer and
Developer's Owners acknowledge and agree that other developers of the System may be granted
development rights at different times and in different situations pursuant to development agreements
which may substantially differ from this Development Agreement (including, without limitation,
development fees, training fees, and other fees). Developer and Developer's Owners acknowledge and
agree that Franchisor reserves the right to vary the System and other standards, specifications, and
operating procedures (including standards and specifications related to building, furniture, fixtures,
equipment, and signage) to address different circumstances or for other reasons deemed sufficient by
Franchisor, in its sole discretion.
[Remainder of page intentionally left blank]
PAGE 38 - DA
IN WITNESS WHEREOF, the parties hereto have executed this Development Agreement to be
effective as of the Effective Date.
Franchisor:
Brinker International Payroll Company, L.P.,
a Delaware limited parmership
By:
Its:
BIPC Management, LLC,
a Delaware limited liability company
General Parmer
By:
Name:
Title:
Developer:
corporation
By.
Name:
Title:
PAGE 39 - DA
ATTACHMENT A TO DEVELOPMENT AGREEMENT
DEVELOPER'S OWNERS, MANAGING OWNER, AND OPERATING PARTNER
Managing Owner:
Operating Partner:
Developer's Ownerg
PAGE 40 - DA
Percentage of Ownership
A T T A C H M E N T B T O D E V E ^ M E N T AGREEMENT
GGNEIDENTIAEITY AGREEMENT
ThisAgreememÊro^tionofGhi^Gri^^BarTrade^^
(this "GoîdentiahtyAgreemem") is entered into
("EranehisoB^
("Deveieperând
("Govenantor^tohe elective as of
(the"EffeetiveDate^
REGtTAES
Franchisor, as the resnit of the expenditure of time, skiii, effort and m o n e y s
o w n s a n n i q n e a n d distinctive system (the "Systems relating to the estahiishmentandoperationof
full-service restaurants m^der such tradenames as Ghii^s®Griii and Bar and GhiifsTo
"Ghiii'sRestaur^nts^
The distinguishing eharacterishes of the System ineiude,without limitation, distinet^^
and interior design, decor, color scheme, furnishings; special recipes and menu items; uniform standar^^
specifications, andprocedures for operations; quality anduniformity of products and services offered;
proceduresforinventory,management, and financialcontrol; training and assistance; and advertising
and promotional programs; all of which may he changed, improved, and further developed hy Franchisor
from time to time (collectively and as further defined in Sectionl(a) helow, the "Gonfidential
Informations
The Gonfidential Information provides economic advantages to Franchisor and are not generally
known to,and are not readily ascertainahlehy proper means to, Franchisor'scompetitors who could
ohtaineconomicvaluefromknowledge and use of the Confidential Information.
Franchisor has taken, and intends to take all reasonable steps to maintain the confidentiality and
secrecy of Confidential Information.
Franchisor has granted Oeveloperalimited right to develop Chili'sRestaurants using the System
andConfidential Information pursuant to that certain Development Agreement between Franchisor and
Developer.
FranchisorandDeveloperhaveagreedintheDevelopment Agreementontheimportanceto
Franchisor andtotheDeveloperandotherlicensedusers of the Systemof restricting use,access and
dissemination of Confidential Information.
Franchisor andDeveloperacknowledgeitwillbe necessary for certainemployees,directors,
officers, partners, members, managers and owners of Developer to have access to and to use some or all
of the Confidential Information in the operation of Chili'sRestaurants using the System.
Developerhas agreed to obtain from those employees, directors,officers,parmers,members,
managers andowners written agreements protecting Confidential Information andthe System against
unfair competition.
PAGE 4t OA
Covenantor desires to remain (or desires to become) an employee, director, officer, partner,
member, manager or owner ofDeveloper and Covenantor desires to receive and nse Confidential
Information in tbe course of bis or ber employment. Covenantor acknowledges tbat receipt of and tbe
rigbt to use tbe Confidential Information constitutes independent valuable consideration for tbe
representations, promises and covenants made by Covenantor berein.
NCWTHEREFCRE, witb tbe intent ofbeing legally bound bereby,in consideration of tbe mutual
covenantsandpromisesbereinaftersetfortb, andotber goodand valuableconsideration, wbicbtbe
parties acknowledge is sufficient to create alegally bindingagreement, tbe parties agree as set fortb
herein.
^
(a)
All information and materials,including, without limitation,tbe CFM, anyconfidential
information, knowledge, or know-how concerning the Chili's Marks, the System, and methods of
operation of the Franchised Restaurant, and any and all information, drawings, knowledge, know how
andtechniques used in or relatedto the Franchised Restaurant mcluding,without limitation, software
licensed or provided by Franchisor, recipes, training materials, constructionplans and specifications,
marketing information and strategies, andsiteevaluationandselectiontechniques shallbe deemedas
"Confidential Information".
(b)
Covenantor shall receive Confidential Information in confidence and shall, at all times,
maintain theminconfidence, anduse the Confidential tnformationonlyinthecourse of h i s o r h e r
employment by or association with Developer, or in the performance ofhis or her other responsibilities to
Developer, and only in connection with this Confidentiality Agreement andôr operation by Developer of
aChili'sRestaurantusing the System for so long as Developer is licensed by Franchisor to use the System.
(c)
Covenantor shall not, at any time, make copies of any documents or compilations
containingsome or all of Confidential Information without Franchisor'sexpress written permission.
(d)
Covenantor shall not, at any time, disclose or permit the disclosure of Confidential
Information except to other employees of Developer and only to the limited extent necessary to train or
assistotheremployeesofDeveloperinthe operation ofaRestaurant using theSystem.
(e)
Covenantor shallsurrender the CFM andany other materialcontaining some o r a l l o f
Confidential Information to Developer or to Franchisor, upon request, or upon termination of
employment by or association with Developer or Covenantor, or upon conclusion of the use for which
CFM or other information or material may have been furnished to the Covenantor.
(f)
Covenantorshallnot,directly or indirectly, d o a n y a c t o r o m i t t o d o a n y act, which
would or would be likely to he injurious or prejudicial to the goodwill of the System.
(2)
Covenants Notto Compete
(a)
In order to protect the goodwill and distinctive qualities of the System and the
confidentiality and value of Confidential Information, and in consideration for the disclosure to
Covenantor of Confidential Information, Covenantor further agrees and covenants that, during the time
PAGE^ OA
Covenantor is employed by D e v e ^
Developed Covenantor shall not
(I)
Divert or attempt to divert, directly or indirectly, any business, business
opportunity or customer of Developer's Restaurants using tbe System to any Competitive
Restaurant(as defined in tbe Development Agreements
(ii)
Employ or seek to employ any person who is at tbe time employed by Franchisor
or any franchisee or developer of Franchisor, orotherwisedirectly or indirectly inducesuch
persons to leavehis orheremployment Fhissubsectionshallnot apply toanyemployee
transfer between Developer and Franchisor.
(iii)
Directly or indirectly, for himself^herself or through, on behalf of or in
conjunction with any person, parmership or corporation, or other entity, without the prior
written consent of Franchisor, own, maintain, develop, operate, engage in, or have any interest
in, advise, help or make loans to any Competitive Restaurant
(b)
In further consideration for the disclosure to Covenantor of Confidential Information and
to protect the uniqueness of the System, Covenantor agrees and covenants for two (2) years following the
termination ofhis or her employment or relationship by Developer or Covenantor, Covenantor shall not
(i)
opportunity or customer of Developer's Restaurants using the System to any Competitive
Restaurant
(ii)
Employ or seek to employ any person who is at the time employed by Franchisor
orany franchisee or developer of Franchisor,or otherwise directlyor indirectly induce such
persons to leave his or her employment
(iii)
Directly or indirectly,for himself or herself^herself or through, on behalf of o r i n
conjunction with any person, parmership, corporation or other entity,without the prior written
consent of Franchisor, own, maintain, develop, operate, engage in, of have any interest in,
advise, help or make loans to any Competitive Restaurant located in the United States of
America.
^
Miscellaneons.
(a)
Developer undertakes to use its best efforts to ensure that Covenantor acts as required by
this Confidentiality Agreement and the Development Agreement and any Franchise Agreement
(b)
Covenantor agrees that in the event of a breach of this Confidentiality Agreement,
Franchisor would be irreparably injured and be without an adequate remedy at law. Therefore, in the
eventofsuchahreach, or threatened or attempted breach of any of the provisions hereof. Franchisor shall
he entitled toenforce the provisions of this Confidenhality Agreement and shall be entitled,maddihon
any other remedies which are made available to it at law or in equity,including the right to terminate the
DevelopmentAgreement, to a temporary ^ndôr permanent injunction and adecreefor thespecific
performance of the terms of this ConfidentialityAgreementandôr the Development Agreement,without
PAGE^-OA
the necessityof showing a c t u a l s
other security
(e)
Covenantor and Developer, jointly and severely agree to payailexpe^
court costs and reasonable attorneys' fees) incurred by Franchisor and Developer inenforcing this
(d)
Any failure by Franchisor or the Developer to object to or take action with respect to any
breach of any provision of this Confidentiality Agreement hy Covenantor shall not operate or be
construed asawaiver of or consent to that breach or any subsequent breach by Covenantor.
(e)
Except as expressly set forth below,Covenantor irrevocably (i) submits himself^herself to
thejurisdictionof theStateCourtsof Fexas, locatedinDallasCounty, Fexas, and theUnitedStates
FederalDistrict Court for the Northern District of Fexas,Dallas Division; (ii) waives allquestions of
personal jurisdiction for the purpose of effecmahng this provision; (iii) agrees tbat service of process may
be made upon any of them in any proceeding relating to, or arising out of,this Development Agreement
(including the relationship contemplatedhy thisDevelopment Agreement)by ^ny means allowedby
FexasorFederal law; and (iv) agrees that venue for any proceeding relating to, or arising out of,this
Development Agreement shall be in Dallas County,Fexas; provided Franchisor or Developer may bring
an action for injunctive orother extraordinary relief in any State orFederal District Court which has
jurisdiction. With respect to all claims, controversies, disputes, andôr actions, this Confidentiality
Agreement shallbe interpreted andconstruedunderTexas law (without regardtoFexas choice of law
rules).
(f)
Fhe parties agree that each of the foregoing covenants shall be construed as independent
of any other covenant or provision of this ConfidentialityAgreement. If all or any portion ofacovenant
in thisConfidentiality Agreement isheldunreasonableorunenforceableby acourtoragency having
valid jurisdiction in an unappealed final decision to which Franchisor or Developer is a party,
Covenantorexpressly agrees t o h e h o u n d h y any lesser covenant suhsumedwithin the terms of such
covenant that imposes the maximum duty permitted hylaw,as if the resulting covenant was separately
statedin and madeapart of this Confidentiality Agreement.
(g)
FhisConfidentiality Agreementcontains theentireagreementof thepartiesregarding
the subject matter hereof. Fhis ConfidentialityAgreement may be modified only b y a d u l y authorized
writing executed by all parties.
(h)
Any and all notices, reports and payments permitted or required to be delivered by the
provisions of this ConfidenhalityAgreement shall he (i) personally delivered, (ii) delivered by overm
delivery service, (iii) delivered by certified^registered mail, return receipt requested, andôr^^
by email, electronic delivery,prepaid telex, or facsimile,provided sender confirms any delivery under
thisclause (iv) by sendingaconfirmation copy by overnight delivery service or certified^registered mail,
return receipt requested,withintluêe business days after transmission thereof to the respective parties at
the addresses listed below. So long as any notice is prepared, addressed, and delivered in accordance
with this subparagraph (h), then any such notice shall be deemed to have been received (i) at the time of
personaldelivery, ( i i ) a t t h e timeof transmissioninthecaseof email,electronicdelivery,facsimileor
telex,providedconfirmationissentasdescrihedabove, ( i i i ) o n t h e next business day i n t h e case of
overnight delivery service, or (iv) within three (3) business days after mailing in the case of registered or
certified mail. Fhe parties may change their notice information below by delivery of written notice to the
FAGE^ DA
other party in accordance with this subparagraph (h) with new notice information. Franchisor may elect
(in is sole discretion) to deliver copies of any notices to Developer and Covenantor under this
Confidentiality Agreement to their respective Iender(s) landlord(s), and other similar parties.
/
Notices To Franchisor:
w/ a copy to:
6820 LBJ Freeway
Dallas, Texas 75240
Attn: Chili's Grill & Bar Franchise Department
6820 LBJ Freeway
Dallas, Texas 75240
Notices To Developer
and Covenantor:
Attn:
(i)
The rights and remedies of Franchisor under this Confidentiality Agreement are fully
assignable and transferable and shall inure to the benefit of its successors, assigns and transferees. The
respective obligations of the Developer and the Covenantor hereunder are personal in nature and may
not be assigned by the Developer or Covenantor, as applicable, without the prior written consent of
Franchisor.
PAGE 45 - DA
IN WITNESS WHEREOF, the parties hereto have executed this Confidentiality Agreement to be
Franchisor:
By:
Its:
General Parmer
By:
Name:
Title:
Developer:
corporation
By:
Name:
Title:
Covenantor:
Name:
PAGE 46 - DA
ATTACHMENTCTO DEVELOPMENT AGREEMENT
GUARANTY
Eursuant to Section ^.8 of this Deveiopment Agreement, the undersigned agrees to be
individuaiiy houndhy aii the terms and conditions of this Development Agreement incinding any
amendments or modifications thereto whenever made; andnnconditionaiiy irrevocably guarantee to
Eranchisorand its successorsandassigns that a l l o f Developer'sobligations under thisDevelopment
Agreement will be punctually paid and performed.
Upon default by Developer or notice from Eranchisor,the undersigned will immediately make
each payment and perform each obligation required by Developer under the Development Agreement.
Without affecting the obligations of the undersigned under this Guaranty,Eranchisormay,withoutnoti^^
to the undersigned, renew, extend, modify, amend or release any indebtedness or obligation of
Developer, or settle, adjust, or compromise any claims against Developer.
The undersigned waive all demands and notices of every kind with respect to this Guaranty and
the Development Agreement, including,without limitation, notice of the amendment or modification of
this Guaranty or the Development Agreement,the demand for payment or performance by Developer,
any default byDeveloper orany guarantor,and any release of anyguarantor or other security for tbe
Development Agreement or the obligations of Developer.
Eranchisor may pursue its rights against the undersigned without first exhausting its remedies
against Developer and without joining any other guarantor hereto and no delay on the part of Franchisor
in the exercise of any right or remedy shall operate asawaiver of such right or remedy,and no single or
partial exercise by Franchisor of any right or remedy shall preclude the further exercise of such right or
remedy.
Upon receipt by Franchisor of notice of the death of an individual guarantor, the estate of such
guarantor will he bound hy this Guaranty but only for defaults and obligations hereunder existing at the
time of death, and the obligations of the other guarantors hereunder will continue in full force and effect.
IN WITNESS WHEREGF,the undersigned hasexecutedtlus Guaranty to be effechve as of the d
below.
Acknowledged and Agreed by Managing Owner:
Name:
Title: Managing Owner
Date:
PAGE^-DA
ATTACHMENTDTO DEVELOPMENT AGREEMENT
RIGHTOEFIRSTREEUSAE
G ^ ^ ^ ^r^s
^
Ri^f o ^ F ^ R ^ s ^ s ^ ^ ^ ^
^ r i ^ ^ s ^ ^ ^ ^ ^ D ^ ^ ^ ^ B l ^ ^ ^ ^ ^ ^
^r^^
^ ^ ^ ^ 2
(1)
In the event Developer receives^dehvers) an acceptable bo^
party related to this Development Agreement andôraproposed sale of the Eranch^
theTerritory (or any portlonthereof or Interest therem^then Developer shall give Eranchl^^
notice sethng forth the name and address of the prospective purchaser, the price and terms of the o f ^
together withafranchisee application completed hy the prospective pnrchaser,acopy of the purchase
and sale agreement, executed hyhoth Developer and purchaser, and all exhibits, copies of any real estate
purchase agreement or agreements, proposed security agreements and related promissory notes,
assignment documents, title insurance commitment and any other information that Franchisor may
request i n order to evaluate the offer.
(2)
Franchisor shall thenhave the right of first refusal to purchaseDeveloper^sinterest
covered hy such offer at the price and upon the same terms of the offer. Franchisor shall have thirty (30)
calendar days after receipt of Developers notice of offer and the furnishing of all reasonably requested
information within which to notify Developer in writing of its intent to accept or reject tbe offer. Silence
on the part of Franchisor shall constitute rejection. Developer may not rely uponany noticefrom
Franchisor of its intention to accept or reject the offer nor shall such notice be effective unless such notice
is in writing and signed by an officer of Franchisor.
(a)
In the event an offer f r o m a t h i r d party provides for payment of consideration
other than cash or involves certainintangiblebenefits. Franchisor may elect to purchase the interest
proposed to be sold for the reasonable equivalent in cash, f f t h e parties cannot agree withinareasonable
time on the reasonable equivalent in cash of the non-cash part of the offer, an independent appraiser shall
be designated by Franchisor to determine such amount, and his determination shall be binding.
(3)
If the proposed sale includes assets of Developer not related to the Franchised
Restaurants, then Franchisor may,at its option, elect to purchase only the assets related to the Franchised
Restaurants and an equitable purchase price shall be allocated to each asset included in the proposed sale.
(4)
If the proposed sale includes Brinker-franchised restaurants other than Chili's
Restaurants (the drinker Non-Chili'sR
(i) only the Brinker Non-Chili'sRestaurants;(ii) only the Franchised Restaurants; or (m^
of Brinker Non Chili's Restaurants andôr Franchised Restaurants whether on an individual restaurs
basis or on an aggregate basis; and an equitable purchase price shall be allocated to each restaurant.
(5)
To theextent any franchiseagreementsorotheragreementsrelatingtotheBrinker
Non-Chili's Restaurants may be inconsistent with, or conflict with the terms of the right of first r^^
contained herein, the terms of this right of first refusal shall control. This right of first refusal shall apply
to any transfer, conveyance, assigrmient,consolidahon, merger or any other transachon in which legal or
beneficial ownershipofthefranchisegrantedinafranchiseagreementisvested in an individual or entity
other thanDeveloper;provided,however, it shallnotapply if Developerconsistsof morethanone
FAGE^ DA
person and the transfer or a s s i g n s
Developrnent agreement as of the date here^
requirements set forth in Seehon 6.2 hereof, and (ii) Franchisor is given
such transfer.
(6)
tf this Development Agreement has heen assigned toacorporation in accordance with
Section 8.2(c) of this Development Agreement,then this right of first refusal shall also apply ifVoting
Common Stock in such corporation is sold, assigned or transferred to individuals or entities other than
those approved hy Franchisor as owners of the Voting Common Stock.
(7)
Fhe election hy Franchisor not to exercise its right of first refusal as to any offer shall not
affect its right of first refusal as to any subsequent offer.
(8)
Any sale, attempted sale, assignmentor other transfer of therightsgrantedeffected
without first giving Franchisor the right of first refusal described above shall he void and of no force and
effect
^)
If Franchisor does not accept the offer to purchase the Franchised Restaurants proposed
to he sold by Developer, then Developer may conclude the sale to the purchaser who made the offer upon
the same terms, conditions, and price as offered to Franchisor provided Franchisors consent to the
assignment be first obtained, which consent will not be unreasonably withheld upon compliance with tbe
conditions imposedbyFranchisoronthe assigênt including the condihonsset forth in Section 8.2(b).
(10)
In addition. Developer agrees that, prior to acquiring any other Chili's Restaurant
development rights or franchise which may be offered to it for sale or which it may offer to purchase,
such development rights or franchise will first be offered to Franchisor on the same terms, conditions and
price.
*******
FAGE^ DA
ATTACHMENT E TO DEVELOPMENT AGREEMENT
CHILES® GRILL & BAR
DOMESTIC FRANCHISE AGREEMENT
PAGE 50 - DA
PUBLIC COMPANY ADDENDUM
This "Public Company Addendum" is entered into between Brinker International Payroll
Company, L.P., a Delaware limited parmership ("Franchisor"), and
("Developer") to be
effective as
(the "Effective Date").
L
Introduction. Franchisor and Developer entered into a Development Agreement dated
(the "Development Agreement") related to the development of Chili's Restaurants
and the parties desire to modify certain provisions of the Development Agreement regarding
publicly-held corporations.
2,
Defined Terms. Capitalized terms used in this Public Company Addendum shall have
the meanings ascribed to such terms in the Development Agreement unless otherwise expressly defined
herein.
3,
Definition of Public Company. The term "Public Company" as used in this Public
Company Addendum shall be deemed to mean a publicly-held corporation having its securities
registered pursuant to Section 12 under the Securities Exchange Act of 1934, as amended or a corporation
subject to the requirements of Section 15(d) under the Securities Exchange Act of 1934, as amended.
4,
Amendment tp Development Agreement. Commencing on the Effective Date of this
Public Company Addendum, the terms of Section 6.2(i) and Section 6.2(m) shall not apply to Developer
so long as Developer is a Public Company.
(a)
Commencing on the Effective Date of this Public Company Addendum, the
terms of Sections 9.3(a)(iii), 9.3(b)(iii), and 9.3(c)(iii) of the Development Agreement shall not apply to
ownership of less than one percent (1%) beneficial interest in Developer so long as Developer is a Public
Company..
(b)
With respect to Section 8.2(a) of the Development Agreement, Franchisor's prior
written consent shall not be required for a transfer of less than a
% interest so long as Developer is a
Public Company, except that Franchisor's prior written consent shall be required for a series of transfers
which, in the aggregate, amounts to a transfer of greater than a
% interest (even if each individual
transfer in such series falls below the
% threshold).
5,
Except as modified by this Public Company Addendum, the Development Agreement
remains in full force and effect as written therein.
PAGE l - D A
IN WITNESS WHEREOF, the parties hereto have executed this Public Company Addendum to be
Franchisor:
By:
Its:
General Parmer
By:
Name:
Title:
Developer:
corporation
By:
Name:
Title:
PAGE 2-DA
EXHIBIT C
FRANCHISE AGREEMENT
FDD-2015
783265-v3\DALDMS
Exhibit C
ÂLBRINKER
M
INTERNATIONAL*
CHILI'S® GRILL & BAR
DOMESTIC FRANCHISE AGREEMENT
PAGE 1-FA
TABLEOF CONTENTS
A r i i d e L Grant of Franchise
SechonTl
Sections
Grant of Franchise
NoTerritorial Rights
Articled Term and Successor Franchise Agreement
Sections
Term
Sections
Successor Franchise Agreement
Articled Training and Opening Requirements
Sections
InitiaiTraining
Sections
FreÔpening Assistance
Sections
Other Assistance
Sections
SuppiementaiTraining
Sections
Opening Requirements
Sections
Gonstrnction^ndAnthorizationtoOpen
Sections
Training Gosts
Sections
Release by Franchisee
Articled Fees and Payments
Sections
Sections
Sections
Sections
Sections
Sections
Sections
Sections
Sections
Franchise Fee
Monthly Fee and Definition of Gross Sales
Other Payments
E^te Charge and Interest on Eate Payments
Fayments^NoRefunds^No Offset
Application of Payments
Payment hyPre-Authorized Bank Transfer
Biweekly Payments
Taxes
Article^Chili'sFranchise Manual, Public Relations, and Crisis Communications
Sections
Sections
Sections
Chili'sFranchise Manual
Franchisee'sUseofChili'sFranchise Manual
Public Relations and Crisis Communications
Article^Franchisee'sRepresentations
Sections
Sections
PACE 2 FA
Franchisee'sRepresentations
Background Information
A r i i c l e ^ Opemhon of the Franchised Restaurant
Sectional
Sections
Sections
Sections
Sections
Sections
Sections
Sections
Sections
Section^BlO
Sectional
Section7T2
Section7Bl3
Section7T4
Section7Bl5
Section7T6
Section7T7
Operation of the Franchised Restaurant
Managing Owner and Operating Fartner
Hours of Operation
Fersonnei and Staffing
Health and Safety Standards
Approved Suppliers
Proprietary Products
Repair and Maintenance of Franchised Restaurant
Fhe Current Image
Mandatory Remodeling of Franchised Restaurant
Inspection hy Franchisor
Mandatory Sanitation and Food Safety Frogram
Prices at Franchised Restaurant
Liquor Licenses and Business Licenses
Compliance with Laws and Industry Standards
Computer System(s)
Supplemental Marketing Programs
A r t i c l e ^ T h e Chili'sMarks
Sectional
Sections
Sections
Sections
Franchisor'sRepresentations
Franchisee'sUseoftheChili'sMarks
Limitations on Franchisee'sLlse of the Chili'sMarks
Suhstitutions to Chili'sMarks
Articled Confidential Information
Sectional
Sections
Sections
Sections
Sections
Confidential Information
ConfidentialityAgreement
Breach of Confidentiality Agreement
Franchisee'sAccess to Confidential Information and Other Information
Survival
A r t i c l e d Accounting and Records
Sectional
Section 10.2
Section 10.3
Section 104
Section 10.5
Franchisee'sAccounting Records
Monthly Financial Statement
Other Financial Statements
Certification
Franchisor'sAudit Rights
Article 1L Advertising
Section 11.1
Section 11.2
Section 11.3
PACE 3 FA
Advertising Programs
Local Advertising Program
Regional Advertising Program
Section
Section
Section
Section
Section
Section
Section
11.4
11.5
11.6
11.7
11.8
11.9
11.10
National Advertising Program
Administration of Advertising Programs
Advertising Standards and Approval
Internet and Electronic Commerce
Production Fee
Advertising Fee
Copyrights
Article 12: Insurance
Section
Section
Section
Section
Section
Section
Section
Section
Section
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
Liability Insurance
Property Insurance
Worker's Compensation Insurance
Builder's Risk Insurance
Automobile Insurance
Excess Insurance
Additional Insurance Policies
Policy Requirements
Franchisor's Right to Procure Insurance
Article 13: Transfer and Assignment
Section 13.1
Section 13.2
Section 13.3
Section 13.4
Section 13.5
Section 13.6
Section 13.7
Section 13.8
Section 13.9
Transfer by Franchisor
Transfer by Franchisee
Conditions for Approval
No Security Interest
Transfer for Convenience of Ownership
Right of First Refusal
Transfer Upon Death or Permanent Disability
Non-Waiver of Claims
Offerings by Franchisee
Article 14: Default and Termination
Section 14.1
Section 14.2
Section 14.3
Section 14.4
Section 14.5
Section 14.6
Section 14.7
Section 14.8
Obligations Material
Default and Automatic Termination
Other Defaults by Franchisee
Remedies for Default by Franchisee
No Cure Period
No Waiver
Remedies Not Exclusive
Default by Franchisor
Article 15: Termination or Expiration of Franchise Agreement
Section 15.1
Section 15.2
Section 15.3
PAGE 4 - FA
Termination or Expiration
Franchisor's Option to Purchase the Franchised Restaurant
Survival
Article 16: No-Compete Clause and Related Covenants
Section 16.1
Best Efforts
Section 16.2
Section 16.3
Section 16.4
Section 16.5
Section 16.6
Section 16.7
Section 16.8
Receipt of Confidential Information
No-Compete Clause
Managers and Employees
Survival
Reduction in Scope
No Defense
Consent to Injunctive Relief
Article 17: Independent Contractor and Indemnification
Section
Section
Section
Section
Section
Section
Section
Section
17.1
17.2
17.3
17.4
17.5
17.6
17.7
17.8
Independent Contractor
Indemnity
Notice to Franchisor
Settlement or Other Remedial Actions
Definition of Losses and Expenses
No Liability
No Requirement to Pursue Third Party
Survival
Article 18: Approvals and Waivers
Section 18.1
Section 18.2
Requests for Approvals
No Waiver
Article 19: Notices
Article 20: Miscellaneous Provisions
Section 20.1
Section 20.2
Section 20.3
Section 20.4
Section 20.5
Section 20.6
Section 20.7
Section 20.8
Section 20.9
Section 20.10
Section 20.11
Entire Agreement
Severability
No Benefit
Agreement to be Bound
Captions
Survival
References
Counterparts
Business Days
Franchisee's Responsibility For Franchisee's Owners
Outsourcing by Franchisor
Article 21: Dispute Resolution
Section 21.1
PAGE 5-FA
Legal Remedies
Section 21.2
Section 21.3
Section 21.4
Section 21.5
Section 21.6
Section 21.7
Section 21.8
Non-Binding Mediation
Consent to Jurisdiction, Venue, and Governing Law
Place of Execution of Franchise Agreement
Costs and Attorneys' Fees
Rights of Parties are Cumulative
Waiver of Punitive Damages and Jury Trial
Limitation of Claims
Article 22: Acknowledgements
Section 22.1
Section 22.2
Section 22.3
Section 22.4
Investigation by Franchisee and Franchisee's Owners
Receipt of Documents
Acknowledgment by Franchisee and Franchisee's Owners
Franchisor's Right to Vary the System and Other Standards
******
TABLE OF ATTACHMENTS
ATTACHMENT A:
ATTACHMENT B:
ATTACHMENTC:
ATTACHMENT D:
ATTACHMENT E:
ATTACHMENT F:
ATTACHMENTC:
ATTACHMENT H:
ATTACHMENT T;
THE LOCATION
CONFIDENTIALITY AGREEMENT
FRANCHISEE'S OWNERS, MANAGING OWNER, AND OPERATING PARTNER
PRE-AUTHORIZED BANK TRANSFER
RIGHT OF FIRST REFUSAL
FRANCHISOR'S OPTION TO PURCHASE THE FRANCHISED RESTAURANT
REQUIREMENTS FOR LOCAL ADVERTISING PROGRAM
GUARANTY OF FRANCHISE AGREEMENT
flTTF, DEVELOPMENT OBLIGATIONS
******
PAGE 6 - FA
CH^S®G^L^BAR
DOME^CFRANCHÊAGREEMENT
This C h i ^ 5 ® G r i ^ ^ B a r D o m e 5 h c Franchise A g r e e d
into between Brinker InternationaiFayroii Company L.FâDei^
and
("Franchisees to he elective asof
(the "Ffrective Date")
Feeitais
D
Franchisor and
("Developer") have entered intoaDeveiopment Agreement dated
(the "Development Agreement"), relating to the development of Chili's
Restaurants in theFerritory(as that term is defined in the Development Agreement).
D
Franchisor(andôritsparentcompanyaffiliates,and subsidiaries), as the result of the
expenditure of time, skill, effort and money has developed and ownsadistinctive system (tbe
"System") relating to the establishment and operationof restaurants under the tradename
Chili's^Crill and Bar and related tradenames(collechvely, "Chili'sRestaurants"^
^
Fhe distinguishing characterishcs of the System include, without limitation, distinctive exteri^
and interior design, decor, color scheme, furnishings; special recipes and menu items; uniform
standards, specifications, and procedures for operations; quality and uniformity of products and
services offered; procedures for inventory and management control; training and assistance; and
advertisingandpromotional programs;allof which maybe changed,improved, andfurther
developed by Franchisor from time to time.
^
Franchisor identifies the System by means of certain tradenames, service marks, trademarks,
logos, emblems andindiciaoforigin,including,butnotlimitedto. Chili's® C r i l l ^ B a r and such
other tradenames, service marks, and trademarks as are now designated (and may hereafter be
designated) by Franchisor for use in connection with the System (collectively, the "Chili's
Marks")
D
Franchisor continues to develop and use(and control the use of) the Chili'sMarks in order to
identify for the public the source of services and products marketed thereunder and under the
System, and to represent the System'shigh standards of quality,appearance and service.
D
Franchisor has establishedahigh reputation andapositive image with the public as to the quality
of products and services available at Chili'sRestaurants, which reputation and image have been
and continue to be unique benefits to Franchisor and its franchisees.
^
Franchisee understands and acknowledges the importance of Francbisor'shigh standards of
quality, cleanliness, appearance and service and the necessity of operating the business
franchised hereunder in conformity with Franchisor'sstandards and specifications.
^
Franchisee desires to use the Systeminconnection with the operation ofaChili'sRestaurant at
the "Location''specified in Attachment A, as well as to receive the training and other assistance
provided by Franchisor in connection with such restaurant.
FAGF ^ FA
NOW THEREFORE, with the mtent^
covenants and promises hereinafter set forth, and other good and vainabie consideration, which the
parties acknowiedgeis sufficient to createaiegaiiybindingagreement, the parties agreeas set fori^
herein.
ARTtCEEl
ORANTOFERANCHISE
Sections
Orant of Franchise. Snhject t o t h i s Franchise Agreement,Eranchisorherehy
grants to Franchisee, and Franchisee herehyaccepts,thenon-excinsive right and ohiigation to operatea
franchised C h i i i ' s ® O r i i i ^ B a r restaurant in accordance with the System oniy at the "Location
on A t t a c h m e n t A a n d u s i n g o n i y the ChiiBs Marks at such restaurant (coiiectiveiy, the "Franchised
Restaurant"). During the Ferm(definedheiow), Franchisee shaii use the Eocationsoieiy for the opera
of the Franchised Restaurant in accordance with this Franchise Agreement and for no other purpose and
Franchiseeshaiinot relocate theFranchised Restaurant without theexpresspriorwrittenconsentof
Franchisor.
(a)
Franchisee orany ofFranchisee'sOwnersshaE not enter into any subfranchise
agreement, management agreement, operating agreement, consulting arrangement, subcontracting
arrangement, outsourcing arrangement, or any other similar arrangement relating to the rights and
obligations of Franchisee hereunder. This Franchise Agreement (including the rights, obligations, duties,
and benefits hereunder) is intended solely for the parties hereto, and no other person or entity shall have
any rights, obligations, duties, and benefits under this Franchise Agreement.
(b)
Franchisee agrees this Franchise Agreement is strictly limited to the
nonexclusive right and obligation to operateafranchisedChili'sRestaurant at the Location in accordance
withthisEranchise Agreement and Franchisee agrees thisFranchise Agreement is notadevelopment
agreement and does not grant any right to develop andôr operate any other Chili'sRestaurants.
Sections
NoTerritorial Rights. Franchisee agrees thisFranchise Agreementdoesnot
grant any territorial rights, radiusrestrictions, minimum population requirements, andôr any other
requirements which would govern andôr restrict where another Chili's Restaurant may open and
operate. Franchisor(on its behalf and on behalf of any other entity which it may acquire, or be acquired
by,or otherwise is or becomes affiliated with) retains all rights not expressly granted in this Franchise
Agreement.
(a)
Franchisee agrees that Franchisor may establish,develop,construct,open, and
operate Chili'sRestaurants at any location inside or outside theTerritory (either d i r e c t l y o r ^
franchise, licensing, joint venture, or any other arrangement).
(b)
Franchisor (including its affiliates,parmers,andôrauthorized representatives)
may,at any time, advertise or promote the System and fulfill customer orders in the Territory.
(c)
Franchisor may offer and sell(or authorize any person or entity to offer and sell)
products and services displaying the Chili's Marks or other tradenames and trademarks (e.g.,
prepackaged food and beverage items, T shirts and other memorabilia) to the public through any
distribution channel inside or outside theTerritory and Franchisee acknowledges suchproductsor
services may be similar to those offered by Franchised Restaurant.
PAGE ^ PA
(d)
Franc^sor reserves the right to d^
marks, trademarks, logos, emhlems and indicia of origin which m^
Chiii'sMarks(coiiectiveiy,the "Cther Marks"). The Cther Marks shall he separate and distinct from the
Chili'sMarks referenced in this Franchise Agreement; therefore, (i) Franchisee shall have no rights to
Cther Marks, and (ii)Franchisor(on its hehalf and on hehalf of any other entity which it may acquire, or
he acqniredhy, or otherwise i s o r becomes affiliated with) reserves the right toestablish, develop,
construct, open, andoperate restaurants, other food service operations and other businesses under the
CtherMarksat any location insideand outside theTerritory (eitherdirectlyorthroughafranchise,
licensing, joint venture orany otherarrangement). TbeCtherMarks may include, without limitation,
brand extensions or related brands of Chili's Restaurants such as counter-service restaurants,
quick-service restaurants or other such restaurants, and the Cther Marks may include such restaurants
operahng under the tradename "Chilis Fxpreoo''orotbera similar tradename.
(e)
Franchisee releases Franchisor and shall hold Franchisor harmless (including its
subsidiaries, officers, directors,employees,andagents)fromanyandall liability, loss, damages, costs,
andôr expenses which Franchisee may claim to have arising out of, or related to, the exercise by
Franchisor (including its affiliates, franchisees, developers, parmers, andôr authorized
of the rights reserved to Franchisor under this SechonT2, including, without limitation, any claim relat^^
to an allegedcannibalizationof Cross Salesandanyclaimrelatedtothe right to establish,develop,
construct, open, and operate Chili's Restaurants inside andôr outside the Territory andôr other
restaurants, other food service operations, and other businessesunder the Cther Marks inside and
outside theTerritory (either directly or through afranchise,licensing, joint venture, o r a n y other
arrangement).
ARTICLED
TFRMANDSUCCFSSCRFRANCHISFACRFFMFNT
Section 2Bt
Term. Unless sooner terminated, the "Term"of this Franchise Agreement shall
commence onthe Effective Dateand shall e x p i r e o n t h e l a s t d a y of thelast calendar monthof the
twentieth (20^) anniversary following the date on which the Franchised Restaurant is opened for
business.
Sections
Successor Franchise Agreement. Franchisee may,at its option, deliverawritten
request to Franchisor for a "Successor Franchise Agreement" (defined below) for the Franchised
Restaurant,subject tothe following conditions precedent which must be satisfiedprior to the parties
executing any such Successor Franchise Agreement.
(a)
Franchiseeshall give Franchisor written notice of Franchisee'srequest to signa
Successor Franchise Agreement not less than twelve (12) months nor more than twenty-four (24) months
prior to the end of the initial term. The term of Successor Franchise Agreement shall be twenty (20) years
and such term shall commence upon the expiration of this Franchise Agreement.
(b)
Franchisee shall completed in a manner satisfactory to Franchisor, such
renovation and modernization of theFranchised Restaurant asFranchisor may reasonably require,
including, without limitation, renovation and modernizahon of the building, signs, furnishm^
equipment and decor, to reflect the then current standards and image of tbe System.
FAGE^ FA
(c)
A s o f s e d a t e of the noticereferenced abovein Section 2 . 2 ^ a n d a s o f the
expiration of this Franchise Agreement, Franchisee shaii nothe in defanit of any provision of this
Franchise Agreement, any amendment hereof or successor hereto, or any other agreementhetween
Franchisee and Franchisor or its subsidiaries and affiliates; and Franchisee shaii have suhstantially
complied with aff the terms and conditions of such agreements during the terms thereof.
(d)
A s o f thedate of the notice referencedahovein Section 2.2(a)andasof the
expiration of this Franchise Agreement, Franchisee shall have satisfied all monetary obligations owed hy
FranchiseetoFranchisorand its subsidiaries and affiliates and shall havetimely met those obligations
throughout the term of this Franchise Agreement.
(e)
Franchiseeshall present satisfactory evidence that Franchiseehastheright to
remain in possession of the approved location for the entire term of the Successor Franchise Agreement.
(f)
Franchisee and Franchisee'sCwners(defined below) shall execute the Successor
Franchise Agreement (i.e., Franchisor'sthen-current form of franchise agreement), which agreement shall
supersede this Franchise Agreement in all respects, and the terms of which may substantially differ from
the terms of this Franchise Agreement, including,without limitation, payments by Franchisee of higher
percentage of royalty fees, higher percentage of technical services fees, higher percentage of advertising
fees, and higher franchise fee(s).
(i)
Attachment C contains a complete list of all owners of any type of
interest in Franchisee and such individuals andôr entities shall be deemed as
"Franchisee'sOwners" for the purposes of this Agreement.
(g)
Franchisee and each of Franchisee'sOwners shall executeageneral release, i n a
formprescribedbyFranchisor,of any and all claims against Franchisor, its subsidiaries and a f f i l i a ^
successors and assigns and their respective officers, directors, shareholders, parmers, employees,
servants, representatives and agents.
(h)
Franchiseeshall comply with Franchisor'sthen^current qualification and training
requirements.
(i)
In the event Franchisee fails(or failed) to comply with any or all of the conditions
precedentsetforthabove,thenFranchisee shallhedeemed to have waived any such option toaSuccessor
Franchise Agreement and, i n such event, Franchisor shall be entitled to deny Franchisee'srequest f o r a
Successor Franchise Agreementby writtennotice to Franchisee and this Franchise Agreement shall
thereafter expire on the date specifiedinSection 2.^(unless sooner terminated in accordance with the
provisions of this Franchise Agreement).
(j)
Uponexpiration(or termination) of this Franchise Agreement, Franchisee hereby
waives any right or option toaSuccessor Franchise Agreement, unlessaSuccessor Franchise Agreement
hasbeensignedbybothFranchisorandFranchisee in accordance withthis Section 2.2prior to such
expiration or termination.
PAGE to FA
ART^LE3
T R A ^ N G A N D O P E N I N G RECREMENTS
Secrion^l
I m r i a l T r a m m ^ In c o r m ^ i o n w i t h ^ f i ^ t w o ^ o p e m n g s of France
Restauran^^reqnfredbytheD^^
provide(on such dates and at such locations as determined by
Eranebisee'sManagingOwnerandOperatingRarmer (as definedin A r t i c l e d andnp t o f i v e ( 5 ) of
Eranebisee's managers per Eranebised Restaurant and Eranebisee agrees tbat sneb personnel must
complete sneb training program to Eranebisor'ssatisfaetionnot more tban five (5) montbs prior to
opening of tbe EranebisedRestanrant(tbe"tnitialTraining"^
(a)
In connection witb tbe first two (2) openings of Erancbised Restaurants (as
required by tbe Development Schedule in tbe Development Agreements Franchisor sball be responsible
for the onsitetrainingcostsrelatedtothelnihalTraining for the Managing Owner,Dperating Farmer,
and up to five (5) of Franchisee'smanagers per Franchised Restaurant; provided that Franchisee shall be
responsible for all other costs (i.e., airfare costs, rental car costs, other travel costs lodging costs, meals
and food costs, and other similar costs) for such individuals associated with such training.
(i)
However,if the Managing Owner,Operating Farmer, and five
(5) of Franchisee's managers have completed the Initial Training and if the
opening of the Franchised Restaurant is then moved to a later date, then
Franchisor may,at its option, elect to require such personnel to attend another
Initial Training. In such event. Franchisee shall pay to Franchisoratraining fee
for the Managing Owner, Operating Farmer, and five (5) of Franchisee's
managers (as applicable)at the then-current rate being charged by Franchisor to
franchisees for suchtraining and Franchisee shall also be solely responsible for
all other costs (i.e., airfare costs, rental car costs, other travel costs, lodging costs,
meals and food costs, and other similar costs) associated with such training for
such individuals.
(ii)
If theFranchised Restaurant representsthethird(3^) or more
Franchised Restaurant to be opened (as required by the Development Schedule
intheDevelopment Agreement), then Franchisor reserves the right to charge
Eranchiseeatraining fee for the Managing Owner, Operating Farmer, and up to
five (5) of Franchisee's managers (as applicable) at the then-current rate being
charged byFranchisor to franchisees for such training and Franchisee shall also
he solely responsible for all other costs (i.e., airfare costs, rental car costs, other
travel costs lodging costs, meals and food costs, and other similar costs)
associated with such training for such individuals.
(b)
Any person subsequentlyemployedbyFranchisee in the position of manager
(e.g., the^manager at the Franchised Restaurant) and each subsequent Managing Owner and Operating
Farmer, if any,shall attend and complete,toFrancbisor'ssatisfaction, the Inihal Training and, in such
event, Franchisee shall pay toFranchisor a t r a i n i n g f e e a t the then-current ratebeingchargedby
Franchisor to franchisees for such training and Franchisee shall also be solely responsible for all o^^
costs (i.e., airfare costs, rental car costs, other travel costs lodging costs, meals and food costs, and oth^
similar costs) associated with such training for such individuals.
PAGE^^FA
(c)
I f ^ F r a n c h i s e e o p e r a s another C ^
Restaurants (n) Franchisees Managing Owner and O p e r a s
the other restaurant have completed the hîtiai Training to Franehisor'ssatis^
Chili's Restaurant has heen approved hy Franchisor as a "Certified Training Store ("CTS)", then
FranchiseemaysuhjecttoFranchisor'sapprova^co^
at the Chiii'sRestaurant which has heen approved asaCertihed Training Store, if Franchisee conducts
the Initial Training, then Franchisee'smanagers shall satisfactorily complete such training as ev
hyFranchisor'swritten certification thereof.
Sections
Fre^Cpening Assistance. Franchisor may,at its option, elect to provide on-site
supervision and assistance prior to opening of the Franchised Restaurant (which may include, at
Franchisee's expense, an opening crew as described in this Article 3 and otherwise subject to the
availability of such opening crew).
Sections
Cther Assistance. Franchisor may, at its option, provide such continuing
advisory assistance toFranchiseeinthe operationof the Franchised Restaurant,as Franchisor deems
advisable.
(a)
Franchisor may make available, from time to time, research data and otber
materials relating to merchandising marketing and advertising.
(b)
Franchisor may, from time to time and at its option, make available to
Franchisee, atareasonablecost,''back-of-the-hous
systems. Franchisee shall be required to execute such documents related to the licensing of the software
and register systems asFranchisor may reasonably requireand topay any licensing fees associated
therewith.
(c)
Franchisor may,fromtimeto-time and at its option, provide to Franchisee advice
and written materials concerning techniquesofmanagingandoperating theFranchised Restaurant,
including information regarding newdevelopments and improvementsinrestaurant equipment, food
products, packaging, and preparation.
Sections
Supplemental Training. In addition to the Initial Training, Franchisor reserves
tbe right to require Franchisee, Managing Cwner, CperatingFarmer, and then current managers at the
FrancbisedRestaurantto attend supplementaltrainingcoursesattimesandlocationsdeterminedby
Franchisor and allcosts(including,withoutlimitahon,travel, lodging, and food costs for Franchisee's
personnel) associated with such supplemental training shall be Franchisee's responsibility. Franchisor
reserves theright tochargeafeetoFranchiseeforsuchsupplemental trainingcourses and training
materials.
Sections
Cpemng Requirements. In connection with the openingof the Franchised
Restaurant, Franchisee shall conduct, at France
as Franchisor may require. Franchisee agrees tbat Franchisor, in its reasonable business judgment, may
require that the Franchised Restaurant be staffed,inwhole or in part, by an opening crew composed of
trained representatives of Franclusor,foratotal period not to exceed twenty (20) days occurring bef^^
and after the date of opening of the Franchised Restaurant. Franchisee'smanagement team shall be at the
Franchised Restaurant at least six (6) weeks prior to the Franchised Restaurant opening and no opening
crew shall he furnished hy Franchisor until Franchisor's representative approves the Franchised
F A G E ^ FA
Reâurantasâdy^^mm^
Franchisee briber a g r e e s t o r ^
expenses incurred in providing sneh opening crew for the France
transportation, lodging, meals and wages.
Sectinn^
Construcrinn and A n ^ n r i ^ i ^ T o Open. Frior to opening the Franchised
Restaurant for business. Franchisee shall comply with ail opening requirements set forth in this Fra^^
Agreement any aonlicahle Development Agreement ^ n d i f t b i ^ A g r ^ m ^
pursuant toaDevelopmentAgreementthen tbe r e q ^ r ^ ^ ^ A ^
below), andôr elsewhere in writing by Franchisor. Franchisee shall not, in any event, open the
Franchised Restaurant to the public for business until Franchisee has received authorization to open from
Franchisor.
Sections
Training Costs. Franchisee shall be responsible for any and all expenses
incurredbyFranchisee,Franchisee'sOwners, and its managers and employees in connection with any
training programs hereunder, including,without limitation, the costs of transportation, lodgm^^
and wages.
Sections
Release hy Franchisee. Franchisee assumes all cost, liability, expense, and
responsibility forlocating,obtaining,anddeveloping the Franchised Restaurant and for constructing,
equipping, and operating the Franchised Restaurant.
Franchisee acknowledges that Franchisor's
approval ofaprospective site and the rendering of assistance in connection with the foregoing does not
constitutearepresentation, promise, warranty,or guarantee byFranchisor that the Franchised Restaurant
will be profitable or otherwise successful. Accordingly,Franchisee releases Franchisor and shall hold
Franchisor harmless (including its subsidiaries, ofhcers, directors, employees, and agents) from any and all
liability, loss, or damages whichmayarisefromFranchisee'slocating,obtaining, anddeveloping the
Franchised Restaurant and for constructing, equipping, and operating the Franchised Restaurant.
ARTICLED
FFFSANDFAYMFNTS
Section 4B1
Franchise Fee. Franchisee shall pay to Franchisor an initial franchise fee of Forty
Thousand and 00^100 Dollars (^40,000) on or before the commencement of construction on the Franchised
Restaurant (the "Franchise Fee"). Upon payment, the Franchise Fee shall be deemed fully earned and
nonrefundable in considerahon for administrative and other expenses incurred byFranchisor in granting
this franchise and for Franchisor'slost or deferred opportunity to franchise others.
(a)
In the event (i) the Development Agreement has not been terminated at the time
the Franchised Restaurant opens to the public; (ii) Franchisor has not elected any of its remedies under
Section7.5of the Development Agreement at the time the Franchised Restaurant opens to the public; (iii)
Developer is not indefault under the Development Agreement at the time the Franchised Restaurant
opens to the public; (iv) Developer, Franchisee, andôra^
any other agreement with Franchisor at the time the Franchised Restaurant opens to the public; and (v)
Franchisee opens and is operating the Franchised Restaurant at least 90 days before the opening date for
the Franchised Restaurant as set forth in the Development Scheduleinthe Development Agreement, then
Franchisee shall be entitledtoacredit against the Franchise Fee ofTenThousand and 00^100 Dollars
(^10,000.00) whichcredit shallbepaid toFranchisee, atFranchisor'ssoleoption,either(i)by direct
payment from Franchisor to Franchisee, or ( i i ) b y a m o n t h l y credit against the Monthly Fee (defined in
F A G E ^ FA
Sechon 4 ^ provided such
calendar mouth.
5ecriou^
MouthlvFee and DerimriouofGross Sales.
(a)
Royalty Fee. DurlugtheTerm(audlueouslderatlouofFrauchlsee'srlghttouse
the Chill's Marks for the Franchised Restaurant in accordance with the terms of this Franchise
Agreement^FranchiseeshallpaytoFranchisoracontinuing monthly royalty fee in an amount equal to
CneandCne-FourthRercent ^ . 2 5 ^ ofCrossSales, as defined helow(the "Royalty Fee"^^
(h)
Fechnical Services Fee. During theFerm and in addition to the Royalty Fee(and
in consideration of Franchisee'sright to use the System and receive the services available to Franchisee
under thisFranchise Agreements Franchisee shall pay to Franchisoracontinuing monthly technical
services fee in an amount equal toFwo and Fhree-FourthsFercent(2.75^ of Cross Sales (the "Technical
Services Fee")
(c)
Monthly Fee. FheRoyalty Fee andtheFechnical Services Fee are hereinafter
collectively called the "Monthly Fee."
(d)
Monthly Fee Payment Date. Subject to Section 4.8, the Monthly Fee shall he paid
to and received by Franchisor on or before the tenth (10th) day of each month based on the Cross Sales for
the preceding calendar month and shall be submitted to Franchisor at the address provided under Article
19 in care of the "Treasurer".
(e)
Cross Sales. The term"CrossSales"shall include the total value of all services
andproducts provided by andôr from the Franchised Restaurant and all revenue from any sale of all
services and products and all other income of every kind and nature related to the Franchised Restaurant
(including,withoutlimitahon, the f u l l value of on-premise sales, off-premise sales, catering sales, intem^^
sales, sales fromtabletop and other digital media devices, complimentary sales, coupon sales, sales to
employees, employee meals, and any other type of sale related to the Franchised Restaurant
all such
sales subject to Section7.1(e)), whether for cash or credit(and regardless of collection in the case of credit)
and with no deductions or exclusions whatsoever, except federal, state, or municipal sales taxes collected
by Franchiseefromcustomersandpaidby Franchisee to theappropriatetaxingauthority. Without
limiting the foregoing, Franchisee shall not be permitted to take any other deduction or exclusion from
CrossSales other than the taxes listed in the previous sentence and specifically,Franchisee shall not be
permittedto deduct any complimentary sales including,without limitation, sales from complimentary
food and beverages provided to customers andôr employees.
Sections
Cther Fayments. A l l other payments required under this Franchise Agreement
(except the Monthly Fee and the Advertising Fee which must be received by Franchisor no later than the
10^ day of eachcalendarmonth),including those relatedtoreimbursement of expenses, are due and
payableupondemandorreceipt of anyhillingstatementorinvoicetherefor, whichever is earlier and
shall otherwise be payable in accordance with the provisions of this Franchise Agreement, unless
otherwise instructed i n writing byFranchisor. Franchisee shall designateasingleaddress^location for the
delivery of all billing statements and invoices under this Franchise Agreement and any other
development or franchise agreement between Franchisor and Franchisee (including its parent company
^nd affiliated entities).
P A G E ^ FA
Secrion^
Late Charge and I n t e r s on Late P a y m ^
received hy Franchisor on or hefore the date onwhiehsneh payments
Fo
compensate Franchisor for the increased administrative expense of handling iate payments, Fra^^
has the right to chargeaÔOiate charge for each deiinqnent payment, doe npon making the deiinqoent
payment, tn addition to snch late charge. Franchisee shall pay Franchisor interest on snch late payment
from the date it was dnennhl paid at the rate of eighteen percent ( 1 8 ^ per annnm, or the maximum rate
permittedhy law, whichever isless. Entitlement t o s n c h i n t e r e s t s h a l l h e i n a d d i t i o n to any other
remedies Franchisor may have. Franchisee agrees this section does not constitute Franchisor'sagreement
to accept payments after they are due oracommitmenthy Franchisor to extend credit to Franchisee or
otherwise finance the operation of the Franchised Restaurant.
Sections
FaymentsôRefundsBNo Offset Under no circumstances will any amounts
paid or payable to Franchisor he refunded hy Franchisor for any reason. All amounts owed to Franchisor
pursuant to this Franchise Agreement shall he paid to and received byFranchisor on or hefore the date
such amount is due. A l l suchpaymentsmustbemadebywire transfer, electronic payment or other
mechanism as designated fromtimetotimebyFranchisor,and each payment shall be accompanied by
the electronic,digitalor other reports as specified byFranchisor. Franchisee shall not withhold,retain,
deduct, credit,andôroffsetany amounts whichmaybeowedbyFranchisortoFrancbisee(andôr its
affiliates or subsidiaries)against any amounts due from Franchisee to Franchisor.
S^ction^
Application of Favm^nts. Regardless of any designationby Franchisee,
Franchisor has the right to apply any payments by Franchisee to any of Franchisee's past due
indebtedness, interest, or any other indebtedness or amounts owed to Franchisor.
Sections
FaymentBvFreÂuthori^d Bank Transfer. Franchisee agrees to execute and
complete the Authorization Agreement in AttachmentD,andôr such other documents as Franchisor may
require from hme to hme, to authorize and direct Franchisee'sbank or financial institution to pay and
deposit directly to Franchisor's account, and to charge to Franchisee's account, the amount of tbe
Franchise Fee, Monthly Fee, Advertising Fee, and other amounts due and payable by Franchisee pursuant
to this Franchise Agreement.
(a)
Franchisee'sauthorizations will permit Franchisor to initiate debit entries andôr
creditcorrectionentries toFrancbisor'saccount for the amountof such fees andotber amounts then
payable to Franchisor from Franchisee. Franchisee agrees to maintain, at all times during the term of this
Agreement, ahalanceinFranchisee'saccountatFranchisee'sbankorfinancialinstitution sufficient to
allow the appropriate amount to be debited from Franchisee'saccount for payment of such fees and other
amounts payablehyFranchiseefor deposit inFranchisor'saccount.
(b)
Fhe Monthly Fee, Advertising Fee, and any other fees actually transferred from
Franchisee'saccount each month shall be based on the Monthly Financial Statement's defined in Section
10.2) provided by Franchisee pursuant to this Article 4. If Franchisee does not provide Franchisor witha
MonthlyFinancial Statement foranygivenmonth. Franchisor has the right to debit Franchisee'saccount
( i ) i n a n amount equal to such fees transferred from Franchisee'saccount for tbe last reporting period for
which Franchisor receivedaMonthlyFinancialStatement from Franchisee,or(ii) suchother amount
reasonably estimated by Franchisor to approximate the Monthly Fee, Advertising Fee, and other amounts
due and payable by Franchisee pursuant to this Franchise Agreement foraparticular month. Franchisee
is responsible for any administrative costs, penalties, fines or other similar expenses associated with the
pre-authorized bank transfers described in this Section 4.7.
P A G E ^ FA
Secrinn^
B^Weekly P a y m e n t Franchisor ^ e ^ s ^ r i g b t ^ r e q u u e F r a n c h i s e e ^ p a y
the MonthlyFcc, Advertising Fee, andother amounts due and pay^
Franchiso Agreement onahi^weckiyhasis pursuant toaschednic determined by Franchi^^
Sections
Taxes. Franchiseeshaiipromptiy pay when due aiitaxes,duties,andôr fees
levied or assessed (including, without limitation, gross receipts taxes, franchise taxes, sales taxes,
withholding taxes, value added taxes, andôr any similar taxes or fees) and all accounts andother
indebtedness of every kind incurred by Franchisee under this Franchise Agreement (collectively,
"Faxes"). I n t h e event of any bona fide dispute as toFranchisee's liability forFaxes, Franchisee may
contest the validity or the amount of such Taxes in accordance with procedures of the taxing authority or
applicable law;however,innoeventshall Franchisee permitatax sale or seizure by levy of execution or
similar writ or w a r r a n t o r attachment b y a c r e d i t o r , t o occur against this Franchise Agreement,the
Franchised Restaurant, andôrLocation(or any improvements thereon).
(a)
All payments made by Franchisee to Franchisor under this Franchise Agreement
shallbepaidinU.S.Dollars and shall be grossed-up and paid by Franchisee to Franchisor without any
retention, deduction, credit, andôr offset for anyTaxesêxcept any deduction andôr credit expressly
permitted under the definition of Gross Sales i n Section 4.2(e) above. Franchisee shall, at its sole cost, pay
directly to the appropriate taxing authority any and all Taxes on any amounts paid by Franchisee under
this Franchise Agreement or otherwise imposed on Franchisor by any taxing authority in the Territory.
(b)
It is the parties' intention that all payments by Franchisee to Franchisor
hereunder shall be grossed-up (and without any retention, deduction, credit, andôr offset) for anyTaxes
inorder for Franchisor to receive the entire Franchise Fee, Monthly Fee, Advertising Fee, andôr other
amountsduetoFranchisorunder thisFranchise Agreement without any retention,deduction,credit,
andôr offset for anyTaxes(except any deduction andôr credit expressly permitted under the definition
of Gross Sales in Section 4.2(e)above).
(c)
AnyTaxes imposedupon or with respect tothis Franchise Agreement or any
materials, supplies or specifications acquired by or provided to Franchisee pursuant to or in connection
with this Franchise Agreement shall be paid by Franchisee.
(d)
In the event Franchisor is required under applicable law or otherwise elects (all
as determined by Franchisor in its sole discretion) to pay any Taxes to the appropriate taxing
authority(ies)in the Territory arising out of this Franchise Agreement, then Franchiseeshall^
pay to Franchisor an amount equal to any amount(s) so paid by Franchisor to such taxing authority(ies).
ARTfGLF5
GHITFSFRANGmSFMANUAL,FUBLtGRFLATIGNS,
ANDGRISISGGMMUNIGATIGNS
Sections
îlFsFranchiseManuaFThe term "Ghili'sFranchise Manual" o r " G F M " ( a ^ a
the Manual of Operating Data or the MOD Manual) means the manuals, policies, specifications,
standards, checklists, evaluation forms, spreadsheets, guides, recipes, handbooks, document^^
information designatedhyFranchisor from time-to-hmeregarding the System and Ghili'sRestaurant^
For convenience, the Manual of Operating Data, MOD Manual, and the Ghili'sFranchise Manual are
collectively referencedinthis Franchise Agreement as the GFM. The GFM is part of the System and may
FAGEt6-FA
be upda^d, m o d i f y a n d ^
Tbe GEM
also ineludes sueb otber manuals, policies, specifieatious, standards, guides, documents, and otber
informationas maybe designated by Franchisor in tbe fumrewitb respect to Cbili'sRestaurants.
(a)
During tbeTerm, Franchisee shall remain in strict conformity witb tbe System
and tbe CFM and Franchisee shall also operate the Franchised Restaurant in strict conformity with the
System and CFM in accordance with Section^lbelow.
(b)
Franchisor has the right, at its option,to furnish the CFM to Franchisee in the
formof paper copies, electronic copies, on computer diskette or CD-Rom, or electronic copies accessed
through the internet, designated website(s), or other media. Fhe CFM (in whole or in part) is currently
located at the following website (https^franchise.brinker.com), butFranchisor may update, modify,
andôrrevisesuchwebsite from time-to-timeinits sole discretion.
(c)
Franchisor has the right to update,modify,andôr revise tbe System andôr the
CFM in the fnture to reflect changes to Chili's Restaurants and changes in the System, image,
specifications,standards,procedures, approvedproducts,andotber items. lnsuchevent,Francbisee
shall thereafter comply with tbe System andôr^FM, as updated, modified, andôr revised.
Sections
Franchisee'sUse of Chili's Franchise Manual. With respect to Franchisee'snse
of the CFM, Franchisee agrees that:
(a)
Franchisee and Franchisee'sCwners shall at all times treat the CFM (including
the information therein) as confidential, and shall use all reasonable efforts to maintain the confidentiality
of such manuals(and the information therein).
(b)
Franchisee and Franchisee'sCwners shall not at any time copy,duplicate, record
or otherwise reproduce the CFM, in whole o r i n p a r t , n o r otherwisemake the sameavailable toany
unauthorized person.
(c)
Fhe CFM shall at all times remain the sole property of Franchisor.
(d)
Franchisor may from time to time supplement andôr modify the CFM and
Franchisee expresslyagreesthat such supplements andôr modifications shallbe effective upon receipt
and Franchisee shall promptly comply with all such supplements andôr modifications.
(e)
Fo the extent that Franchisee maintains ahardcopy(ies) of tbe CFM (orany
portion thereof), Franchiseeshall a t a l l t i m e s m a i n t a i n t h e C F M i n a s e c u r e p l a c e a t theFranchised
Restaurant and shall ensure the CFM is kept current and up-to-date. In the event of any dispute as to the
contents of the CFM, the terms of the master version of the CFM maintained by Franchisor on
Franchisor'swebsitereferenced above or atFrancbisor'shome office shall control.
(f)
If applicable and if Franchisee's copy of the CFM is lost, destroyed or
significantly damaged. Franchisee will immediately notify Franchisor and w i l l h e obligated to obtain
from Franchisor, at Franchisor'sthen applicable charge,areplacement copy of the CFM.
Sections
Fuhlic Relations and Crisis Communications. Fhe term "FR Manual" is part of
the CFM and means the policies, procedures, and other standards designated by Franchisor from
P A G F ^ FA
hme to-hme regarding
Restaurant andôr the Franchised Restaurant
further agrees that
Franchisee agrees to eompiy with the RR Manual and
(^
Fhe FR Manual contains the official guidelines and procedures outlinedhy
Franchisor for managing the puhlic relations and crisis communications aspects of the Franchised
Restaurant
(h)
Franchisee shall at all timesmaintaintheFRManualinasecureplace at the
Franchised Restaurant and shall ensure the FR Manual is kept current and up-to-date. In the event of any
dispute as to the contents of the FR Manual, the terms of the master copy of the FRManual maintained hy
Franchisor at Franchisor'shome office shall control.
(c)
Fhe information in the FR Manual is confidential and proprietary to Brinker and
is to he used hy the Franchisee only in connection with the operation of the Franchised Restaurant.
(d)
Franchisee is responsible for managing its public relations and crisis
communicationsmatters and agrees that Franchisor'spublic relations department will not be responsible
for such matters. However, Franchisor may,from time-to-time and atits option, make its public relations
department available to Franchisee to assist with public relations and crisis communications matters. In
the event of an emergency,Franchisor reserves tbe right (but shall not be obligated) to direct and control
all crisis communications on behalf of Franchisee and the Franchised Restaurant.
(e)
Franchisee may retain its own local public relations firm for its day-to-day public
relations needs and must inform Franchisor of the firm'sidentity.
(f)
Franchisee shall not distribute any press release to the media without the prior
written consent of Franchisor, in its sole discretion.
(g)
Franchisee agrees to notify Franchisor immediately upon the development of any
crisis situation regarding the Franchised Restaurant, regardless of whether the Franchisee has retaineda
local public relations firm. Franchisee shall alsoalertFranchisorto any potential crisis situation,which
Franchisee reasonably believes may be developing.
ART1CLF6
FRANCHISFF^RFFRFSFNTATIONS
Sectinn^Bl
set forth below.
Franchisee'sRepresentations.
Franchisee represents, warrants and covenants as
(a)
If Franchiseeisacorporation,limitedliahilitycompany,or parmership, then
Franchisee is duly organized and validly existing under the state law of its formation.
(b)
If Franchiseeisacorporation,limitedliabilitycompany,or parmership, then
Franchisee is duly qualified and is authorized to do business in each jurisdiction in which its business
activities or the nature of the properties owned by itrequire such qualification.
P A G E ^ FA
(c)
Franchisees corporate c h a r ^
shareholder agreemeots,hmitedhabihty company agreement or writ^^
alltimes provide that the achvihes of Franchisee are confined exclusively to oper^^
Restaurant unless otherwise consented to hy Franchisor in writing.
(d)
The execution of this Franchise Agreement and the performance of Franchisee's
ohligationshereunderhaveheendulyauthorizedhyFranchisee and are within Franchisee'scorporate
poweror permitted under Franchisee'sparmership agreement or limited liahility company agreement
(e)
If Franchisee isacorporation, then Franchisee has delivered to Franchisor copies
of Franchisee'sarticles of incorporation, hylaws, resolution of the hoard of directors authorizing entry
intoandperformance of this Franchise Agreementother governing documents and anyamendments
thereto.
(f)
If Franchiseeisalimited liability company, then Franchiseehasdelivered to
Franchisor copies of Franchisee'sarticles of organization, operatingagreement, membership transfer
agreement, aresolutionof the membersor manager authorizingentryintoand performanceof this
Franchise Agreement, other governing documents and any amendments thereto.
(g)
If Franchisee isaparmership, then Franchisee has delivered to Franchisor copies
of Franchisee'swrittenparmership agreement, evidence of consent or approvalof the entry into and
performanceof thisFranchise Agreementby the requisite number or percentage of parmers (if such
approvalorconsentisrequiredbyFranchisee'sparmership agreement), other governing documents and
any amendments thereto.
(h)
Franchisee shall maintainacurrent list of Franchisee'sCwners and such list shall
be certified by the Managing Cwner and furnished to Franchisor upon request. lfnecessary,Franchisee
shall execute an addendum to Attachment C to ensure the informationcontainedin Attachment C
complies with this Franchise Agreement
(i)
IfFranchiseeisacorporation, Franchisee shall maintain stop-transfer instructions
against the transfer on its records of any equity securities of Franchisee and each stock certificate of tbe
corporation shall have conspicuously endorsed upon its face a statement in a form satisfactory to
Franchisor t h a t i t i s h e l d subject to, and that furtherassignmentor transfer thereof i s s u b j e c t t o a l l
restrictions imposed upon assignments by this Franchise Agreement
(j)
If Franchiseeisalimited liability company,its operating agreement, membership
transferagreement,andany other relevant agreement, shallprovide that ownership of an interest in
Franchisee is held subject to all restrictions imposed upon assignments by this Franchise Agreement.
(k)
IfFranchiseeisaparmership, then Franchisee'swritten parmership agreement
shall provide that ownership of an interest in the parmership is held subject to and that further
assignment or transfer is subject to all restrictions imposed upon assignments by this Franchise
Agreement
(1)
If any officer or director of Franchiseeshall cease to serveassuchor any
i n d i v i d u a l s h a l l b e e l e c t e d a s a n o f f i c e r o r d i r e c t o r o f Franchisee subsequent tothe executionof this
Franchise Agreement, then Franchisee agrees to provide Franchisor with notice thereof within ten (10)
FAGEt9 FA
dayssubsequemmsuchchangc
In the event such newly e l e c t e d o f ^
Owner"or "Operating Partner then Franchisee shalleanse such newlyeleetedoffieer or director to
comply with the relevant portions of this Franchise Agreement
(m)
Managing Owner (defined helowÔperatingFartner (defined helow), and any
other of Franchisee'sOwners shall not he ohligatedto execute the Guaranty inthe form set forthon
AttachmentH;providedthatintheeventofamonetarydefaultunderthisFranchiseAgreement(evenif
such monetary default is cured). Franchisor reserves the right to require the Managing Owner to sign the
Ouarantyinthe form set forth on Attachment H, in addihon toFranchisor'sother rights and remedies
hereunder.
(n)
Franchisee acknowledges andagrees that therepresentations, warrantiesand
covenants set forth in Sechons6T(a)-(m)are continuing obligations of Franchisee and that any failure
comply with such representations,warranties and covenants shall constituteamaterial event of default
under ArticleI4pursuant to which Franchisor may terminate thisFranchise Agreement in additionto
such other rights and remedies available to Franchisor hereunder. Franchisee shall cooperate with
Franchisorinanyefforts made by Franchisor to verify Franchisee'scompliance with such representations,
warranties and covenants.
Sections
Background Informatiom Franchiseeagreestopromptly provide information
regardingFranchisee, Managing Owner, OperatingFarmer,Franchisee'sOwners, and other individuals
associated with Franchisee andôr the Franchised Restaurant as may be reasonably requested by
Franchisor from time-to-time for the purpose of conducting background checks and security clearances.
ARTtGLF7
OFFRATfONOFTHFFRANGHfSFDRFSFAURANF
Sectmn^l
Operation of the Franchised Restaurant During tbeFerm, Franchiseeshall
operate the Franchised Restaurautinafirst-classmarmerandinstrict conformity with the Syste
GFM (and such other methods, standards and specifications as Franchisor may from time to-time
prescribe in the GFM or otherwise in writing). In the event of an update, modification, andôr revision to
the System andôr GFM, Franchisee shallthereafter comply withthe System andôr GFM, as updated,
modified, andôr revised. Franchiseeacknowledgesthateverydetailof the Franchised Restaurant is
important to Franchisee, Franchisor, and other franchisees in order to develop and maintainhigh
operating standards, to increase the demand for the services and products sold by all franchisees, and to
protect Franchisor'sreputation and goodwill. Furthermore, Franchisee agrees:
(a)
Fomaintain in sufficient supply,andto use andôr sell at alltimes, only such
menu items, ingredients,products,materials, supplies andpaper goods as conformwith Franchisor's
standards and specifications, and to refrain from deviating therefrom by the use or offer of
non-conforming items, without Francbisor'sprior written consent
(b)
Fosell or offer for sale only such menu items, products and services as have been
expressly approved for saleinwriting byFranchisor; to sellor offer for sale alltypes of menu items,
products and services specified byFranchisor; to refrain from any deviation from Franchisor'sstandards
and specificahons without Francbisor'sprior written consent; and to discontinue selling and o ^
sale any menu items, products or services which Franchisor may,in its discretion, disapprove in writing
at any time.
(c)
Topermit Franchisor or its agents at a^
food or nonfood items from Franchiscc'sinvcntory or from the Franch^
therefor, inamonntsreasonahiy necessary for teshnghy Franchisor oranindependemiahoratory
determine whether said samples meet Franchisor'sthen-cnrrent standards and specifications, fn addition
to any other remedies it may have under this Franchise Agreement, Franchisor may (i) require Franchisee
to hear the cost of such testing if the supplier of the item has not previously heen approved hy Franchisor
or if the sample fails to conform with Franchisor'sthen-current specifications and (ii) require Franch^^^
toremoveanddestroysuchfood or non-food items at Franchisee'ssole cost without reimhursement from
Franchisor whatsoever.
(d)
Fo purchase and install, at Franchisee's expense, all fixtures, furnishings,
equipment, computer software and hardware, decor and signs as Franchisor may reasonably direct from
time to t i m e i n t h e C F M o r otherwise inwritingând torefrain from installingor permitting tohe
installed onorahouttheFranchisedRestaurantpremises, without Francbisor'sprior written consent, any
fixtures, furnishings, equipment, computer software and hardware, decor, signs, games, vending
machines or other items not previously approved as meeting Franchisor'sstandards and specifications.
(e)
T o s e l l o r offer for sale products and services only at the Franchised Restaurant
and to refrain from off-premises sales or catering unless expressly authorized by Franchisorinwriting.
(f)
Fo permit Franchisor to poll Franchisee's point-of-sale and other related
computer systems (regardless of locationat the Franchised Restaurant, Franchisee'soffices, orother
locations)for the purpose of compiling data regarding Gross Sales and other relevant data.
(g)
If so requested by Franchisor, to provide daily reports toFranchisor regarding
Gross Salesandotherrelevantdata related to theFranchised Restaurant i n a f i l e format andexport
method reasonably establishedbyFranchisor, atFranchisee'ssole cost.
(h)
Franchisee acknowledges tbat Franchisor may implement new andôr
supplemental programs andôr procedures from time-to time and in its sole discretion (e.g.,
food-and-restaurant safety programs, operational improvement procedures, nutrition information
programs, etc.) as an integral part of the System and Franchisee shall be required to participate in (and
comply with)suchprogramsandôr procedures established byFranchisor. Franchisee acknowledges it
may be responsible for the payment of certain costs associated with such programs andôr procedures.
Franchisor reserves the right to establish (and set forth the terms and conditions of) such programs and
procedures throughamodificationandôr revisiontotheSystemandôrGFMand, insuchevent.
Franchisee shall thereafter comply with the System andôr GFM, as modified andôr revised.
(i)
Foprovide Franchisorafully executed copy of Franchisee'spurchase contract or
lease agreement(as applicable) for the occupancy of the Franchised Restaurant premises, within three (3)
business days after request byFranchisor.
Sections
Managin^GwnerandGperatingFartner.
(a)
Managing Gwner. Franchisee shall designate and retain an individual to serve as
the"ManagingGwner"of the Franchised Restaurant. Fhe Managing Gwner(i) shall be deemed asa
''Franchisee'sGwner''hereunder and must have the largest share of unencumbered equity o w n e r s ^
P A G E ^ FA
Franchise^hutnot less thantenpercent ( l O ^ , ^ mustbeauthorizedby ^Franchisee tobind the
Franchisee in any dealings with Franchisor and authorized distributors, suppliers, and contractors of
Franchisee, (iii) must he authorized hy the Franchisee to direct any achons necessary to ensure complin
withthe Franchise Agreement, and(iv) must d e v o t e e
Franchisee's obligations under this Franchise Agreement and the daily operations of the Franchised
Restaurant Except as may otherwise be provided in this Franchise Agreement, the Managing Owner's
interest in Franchisee shall be and shall remain free of any pledge, mortgage, hypothecation, lien, charge,
encumbrance, voting agreement, proxy,securityinterestor purchase right or options.
(i)
Franchisee has not taken and agrees that it will not hereafter take,
whether directly or indirectly,any action to avoid the authority requirements of
the ManagingOwner through the entry oflimitingboard resolutions, management
agreements, amendment of governing documents or any other similar device or
arrangement Franchisee agrees to furnish Franchisor with such evidence as
Franchisor may request from time to time for the purpose of assuring Franchisor
that the Managing Owner'sauthority remains as represented herein.
(b)
Operating Farmer. If the Managing Owner does not intend to devote his full time
and best efforts to the daily operation of the Franchised Restaurant, then Franchisee must also designate an
individual "Operating Farmer" who must be approved by Franchisor and the Operating Farmer (i) shall be
deemed asa"Franchisee'sOwner''hereunder and must be authorized by Franchisee to bind Franchisee in
any dealings with Franchisor and authorized distributors, suppliers, and contractors of Franchisee, (ii) must
be authorized by the Franchisee to direct any achons necessary to ensure compliance with the Franchise
Agreement, and (iii) must devote his full hme and best efforts to the satisfacbon of Franclusee'sobh^^
under tlus Franchise Agreement and the daily operahons of the Franchised Restaurant with no operational
or management commitments to other businesses.
(i)
Fhe Operating Farmer must live within the general area (lOO mile
radius) of the Franchised Restaurant Except as may otherwise be providedin
this Franchise Agreement, the Operating Farmer'sinterest in Franchisee shallbe
and shall remain free of any pledge, mortgage, hypothecation, lien, charge,
encumbrance, voting agreement, proxy, security interest or purchase right or
options.
(c)
Franchisee shall not change the Managing Owner andôr Operating Farmer
without the prior writtenconsent of Franchisor. Any sale, transfer or assignment of the Managing
Owner'sinterest in Franchisee, or any portionthereof,shallbe subject tothe restrictions ontransfer
described in A r t i c l e l ^ a n d any failure to comply with such requirements shall be deemedamaterial
e v e n t o f d e f a u l t b y Franchisee under Article 14. Any sale, transferorassignmentof the Operating
Farmer'sinterest in Franchisee,oranyportionthereof (if any),shall be subject tothe restrictions on
transfer described in A r t i c l e l ^ a n d any failure to comply with such requirements shallbe deemeda
material eventofdefaultby Franchisee under Article 14.
Sections
Flours of Operatiom Franchisee shall keep the Franchised Restaurant open and
innormal operation for such hours and days as Franchisor may from time to time specify in the CFM or
as Franchisor may otherwise approve in writing.
P A O E ^ FA
Sedion7^
Personnel and Staffing Franchisee shall stafr the Franchised Restaurant In
accordance with CFM and Franchisee agrees to n^^^
staff at the Franchised Restaurant including at leastfour (4) fully-trained, full-tunemanagers (unless
otherwise agreed hy Franchisors Franchisee agrees to take such steps as are necessary to ensure that its
employees preserve good customer relations and comply with such dress code as Franchisor may
prescribe. Franchisee also acknowledges and agrees that Franchisor may require Franchisee to maintain
"ahove-restaurant" supervision (e.g., area director(s), regional director(s), etc.) and, in such event,
Franchisee shall ensure that such personnel are fully-trained in accordance with the CFM.
Sectinn^
Health and Safety Standards. Franchisee shall, at all times, operate the
Franchised Restaurantinaccordance with (i) the highest health, safety,and sanitation standards under
applicahlelawand (ii) thehighest health, safety, andsanitation standards asset forth i n t h e CFM.
Franchisee shall furnish to Franchisor, within five (5) days after receipt thereof,acopy of any inspection
report,warning, citation, certificate andôrrahng which indicates Franchisee'sfailure to meet or maintain
the highest health, safety,andôr sanitation standards in the operation of the Franchised Restaurant.
(a)
Femporary Closure of FranchisedRestaurant. In the event Franchisee violates
the terms of Sections, then (in addition toFranchisor'sother rights and remedies hereunder) Franchisee
shall temporarily close the Franchised Restaurant immediately uponreceipt of writtennotice from
Franchisor and Franchisee shall not re-open the Franchised Restaurant until Franchisee has cured such
violation(s)ofSection7.5and Franchisee has received written permission from Franchisor to reopen the
FranchisedRestaurant.
(h)
Fuhlic Health andôr Safety Fmergency. Inthe event ofapuhlic health, safety,
andôr sanitation emergency involving the Franchised Restaurant, then (in addition toFranchisor'sother
rights and remedies hereunder) Franchisee shall temporarily close the Franchised Restaurant
immediately upon receipt of written notice from Franchisor and Franchisee shall not re-open the
Franchised Restaurant until suchemergency hasheenresolved andFranchiseehasreceived written
permission from Franchisor to re open the Franchised Restaurant.
Sections
Approved Suppliers. Franchisee shall purchase all food items, ingredients,
supplies, materials and other products used or offered for sale at the Franchised Restaurant solely from
suppliers (including manufacturers, distributors and other sources) who demonstrate, to the continuing
reasonable satisfaction of Franchisor, the ability to meet Franchisor's then-current standards and
specifications for such items,who possess adequate quality controls and capacity to supply Franchisee's
needs promptly and reliably; and who havebeen approved in w r i t i n g b y Franchisor prior to any
purchases by Franchisee from any such supplier; and who have not thereafter been disapproved.
(a)
If Franchisee desires topurchaseany products fromanunapproved supplier.
Franchisee shall submit to Franchisorawritten request for such approval, or shall request the supplier
itself to do so. Franchisee shall not purchase from any supplier unless and until such supplier has been
a p p r o v e d i n w r i t i n g b y Franchisor. Franchiseeacknowledgesitmay^l^berequiredtosecuresuch
supplier'ssignaturetoareasonably acceptable confidentiality agreement asacondition precedent to any
approval by Franchisor.
(b)
Franchisor shall have the right to require that its representatives be permitted to
inspect the supplier'sfacilihes, and that samples from the supplier be delivered, either to Franchisor
P A G E ^ FA
an independem l a b o r a t o r y ^
Acbarge not to exceed tbe reasonable
cost of tbe Inspection and tbe aetnal cost of tbe test sball be paid by Francblsee or tbe s n ^ ^
(e)
Franeblsor reserves tbe rigbt, at Its option, to re-lnspeetfromtlme to time tbe
faellltlesand prodoetsof any snebapprovedsoppller and torevokeltsapprovalopontbesnppller's
failure to continue to meet any of Franeblsor'stben-cnrrent criteria. Notbing in tbe foregoing sball be
construedto require Franchisor to approve any particular supplier (sucb determination to be made by
Franchisor in its sole discretion).
Sections
Proprietary Products. Franchisee acknowledges and agrees tbat Franchisor may
develop certain products which are made from highlyconfidential secret recipes andwhich are trade
secrets of Franchisor (the"ProprietaryFroducts"). Because of the importance of quality and uniformity
of production and the significance of the Proprietary Products to the System, it is to the mutual benefit of
the parties that Franchisor closely controls the production and distribution of the Proprietary Products.
Accordingly,Franchisee agrees that, in the event Proprietary Products becomeapart of tbe System (and
thereby required for use in the Franchised Restaurant), then Franchisee shall only use Proprietary
Products i n t h e Franchised Restaurant which havebeenpurchased from Franchisor or from asource
designated by Franchisor.
Sectinn7^
Repair and Maintenance of the Franchised Restaurant. Franchisee shall
maintain the Franchised Restaurant inafirst-class manner and condition and Franchisee shall, at its sole
cost, make such repairs to the Franchised Restaurant asmayherequired to maintain the Franchised
Restaurant in a first class manner and condition (including, without limitation, periodic repainting
andôr replacement of obsolete or damaged signs, furnishings, equipment and decor) as Franchisor may
reasonably direct.
(a)
Except for repairs required to maintain the Franchised Restaurant i n a f i r s t class
manner and condition, all other repairs, replacements, additions, andmodifications to theFranchised
Restaurant shall require Francbisor'sprior written consent.
Sections
The Current fmage. UponFranchisor'srequest, Franchiseeshall, at its sole cost
and expense,make all improvements and alterations that Franchisor may determine to be necessary for
the Franchised Restaurant to conform with the thencurrent image of Chili'sRestaurants as required by
the SystemorasprescribedhyFranchisorfromtime to-time (the "current Image"). Franchisee shall, at
its expense, undertake and complete such improvements and alterations within reasonable times
specified by Franchisor.
Section^BtO
Mandatory Remodeling of Franchised Restaurant. Franchisee acknowledges (i)
Franchisor's right to make changes in tbe Current Image, as it reasonably deems appropriate; (ii)
Franchisor's current requirement that Franchisee must remodel the entire Franchised Restaurant, at
Franchisee'ssole cost, every seven (7) years to conform with the Current Image of Chili'sRestaurants; and
(iii) Franchisor'sright to require Franchisee to make specific changes to the Franchised Restaurant from
time-to-time to conformwiththe Current Image, at Franchisee'ssole cost.
Section^BFl
inspection byFranchisor. Franchisee shall grant Franchisor and its agents the
right to enter theFranchised Restaurant at any timeforthepurposeofconductinginspectionsand
Franchisee shall cooperate with Franchisor's representatives in such inspections by rendering such
assistance as they may reasonably request. UponnoticefromFranchisor oritsagents and without
FAGE^-FA
smiting F r a n c h i s o ^ o t h ^
may be n e c t a r y to c o r r ^ i m m e ^
Should
Frauehisee, for any reason, f a i l t o correct such defieieueies^
Franchisor, Franchisor shall have the right and authority ( w i t ^
correct such deficiencies and to charge Franchiseeareasonahle fee for Franchisor'sexpenses in so acting,
payable hy Franchisee immediately upon demand.
Section7.12
Mandatory Sanitation and Food Safety Frogram. Franchisor reserves the right
to require Franchisee'sparticipationinamandatory sanitation and food safety program relating to tb^
Franchised Restaurant (including periodic inspections and evaluations of the Franchised Restaurant) in
accordance with such rules, terms, and conditions as Franchisor deems advisable. Franchisor reserves tbe
right to incorporate the rules, terms, and conditions of such program into the CFM and to supplement
such rules, terms, and conditions from timeto-time through modifications to the CFM. Franchiseeshall,
at all times, operate the Franchised Restaurant in accordance with the rules, terms, and conditions of such
mandatory sanitation and food safety program. Franchisee acknowledges Franchisee may be responsible
for some(or all) costs of such program as it applies to the Franchised Restaurant.
Sectmn^
Prices at Franchised Restanrant.
Subject to this Franchise Agreement,
Franchisee shall be responsible for determining the prices of products offered at the Franchised
Restaurant, subject to Franchisor'sreasonable rules, limitahons, and regulations regarding such pricm^
permitted by applicable law. Fotbe fullest extent permitted by applicable law,Franchisor reserves tbe
right to establish maximum, minimum, or other pricing requirements with respect to the prices
Franchisee may charge for products or services offered at tbe Franchised Restaurant.
Section7Bt4
Fiquor Licenses and Business Licenses. Fhis Franchise Agreement is expressly
conditioned upon Franchisee'sability to secure and maintain, at its sole cost, any and all required state,
county, andôr local liquor licensesrequired for theon-premises sale and consumptionof alcoholic
beverages at the Franchised Restaurant and any other business licenses required for the operation of the
(a)
If Franchisee fails to secure the required liquor license(s) by the date tbe
Franchised Restaurant is otherwise ready(andôr required) to open for business, then Franchisor may,in
its sole discretion, terminate this Franchise Agreement upon ten (10) days prior written notice to
Franchisee a n d , i n such event,Franchisor shall refundthe Franchise Fee paid byFranchisee (without
interest), less any expenses andôr damages incurred by Franchisor under this Franchise Agreement prior
to the date of such termination.
(b)
After Franchisee has secured the required liquor licenses. Franchisee shall
thereafter comply with all applicable laws and regulations relating to the sale of alcoholic beverages at
the Franchised Restaurant. If the sale and consumption of alcoholic beverages at the Franchised
Restaurant is suspended or prohibited for more than thirty (30) consecutive days as a result of
Franchisee's failure to comply withapplicahlelaws andregulationsrelatingto thesale of alcoholic
beverages at the Franchised Restaurant, then Franchisor may, in its sole discretion, terminate this
Franchise Agreement upon ten (10) days prior written notice to Franchisee and, in such event, Franchisor
shall not be required to refund the Franchise Fee.
Section7.15
Compliance With Laws and Industry Standards. Franchisee shall operate the
Franchised Restaurant in compliance with all federal, state and local laws, rules and regulations, and shall
F A G F ^ FA
timely obtain any and aEper^
Erancbised Restaurant including
licenses, fictitious name registrations, sales tax permits, and fire permits. Erancbisee sball be solely
responsible for any fines, costs, or penalties related to tbe foregoing matters.
(a)
Erancbisee sball notify Franchisor in writing witbin five (5) days of tbe
commencementof any action,suit,orproceedmg,andof tbe issuance of any order,writ,injunction,
award, or decree of any court, agency,or other goverrmiental instrumentality related to any of tbe matters
referenced intbisSection716orwhichmay adversely affect the Erancbised Restaurant.
(b)
Franchisee shall, at its sole cost, comply (i) with rules and regulations
promulgated hy industry groups, trade associations, and similar non-govemmental (andôr
quasi-governmental) organizations so long as Franchisor's company-owned Chili's restaurants also
comply withsuch rules andregulationsandôr(ii)rules and regulationspromulgatedby Franchisor
which are reasonably consistent with rules andregulations promulgated by industry groups, trade
associations, and similar non governmental (andôr quasi-governmental) organizations so long as
Franchisor'scompanyownedChili'srestaurants also comply with such rules and regulations.
Section7Bt6
Computer S y s t e m s Franchisee shall, at Franchisee's sole cost, install and
maintainacomputerizedpoint-of-sale system (the''ECS System'') at the Franchised Restaurant and such
ECS SystemshallbesubjecttoFranchisor'sprior written approval. Franchisor reserves theright to
requireFranchiseetoinstall and maintainaFCS System designated by Franchisor, at Franchisee'ssole
cost. Franchisor also reserves the right to require Franchisee to replace Franchisee'sexisting ECS System
attbeFranchisedRestaurantwithaFCSSystemdesignatedbyFranchisorand, insuchevent. Franchisor
shallgive Franchiseeaminimum of three (3) years to replace Franchisee'sthen existing ECS System with
aFCS System designated by Franchisor, all at Franchisee'ssole cost. In addition to tbe ECS System,
Franchisee shall not install any back of h o u s e ^
software system without Francbisor'sprior written approval. Franchisor may also require Franchisee to
install and m a i n t a i n a B C H software systemdesignatedbyFranchisorandôrFCH software system
designated by Franchisor, all at Franchisee'ssole cost.
Secti^7B17
Supplemental Marketing Frograms.
Franchisee acknowledges that (i)
supplemental marketing programs (e.g., limited hme offers, gift cards, gift certificates,^
programs, customer relationship management, and other supplemental marketingprograms) are an
integral part of the System and (ii) Franchisee shall be required to participate in (and comply with) such
supplemental marketing programs established by Franchisor from time to time.
Franchisee
acknowledges it may be responsible for the payment of certain costs associated with these supplemental
marketingprograms. Franchisor reserves the right to establish(and set forth the terms and conditions of)
such supplemental marketing programs through (i)asupplementandôr modification to the CFM or (ii)a
standard supplemental marketing program agreement which Franchisee agrees to sign, if so requested by
Franchisor. Franchisee acknowledges that Franchisor has developedagift card program and Franchisee
shall be required to participate in (and comply with the terms and conditions of) Franchisor'sgift card
policy as amended or modified by Franchisor from time to-time.
PAGE^-FA
ARTICLED
THECH^FSMARKS
Sections
Franchô^s Representarion^ Franchisor represent that Franchisor has the
corporate power and authority to grant to Franchisee the rights specified in Section L I an^
deliver and perform its ohiigations under this Franchise Agreement
^
Sections
Franchisce'sUse of the ChitFsMarks. With respect to Franchisee'shccnsed use
of the Chili'sMarks pursuant to this Franchise Agreement, Franchisee agrees that
(^
Franchisee shall use only the Chili'sMarks designated hy Franchisor and then
only in the manner authorized hy Franchisor. Any usehy Franchisee ofthe Chili'sMarks shall require
the prior written consent ofFranchisor.
(h)
Franchisee shall use the Chili'sMarks only at the Franchised Restaurant or in
advertising for the Franchised Restaurant(unless otherwise authorized hy Franchisor in writing).
(c)
Franchisee shall cause alladvertising materials, promotionalmaterials, signs,
hanners,decorations,paper goods (includmgdisposahlefoodcontainers,napkins,menus,forms,and
stationery) and other items designated hy Franchisor used in connection with the Franchised Restaurant
to display the Chili'sMarks in the form, color, locahon and manner prescribed and approved in writing
byFranchisor.
(d)
Unless otherwise authorized or required by Franchisor, Franchisee shall operate
and advertise the Franchised Restaurant ordy under the
suffix.
(e)
During theFerm of this Franchise Agreement, Franchisee shall identify itself as
the owner of the Franchised Restaurant and independent franchisee in conjunction with any use of the
Chili'sMarks, including, but not limited to, uses on invoices, order forms, receipts and contracts, as well
as the display of anotice in such content and form and at such conspicuous locations at the Franchised
Restaurant as Franchisor may designate i n writing.
(f)
Franchisee's right to use the Chili's Marks is limited to such uses as are
authorized under this Franchise Agreement, and any unauthorized use thereof shall constitute an
infringement of Franchisor'srights.
(g)
Franchisee shall not use the Chili'sMarks to incur any obligation or indebtedness
on hebalfof Franchisor.
(h)
Franchisee shallnotuse the Chili'sMarks (or any derivative or portion thereof)
as part of its corporate or other legal name.
(i)
Franchisee shall comply with Franchisor'sinstructionsinfiling and maintaining
therequisite trade name or fictitious name registrations,andshallexecuteanydocuments deemed
necessary byFranchisor or its counsel to obtain protechon for the Chili'sMarks or to maintain their
continued validity and enforceability.
P A G E ^ FA
^
Intheeventofanyinfringemem^
Marks or Ehgahoumvolving the Chih^ Marks is i n s ^
shall promptly notify Franchisor and shall cooperate fnlly Indefendlng or settling sneh litigation.
Franchisee and Franchisee'sCwners agree that they will not commnnieate with any person other than
Franchisor and Franchisor's counsel in connection with any such action, claim or infringement.
Franchisor shall have sole discretion to take such action as it deems appropriate and the right to
exclusively control any litigation, Patent and Trademark Office action or other proceeding arising ou^
anyinfringement,challengeorclaimsrelatingto the Chili'sMarks.
Sections
Limitations on Franchisee'sUse of Chili'sMarks. With respect to Franchisee's
licensed use of the Chili'sMarks pursuant to this Franchise Agreement, Franchisee agrees that:
(a)
Franchisor is the owner orlicensee of all right,title and interestinandto the
Chili'sMarks and thegoodwill associated with and symholizedhy them.
(h)
Fhe Chili'sMarks are valid and serve to identify the System and those who are
authorized to operate under the System.
(c)
Franchisee shallnot directly orindirectly contest the validity or Franchisor's
ownership ofthe Chili'sMarks.
(d)
Franchisee'suseofthe Chili'sMarks pursuant to this Franchise Agreement does
not give Franchisee any ownership interest or other interest in or to the Chili'sMarks, except the license
granted hy this Franchise Agreement.
(e)
Any and all goodwill arising from Franchisee'suse of the Chili'sMarks and the
Systemunderthis Franchise Agreement shall inure solely and exclusively toFranchisor'shenefit, and
upon expiration or termination of this Franchise Agreement, no monetary amount shall be assigned as
attributable to any goodwill associated with Franchisee'suse of the System or the Chili'sMarks.
(f)
Fhe right and license of the Chili'sMarksgranted hereunder toFranchisee is
non-exclusive, and Franchisor thus has and retains the rights, among others:
(i)
Fo use the Chili's Marks itself in connection with selling
products and services;
(ii)
Fogrant other licenses for the Chili'sMarks, in addition to those
licenses already granted toexisting franchisees; and
(iii)
Todevelop and establish other systems using the same or similar
Chili'sMarks, or other Chili'sMarks, and to grant licenses or franchises thereto
without providing any rights therein to Franchisee.
(iv)
Fodevelop and establish the Cther Marks and exclude the Cther
Marks from the Chili'sMarks pursuant to and in accordance with Section F2(d)
of this Franchise Agreement.
P A G E ^ FA
(g)
FranchiseeûseoftheChih^Marks^
not give Franchisee any interestinor rigbt to use the Other
Sections
Suhstitutions to ChitFs Marks. Franchisor reserves the right to substitute
different ChiiFs Marks for use in identifying tbe System and tbe business operating thereunder if
Franehisor'seurrentfy owned ChiiFsMarks no longer can he used, or if Franchisor, in its soiediseret^^
determines that substitution of different ChiiFs Marks wiii be beneficiaito the System, insuchevent,
Franchisee shall he responsible for aii expenses related to the subshmtion of different ChiiFsMarks and
shall complete such substitutioninaccordance with the deadlines reasonably established by Franchisor.
CONFIDFNFIAFINFORMAFION
Sectional
Confidentiat Information. Franchisee and Franchisee's Owners shafl not,
duringtbe term of this Franchise Agreement or and foraperiod of f i v e ^ y e a r s thereafter, communicate,
divulge or use for the benefit of any other person, parmership, association, or corporation any
confidential information,trade secrets, knowledge, or knowhow concerning the Chili'sMarks, System,
CFM, and methods of development and operation of the Franchised Restaurant (collectively, the
"Confidential Information"). Fhe foregoing items sball he deemed as Confidential Information
regardless of whether such items are disclosed to Franchisee undera"confidentiality notice". In addition
to the foregoing, any and all information, drawings, knowledge, know-how and techniques usedinor
related to tbe FranchisedRestaurant including, without limitation, softwarelicensedor providedby
Franchisor, recipes, trairdng materials, construction plans and specifications, marketing inform
strategies, and site evaluarion and selection techniques shall be deemed as "Confidential Information".
(a)
Franchisee and Franchisee'sCwners (i) shall disclose Confidential Information
only tosuchofFranchisee'semployees as must haveaccesstoitinorder to operate the Franchised
Restaurant(s),(ii) shall not copy,duplicate, record, or otherwise reproduce the Confidential Informa
in whole or in part, nor otherwise make the same available to any unauthorized person, and (iii) shall be
solelyresponsibletoensurethatFranchisee'smanagers, employees, agents, or independent contractors of
Franchisee having access to Confidential Information comply with this Articleând do not communicate,
divulge oruse Confidential Informationinviolation of this Articled.
Sections
Confidentiality Agreement. In addition to Franchisee's obligations under
Section 9.1, Franchisor may request that Franchisee require Franchisee's Owners and its managers,
employees,agents or independentcontractorshavingaccess to Confidential Informationto executea
"Confidentiality Agreement" in the form contained in Attachments.
Sections
Breach of Confidentiality. Franchisee acknowledges that any failure to comply
with the requirements of this Article9shall constituteamaterial event of default under Article 14 and
will cause Franchisor irreparable injury. Therefore (and in addition to any remedies under Article 14),
Franchiseeagreestopayallcourtcosts and reasonable attorneys'fees incurred by Franchisorinobtaining
specific performance of, or an injunction against violation of, the requirements of this Articled.
Sections
Franchisee's Access to Confidential Information and Other Information. In
addition to Confidential ^formation, Franchisor may,from timeto-time and at Franchisor'ssole option,
elect (i)tograntFranchiseeaccesstocertaindatabase(s),wehbasedinformationprograms,andother
software, andôr (ii) to make other information related to the Franchised Restaurant available to
P A G F ^ FA
Franchisee and Franchisee agrees to promptly comply at Franchisee's sole cost, with all mles and
requirements imposed hy Franchisor in connection therewith (including, without limitation,
implemenhng required security measures,updating and restricting Franchisee'spersormel a c c e s s ^
and other requirements).
Sections
SurvivaF Fhe terms of this Article^shall survive the termination, expiration, or
any transferorthisFranchise Agreement. Franchiseeshallpay toFranchisoralldamages,costsand
expenses, including reasonable attorneys'fees, incurred hy Franchisor suhsequent to the termination or
expiration of this Franchise Agreement in obtaining injunctive or other relief for the enforcement of any
provisions of this Articled.
ARTICFFIO
ACCOUN^NGANDRFCORDS
Section 10^
Franchisee'sAccounting Records. Franchisee shall maintain during the Ferm of
this Franchise Agreement, and shall preserve for at least five (5) years from the dates of their preparation,
full, complete and accurate books, records and accounts related to tbe Franchised Restaurant in
accordance with generally acceptedaccounting principles a n d i n t h e f o r m a n d manner prescribedby
Franchisor from time to time in the CFM or otherwise in writing.
Section 10.2
Monthly Financial Statement. Commencing on the opening date of the
Franchised Restaurant and thereafter on or before the tenth (10^) day of each month during theFerm,
Franchisee shall prepare and submit to Franchisoramontbly financial statement accurately reflecting all
Cross Sales generated at the Franchised Restaurant during the preceding calendar month (the "Monthly
Financial Statement"). Fhe Monthly Financial Statement shall be prepared and submitted by Franchisee
i n t h e f o r m p r e s c r i b e d b y Franchisor fromtime-to-hme including without limitation,(i)an itemized
listing of Cross Sales for the preceding calendar month including a detailed breakdown of any
deductions,reductions,andôr credits claimedbyFranchisee,(ii)amonthlyprofit-and-loss statement,
(iii)asummary of Cross Sales by categories designated byFranchisor from timeto-time(e.g.,FFU,FCH
labor, BCF1 labor, food cost, menu mix, etc.).
Section 10.3
Cther Financial Statements.
(^)
Cuarterly Financial Statements. Within fifteen (15) days after the expiration of
each fiscalquarterduringtheFerm,Franchiseeshallprepare and submit toFranchisor the following
financial statements related to the Franchised Restaurant in a form prescribed by Franchisor from
time-to time:
(i) a quarterly profit-and-loss statement; (ii) a quarterly statement of marketing
expendimres;(ii)aquarterly balance sheet which may h^
and loss statement which may be unaudited(collectively,the "Quarterly Financial Statements").
(b)
SalesFax Returns. Franchisee sball also submit to Franchisor (at the time of
filingwith taxing authorities)copies of all sales tax returns for the Franchised Restaurant.
(c)
Annual Financial Statements. Withinninety (90) days after the expiration of each
f i s c a l y e a r d u r i n g t h e F e r m , Franchisee shallprepare and submit toFranchisoracomplete, audited,
annualfinancial statement for theFranchisedRestaurant(inaformprescribedbyFranchisorfrom
time-to-hme)prepared by an independent certified public accountant satisfactory to Franchisor, showing
PAGE 30 FA
theresuhsof operarionsof theFra^^
sêmen^
(d)
Annual O p e n i n g Budget A t least t b f r ^ ^ d a y s p r i ^
fisealyearduriugtheTerm,Frauehiseeshallprepareaudsub^
budget for the Frauehised R e s t a u r s
Operating Budgets
(e)
Other Fiuaueial Records. Upon written requesthy Franchisor or as specified in
the CFM, Franchisee shaiipromptiy s u b m i t s
informahon and financial data related to Franchisee andôr the Franchised Restaurant ( i n c l u d e
limitation, such financial information and financial data for any parent company(ies) and affiliated
entity(ies) related to Franchisee andôr Managing Ownerînthe form prescribed by Franchisor.
(f)
Franchisor's Accounting Cycle. Franchisee aclmowledges that Franchisor may
(upon t h i r t y ^ d a y s prior written nohce) require Franchisee to (i) change its reporting peri^
prepare and submit the Monthly Financial Statementinaccordance with Franchisor'saccounting cycle
and fiscal calendar, (ii) pay all amounts due to Franchisor hereunderinaccordance with Franchisor's
accountingcycleandfiscalcalendar, and (iii) otherwise comply with Franchisor'sreasonable requests to
effectuate this Section 10 3(f).
Section 10.4
Certificatiom Fach statement andreport referenced in Sectionsl0.2andl0.3
shall be signed by Franchisee and the Managing Owner attesting that it is true, complete, and accurate.
Section 10.5
Franchisor'sAudit Rights.
^)
Financial Audit. Franchisor or its designated agents shall have the right at all
reasonable times to request inspect, audit, and copy,atFranchisor'sexpense, the statements and reports
referenced above as well as the books, records, financial statements, tax returns, and other information in
any mediumwhatsoeverof Franchisee andany affiliates andôr parent company(ies)involved inthe
development andôr operation of the Franchised Restaurant
(b)
Compliance Audit. Franchisor or its designated agents shall also have the rigbt
at all reasonable times to request inspect, audit, and copy,atFranchisor'sexpense, the books, records,
financial statements, tax returns, and other information in any medium whatsoever of Franchisee and any
affiliates andôr parent company(ies) involved i n the development andôr operation of the Franchised
Restaurantinorder to determine compliance (or non-compliance) with this Franchise Agreement andôr
any other agreementinvolving Franchisor.
(c)
Independent Audit. Franchisor or its designated agents shall also have the right,
^t any time, to inspect or have an independent audit made, at Francbisor'sexpense, of the books, records,
financial statements, tax remrns, and other information in any medium whatsoever ofFranchisee and any
affiliates andôr parent company(ies) involved i n t h e development andôr operationof Franchised
Restaurant in order to determine compliance (or non-compliance) with this Franchise Agreement andôr
any other agreement between such party(ies)and Franchisor.
(d)
Audit Results. If ^ny such inspection or audit referenced above should reveal
that any amounts have heen underpaid andôr understated in any report to Franchisor, then Franchisee
P A G E ^ FA
shall immediacy pay to Franchis^^
lolnterestfromthedatesochamouot
annum, or the maximum rate permitted hylaw,wl^chever^
(1)
If any suehmspeehonor audit referenced abovedlscloses an
underpayment or understatementmany report of two pereent^^) or more of
Gross Sales for the period covered hy any statement or report which Is the subject
of such Inspection or audit, then Franchisee shall, In addition, reimburse
Franchisor for any and all costs and expenses connected with such Inspection or
audit (mcludmg, without limitation, travel, lodging and wageexpenses and
reasonable audit, accounting, andôr legal costs).
(ii)
If any such inspection or audit referenced above sball reveal that
Franchisee or any affiliate or parent company involved in the development
andôr operation of Franchised Restaurants is not compliant with this Franchise
Agreement or any other agreement between such party(ies) and Franchisor, then
Franchisee shall immediately cure such non-complying items in accordance with
Franchisor'sreasonable instructions and Franchisee shall, in addition, reimburse
Franchisor for any and all costs and expenses connected with such inspection or
audit (including, without limitation, travel, lodging and wageexpenses and
reasonable audit, accounting, andôr legal costs).
(iii)
Fhe foregoing remedies shall be in addition to any other
remedies Franchisor may have under this Franchise Agreement.
ARTIGFFFt
ADVFRTtSING
Section LtBt
Advertising Programs. Franchisee shall participate in one of the following
advertising programsdesignatedby Franchisor andFranchiseeagrees that suchdesignation may be
changed by Franchisor from time-to-time during the Ferm.
SectinnFL2
Focal Advertising Program. In the event Franchisor requires Franchisee to
participate in the "Focal Advertising Frogram",thenFranchisee shall comply with this Section 11.2.
(^)
Franchiseeshallspendnolessthantwoandone-half percent (2.5^) of Gross
Sales onlocal advertising(defined below) for the benefit of the Franchised Restaurant(the "LAP ^
(b)
Fhe term "local advertising"as used in this Agreement shall be deemed to mean
advertising which complies with the requirements set forth on Attachment G. All local advertising shall
be subject to Franchisor'sprior written approval.
(c)
Franchisee shall have the discretion to expend such funds as and when
Franchisee reasonably deems appropriate, so long as the Franchisee'sexpenditure schedule is acceptable
to Franchisor in its reasonable discretion.
P A G F ^ FA
(d)
Franchisor reserves the rigbt to ^
percent ( l O O ^ o f the LAP Fee to Franchisor upon ten (10) days notice to Franeh^
foradvertisingand promotional activities inthe Franchised PestaoranFsiocai area.
(e)
Within 15 days after the expiration of each fiscal quarter, Franchisee shall snbrnit
toFranchisor written documentation to show that Franchisee has complied with this Section 11.2 and
such documentation shall he signed and certified hy Franchisee and Managing Owner as true, complete,
and accurate.
(f)
In the eventFranchisee does notcomplywiththisSectionll.2andôr i n t h e
event Franchisee fails to spend two and one-half percent (2.5^) of OrossSaleson local advertising
approved byFranchisor for the henefit of the Franchised Restaurant, then such failure shall constitutea
defaultbyFranchisee and, i n a d d i t i o n t o any other rights available to Franchisor under this Franchise
Agreement, Franchisor may require the Franchisee to remit such fnnds to Franchisor and Franchisor shall
spend such funds on local advertising for the Franchised Restaurant.
Section 11.3
Regional Advertising Frogram. In the event Franchisor requires Franchisee to
participateina^Regional Advertising Frogram",then Franchisee shall comply with this Section 11.3.
(a)
Franchisee agrees that Franchisor shall have the rigbt, in its discretion, to
designate any geographical area(e.g., an area of dominant influence or"A01")asaregionfor purposes of
establishingaRegional AdvertisingProgram.
(b)
A Regional AdvertisingProgram may becomposedof o n e o r m o r e C h i l i ' s
Restaurants operatedby Franchisor andôr one or more ChilFs Restaurants operatedby Franchisee
(andôr its parent company or affiliates)andôr other franchisees of Franchisor. IfaRegional Advertising
Programhasbeen(or, is) established for the geographic area where the Franchised Restaurant is located,
then Franchisee shall execute such documentation as required by Franchisor to becomeamember of such
Regional Advertising Program.
(c)
Fhe Regional Advertising Program shall be organized, governed, and operated
inaccordance with written guidelines prepared and approvedinadvancehy Franchisor (the "RAP
Guidelines") and Franchisor shall be responsible for maintaining and administering advertising
programs i n the geographic area where tbe Franchised Restaurant is located in accordance with the RAP
Guidelines. No advertising or promotional plans or materials may be used by the Regional Advertising
Program or furnished to its members without the priorwritten consent ofFranchisor.Further, Franchisor
shall directall advertising and production programs in the Regional Advertising Program and Franchisor
shall have sole responsibility for all advertising, marketing, andôr promotional materials used in
connection with the Regional Advertising Program
(d)
On or before the tenth (10^) day of each calendar month, Franchisee shall pay to
Franchisoracontinuing monthlyadvertising fee in an amount up to or equaltofour percent (4^) of
Gross Sales (the "RAP Fee"). FheRAPFee shallbe determined by Franchisorinits sole discretion from
time-to-time during theFerm, but shall not exceed four percent(4^)of Gross Sales.
(e)
The RAP Fee shall be used exclusively by Franchisor in connection with any and
all costs incurred in connection with the Regional Adverhsing Program including, without limitations
maintaining, direchng, and preparing advertising materials such as the preparahon and coordination of
P A G F ^ FA
revision, radio, magazine, direct maii, and newspaper advertising campaigns, outdoor biiiboard
advertising; marketing surveys andother publics
agencies to assist in the Regional Advertising Program; (iii) the preparation and distribution of
promotional brochures and other marketing materials in connection with the Regional Advertising
Program; (iv) the cost of developing and maintaining any website(s) related to the Regional Advertising
Program; (v) reasonable administrative costs and overhead incurred by Franchisor in activities reasonably
related to the admirdstration or direction of the Regional Advertising Program; and (vi) such other items
as may be set forth in the RAP Guidelines.
(f)
In the event the RAP Pee is set by Franchisor at an amount less than four percent
(4^) of Gross Sales, then Franchisor may require Franchisee to spend an amount equal to the difference
between tbe acmal RAP Fee and four percent(4^)of Gross Sales on local advertising for the benefit of tbe
Franchised Restaurant (asdesignatedbyFrancbisorandallsuchlocaladvertisingshallhe subject to
AttachmentGand Francbisor'sprior written approval). Franchisee shall have the discretion to expend
such funds as and when Franchisee reasonably deems appropriate, so long as the Franchisee's
expenditure schedule is acceptable to Franchisor in its reasonable discretion.
(i)
Within 15 days after the expiration of each fiscal quarter.
Franchisee shall submit to Franchisor written documentation to show that
Franchisee has complied with this Section lF3(f) and such documentation shali
be signed and certified byFranchisee and Managing Gwner as true, complete,
and accurate. In the event Franchisee does not comply with this Section lF3(f)
andôr i n the event Franchisee fails to spend the required amount onlocal
advertising approved by Franchisor for the benefit of the Franchised Restaurant,
then such failure shall constituteadefault by Franchisee and, in addition to any
other rights available to Franchisor under this Franchise Agreement, Franchisor
may require the Franchiseeto remit such fundstoFranchisor and Franchisor
shall spend such funds on local advertising for tbe Franchised Restaurant.
(ii)
Franchisee shall submit toFranchisor such other statements or
reports as may be reasonably required by Franchisor in connection with tbe
Regional Advertising Program.
(g)
Franchisor,in its sole discretion,mayexcludeGhili'sRestaurants operatedby
Franchisorfrom the Regional Advertising Program and may grant to Franchisee(or, any other franchisee
intheRegional AdvertisingProgram) a n e x e m p t i o n f o r a n y l e n g t b o f time from tbe requirement of
membership in the Regional Advertising Program, upon written request stating reasons supporting such
exemption. Franchisor may require asacondition of granting such exemption that Franchisee comply
with Section 11.2; provided that Franchisor may require Franchisee to spend an amount equal to such
amounts as Franchisee would have otherwise been obligated to pay under this Section 11.3. Franchisor's
decision concerning such request for exemption shall be final.
Section 11.4
National AdvertisingProgram. In the event Franchisor requires Franchisee to
participate in the "National Advertising Program'',then Franchisee shall complywith this Section 1F^^
(a)
Gn or before the tenth (10^) day of each calendar month, Franchisee shall pay to
Franchisoracontinuing monthly advertising fee in an amount u p t o or equalto four percent ( 4 ^ ) o f
P A G E ^ FA
Gr055 S 8 ^ ^ " N A P F e ^ The
time to hme during the Te^^
(h)
The Nahonai Advertising Program shall be organized, governed, and
aeeordanee with written guidelines prepared and approved in advance hy Franchisor (the "NAP
Guidelines") and Franchisor shall be responsible for maintaining and administering advertising
programs in accordance with the NAP Guidelines. No advertising or promotional plans or materials may
b e u s e d b y theNational Advertising Frogramor furnished t o i l s members without tbe prior written
consent of Franchisor. Further, Franchisor shall direct all advertising and production programs in tbe
National Advertising Program and Franchisor shall have sole responsibility for all advertising,
marketing, andôr promotional materials used in connection with tbe National Advertising Program all
as determined by Franchisor in its sole discretion.
(c)
The NAP Fee shall he used exclusively by Franchisor in connection with any and
aii costs incurred in connecbon with tbe National Advertising Program inciuding, without limitation,^
maintaining, direchng, and preparing advertising materials such as the preparation and coordination of
television, radio, magazine, direct mail, and newspaper advertising campaigns, outdoor billboard
advertising; marketing surveys and other public relations achvities;(ii) the employment of adverts
agencies to assist in the National Advertising Program; (iii) the preparation and distribution of
promotional brochures and other marketing materials in connection with the National Advertising
Program; (iv) the cost of developing and maintain
Program; (v) reasonable administrative costs and overhead incurred by Franchisor in activities reasonably
related to the administration or direction of the National Advertising Frogram; and (vi) such other items
as may be set forth in the NAF Guidelines.
(d)
f n the event Franchisor requires Franchisee to participate in the National
Advertising Frogram, Franchisor may alsorequire Franchisee to participate inaRegional Advertising
Frogram (if suchaprogram exists for the Franchised Pestanrant) and, in such event, Franchisor reserves
the right to allocate the NAP Fee between the National Advertising Program and the Regional
AdvertisingProgram.
(e)
In the event the NAP Fee is set by Franchisor at an amount less tban four percent
(4^) of Gross Sales, then Franchisor may require Franchisee to spend an amount equal to the difference
between the actual NAP Fee and four percent (4^) of Gross Sales on local advertising for tbe benefit of
the Franchised Restaurant (as designated by Franchisor and all such local advertising shall be subject to
AttachmentGand Francbisor'sprior written approval). Franchisee shall have the discretion to expend
such funds as and when Franchisee reasonably deems appropriate, so long as the Franchisee's
expenditure schedule is acceptable to Franchisor in its reasonable discretion.
(i)
Within 15 days after the expiration of each fiscal quarter.
Franchisee sball submit to Franchisor written documentation to show that
Franchisee has complied with this Section lF4(e) and such documentation shall
be signed and certified by Franchisee and Managing Gwner as true, complete,
and accurate. In the event Franchisee does not comply with this Section lF4(e)
andôr in the event Franchisee fails to spend the required amount onlocal
advertising approved byFranchisor for the benefit of the Franchised Restaurant,
then such failure shall constituteadefault by Franchisee and, in addition to any
other rights available to Franchisor under this Franchise Agreement, Franchisor
may require the Franchisee t o r e m ^
shaii spend such funds on ioeai advertising for the Franchisee Restaurant
(ii)
Franchisee shaiisuhmit toFranchisor such other statements or
reports as may he reasonably required hyFranchisor inconnection with such
local advertising.
Section
Administration of Advertising Programs. Franchisor reasonably anticipates
that the RAF Fee or the NAF Fee (as the case may be) shall be expended for advertising andôr
promotional purposes as described hereinduringFrancbisor's fiscal year within which suchfees are
received. In the event excess amounts remain in such advertising program at the end of such fiscal year,
then allexpendituresinthefollowingfiscalyear(s)shall he made firstout of accumulated fees from
previous years and then from fees collected during the current year.
(a)
Fhe Regional Advertising Frogram andôr tbe National Advertising Frogram are
operated asaconduit for the collection and expenditure of advertising fees for the purposes stated herein.
An unaudited statement of the operations of the Regional Advertising Fund andôr the National
Advertising Fund shall be prepared annually byFranchisor and sball be made available to Franchisee
upon Franchisee'srequest.
(b)
Franchisor reserves the right to terminate the Regional AdvertisingProgram
andôr the National Advertising Program; provided that such program(s) shall not be terminated until all
monies in suchprogramsbavebeen expended for advertising andôrpromotionalpurposes or other
appropriate arrangements have heen made with respect to such monies.
Section
Advertising Standards and Approval. A l l advertisingand promotionby
Franchisee in any medium shall he conducted inadignified manner and shall conform to the standards
and requirements of Franchisor as set forth in the CFM or otherwise. Franchisee shall obtain Franchisor's
prior written consent to all advertising and promotional plans and materials that Franchisee desires to
use which have not been prepared or previously approved by Franchisor within one (l)year.
(a)
Franchisee sball not use any advertising, marketing, andôr promotional
materials inconnectionwiththe Franchised Restaurant unless such materials have been approvedby
Franchisor in writing.
Franchisee shall submit any unapproved advertising, marketings andôr
promotional materials to Franchisor (by personal delivery or through the mail, remrn receipt requested),
and Franchisor shall use reasonable efforts to approve or disapprove such materials within fourteen (14)
days from the date of receipt thereof by Franchisor. Franchisee shall use no such materials until they
havebeenapprovedhyFranchisorandshallpromptly discontinue use of any advertising, marketing,
andôr promotional materials upon notice from Franchisor.
(b)
F h i s S e c t i o n l l . ^ s h a l l a p p l y in all respects to the distribution anddisplay of
advertising, marketing, andôr promotional materialsinany medium (including, withoutlimitation,
print, radio,television,andthe display or use by Franchisee of advertising and promotional materials
and the Chili'sMarks on the Internet).
Sections
Internet and Flectronic Commerce.
Franchisee shall not advertise the
Franchised Restaurant over the Internet (or any other form of electronic commerce andôr electronic
media) without Franchisor's prior written consent. Franchisee shall not use the Chili'sMarks over the
F A G E ^ FA
Internet (or any other form of ele^
written consent Franchisee shall not develop, create, esta^
media which nses,andôr creates any association with,the System andôr the ChiiFsM^
any abbreviation, acronym, phonetic variation, or visual variations
(a)
A l l domain names using, andôr creating any association with, the System andôr
the Chili'sMarks (including anyabbreviation,acronym,phonetic variation, or visual variation) sball be
registered inFranchisor'sname. Franchisor may grant to FranchiseeanonDexclusivelicense touse
domain name(s)selected by Franchisor for Franchisee'suse in accordance with this Franchise Agreement
Franchisee shall not register any domain name in any class or category that uses or creates any association
with the System andôr Chili'sMarks (including any abbreviation, acronym, phonetic variation, or visual
variation) without Francbisor'sprior written consent
(b)
Franchisee agreesthat anyconsent byFranchisor to develop, create,establish,
advertise, register, andôr use any of the Chili'sMarks over the lntemet(or any other form of electronic
commerceandôr electronic media)shall he subject to certainconditionsincluding, withoutlimitation,
requirements as to form, content, and appearance; requirement of a hypertext link to Franchisor's
wehsite(s); prohibitions onhypertextlinks to third partywebsites; and other requirements, r e s ^
and prohibitions deemed necessary by Franchisor.
(c)
Cn termination or expiration of this Franchise Agreement or in the event
Franchisee fails to comply with thisSection lF7,thenFranchisor shallhavetheright (inadditionto
Franchisor'sother rights and remedies hereunder) to revoke its consent toFranchisee'sdevelopment,
creahon, establishment, advertisement, registration, andôr use any of the Chili'sMarks over the Intern
or any other form of electronic commerce andôr electronic media (including, witbouf limitation,
wehsite(s) and domain names) and, in such event. Franchisee shall immediately cease all such activities
and shall immediately take all actions reasonably required to disassociate Franchisee from all such
activities.
Section
FroductionFee. Regardless of the advertising program in which Franchisee is
participating (and i n a d d i t i o n t o the FAFFee, RAFFee, or theNAFFee), Franchisee shall pay to
Franchisoracontinuing monthly production fee in an amount equal to one-half of one percent ( ^ ^ ) of
Cross Sales (the "Production Fee"). Fhe Production Fee shall be used by Franchisor exclusively for the
purpose of maintaining,administering,directing,andpreparingadvertisingandpromotional activities
for tbebenefit ofthe System, including, butnotlimited to, creative costs associated therewith.
Section
Advertising Fee. Fhe term"AdvertisingFee"shall be deemed to mean the FAF
Fee,RAFFee,ortheNAFFee(asthecasemaybe)andtheFroductionFee.
P A G E ^ FA
Section FLIP C o p y r i g h t Franchisceacôwiedgos that Franchisor or its aîh^^
worldwide copyright and other ownership rights to the CFM, and a i i c o m p o n ^
written, electronic, andôr magnetic media snhject to c o p y r i g h t ^ o i i c c t i v c l y , ^
Franchisee acknowledgesar^d agreesthat it mayonly make modifications to the Copyright Materials
npon receiving the prior written consent of Franchisor. Franchisee agrees to use proper copyright and
other proprietary notices inconnectionwithallCopyright Materials or translations,modifications or
adaptationsoftheCopyrightMaterials and conform to Franchisor'sstandards for protecting its rights.
Franchisee agrees to promptly cause the executionof any assignments, waivers of rights, or other
documents, and take any further actions needed or advisable to ensure that Franchisor has such copyright
and other rights described in this SectionlFlO.
ARTICFF^
INSURANCE
Section 12B1
Fiahihtyfnsurance. During theFerm,Franchisee shall maintain,at its cost,
comprehensive general liability insurance, including broad form contractual liability, broad form
property damage, personal injury,completed operations, products liability and fire damage coverage, in
the amount o f F w o Million Dollars ^2,000,000) per oc^rrence for bodily injury and prop
F w o M i l l i o n Dollars ^ , 0 0 0 , ^ f o r l i q u o r l i a b i l i t y a n d F h r e e M ^ ^
^ ^ t ^
^ ^ ^ e e ^ i i ^ ^ ^
reôn^yreîr^byFr^bis^r
Section
Property Insurance. DuringtheFerm, Franchiseeshall maintain, atits sole cost
and expense,propertyinsurance againstdamageorloss byhre and such other hazards (including without
limitabon, earthquake, lightning,windstorm, hail, explosion, riot, civil commotion,vandalism
mischief, aircraft,vehicle and smoke) on an "all risk" basis on the Franchised Restaurant in an amount
less thanthe full replacementvalue thereof.
Sections
Worker's Compensatmn Insurance. During tbe Ferm, Franchisee sball subscribe
to the workers'compensation law inthe stateinwhichtheFranchised Restaurant islocated and sball
maintain, at its sole cost, workers' compensation and employers' liability insurance covering all of
Franchisee's employees w i t h e m p l o y e r ' s l i a h i l i ^
^500,000) foreach bodilyinjury by accident andFive Hundred Thousand Dollars ^^^^
injury of an employee by disease, and Franchisee is required to carry this insurance regardless of waiver or
exemption of coverage under applicable state statute.
Section 1^.4
Builder's Risk Insurance. Inconnectionwithany construction,renovation,
refurbishment or remodeling of the Franchised Restaurant, Franchisee shall maintain''all risks''^
Risk insurance and performance and completion bonds in forms and amounts, and written byacarrier or
carriers, reasonably satisfactory to Franchisor.
Section 12.5
Automobile Insurance. During the Ferm, Franchisee shall maintain, at its cost,
automobile liability insurance for all owned, non-owned and hired vehicles covering b o d i l y ^
and property damage with a minimum combined single coverage limit of Cue Million Dollars
^1,000,^)
Secti^ml2.8
Fxcesslnsurance. During theFerm,Franchisee shall maintain,at its cost,
commercial umbrella liability or excess liability insurance w i t h a m i n i m u m limit of Five Million
(^000,000) per occurren^
babihty and employers E ^
Sedionl^
Additional Insurance P o h d e ^ D u r i n g the Term.
at its cost, such additionaiinsnraneepeiieiesasareasonahly prudent franchisee would mainta^
reasonably required hy Franchisor.
Section
Policy Requirements. All insurance policies required under this Article 12 will
contain provisions to the effect that the insurance will not he canceled or modified without at least 30
days prior written notice toFranchisor andthatnomodification will he effective unless approvedin
writing byFranchisor. A l l such policies will be issued byacompany or companies, rated"A"or better by
Best'slnsuranceGuide, responsibleand authorized to d o b u s i n e s s i n t h e s t a t e i n which Franchised
Restaurant is located, as Franchisee may determine, and as approved by Franchisor, which approval will
not be unreasonably withheld.
(a)
A l l insurance policies required hereunder, with the exception of Workers'
Compensahon Insurance, shall name Franchisor, its a f ^
officers, directors, shareholders, partners, employees, servants, representatives and agents) as additional
insureds and sball expressly provide that any interest of same therein shall not be affected by any breach
by Franchisee of any policy provisions. In addition, all insurance policies required hereunder shall waive
subrogation in favorof Franchisor, its affiliates,successorsandassigns(andtheir respective officers,
directors, shareholders, partners, employees, servants, representatives and agents).
(b)
Franchisee may elect tobave reasonabledeductiblesinconnection with tbe
insurance coverage required under Sections 12.1, 12.2,12.5 and 12.6 subject toareasonable evaluation of
Franchisee'sfinancial strength as compared to suchdeductiblesandotherwise subject toFranchisor's
prior written consent. Franchisee may not agree to sublimits in the insurance policies required by this
Article 12 without the prior, written consent of Franchisor.
(c)
Franchisee'sobligation to maintain the insurance policies under this Articlel2
shall not (i) release Franchisee from its obligations under the indemmty provisions set forth in Arties
or (ii) be limited by reason of any insurance which may be maintained by Franchisor.
(d)
Franchisor reserves the right to reasonably revise andôr reasonably increase the
insurance coverages required under this Article 12 and Franchisee shall promptly comply with any such
revisions andôr increases.
(e)
plotless than once per year. Franchisee shall deliver to Franchisor certificates of
insurance evidencing the insurance coverages required under this Article 12. Franchisee shall also deliver
such certificates andôr copies of such insurance policies within 10 days after Franchisor'srequest.
Sections
Franchisor'sRightto Frocnre Insurance. In theeventFranchisee fails tocomoly
with this Arhcle 12, then (in addihon to any other remedies available to Franchisor under tlusFranchi^^
Agreement),Franchisor shall have the right (but not the obligahon) to procure such insurance
Franchisee'sbehalf and to charge same to Franchisee, which charges, together withareasonable fee for
Franchisor'sexpenses in so acting, shall be payable by Franchisee immediately uponnotice.
F A G F ^ FA
ARTICLED
TRANSFERAND ASSIGNMENT
Section 13BI
Transfer by Franchisor Franchisor shaii have the right to transfer or assign this
Franchise Agreement and aii or any part of its rights or o ^
the GhifFsMarksandôrtheSystem) to any person or iegai entity and, in snch event, (i) the transferee or
assignee shaii he soieiy responsible for aii of Franchisor'sohiigations hereunder arising after the date of snch
transfer or assignment and (ii) Franchisor shall be released of its obligations hereunder to tbe extend
obligations arise after the date of such transfer or assignment. Franchisee expressly and specifically waives
any claims, demands, or damages against Franchisor in connection therewith.
(a)
Without limiting the foregoing. Franchisee agrees that Franchisor may (i) sell its
assets, the GhilFsMarks or the System t o a t h i r d party; (ii) offer its securihes privately or p u b ^
merge, acquire other corporations or be acquired by another corporation; andôr (iv) undertake a
refinancing, recapitalization, leveraged buyout or other economic or financial restructuring, and
Franchisee expressly and specifically waives any claims, demands, or damages against Franchisor in
connection therewith.
(b)
Nothing contained in this Franchise Agreement shall require Franchisor to offer
any services or products, whether or not bearing the GhilFsMarks, to Franchisee if Franchisor transfers or
assigns its rights in this Franchise Agreement.
Section 13.2
Transfer hyFranchisee. Franchisee agrees the rights and duties set forth in this
Franchise Agreement are personal to Franchisee and that Franchisor entered into this Franchise
Agreementinreliance on the business skill, financial capacity and personal character of the Franchisee
and Franchisee'sCwners.
(a)
Franchisee andôrFranchisee'sCwners shall not(i) sell, assign, transfer, convey,
give away,gift, pledge, mortgage or otherwise encumber any direct or indirect interest in this Franchise
Agreement andôr the Chili'sMarks and (ii) shall not grantasecurity interest or collateral interestint^^
Franchise Agreement andôr Chili'sMarks. Franchisee andôrFranchisee'sCwners shall not sell, assign,
transfer, convey,giveaway,pledge, mortgage or otherwise encumber any direct or indirect interestin
Franchisee andôr the Franchised Restaurant without tbe prior writtenconsent of Franchisor which
Franchisor may condition upon any or all of the requirements set forth in this Section 13.2 (as determined
by Franchisorinits sole discretion).
(h)
Any purported assignment, transfer, conveyance, give away, gift, pledge,
mortgage or other encumbrance (by operationof laworotherwise)byFranchiseeandôrFranchisee's
C w n e r s w h i c h d o e s n o t c o m p l y w i t h t h i s A r t i c l e l 3 ( i n c l u d i n g , withoutlimitation, the prior written
consentofFranchisor)sballhenullandvoid and shall constitute an event of defaultunder Sections.2(a)
of this Franchise Agreement.
Section 1^3.3
Conditions for Approval. Franchisor shall not unreasonably withhold its
consent to a transferof any interest inFranchisee, thisFranchise Agreement, andôr theFranchised
Restaurant; provided Franchisor may, i n its sole discretion, require any or all of the following as
conditions precedent to its approval (and Franchisee agrees that all such conditions are reasonable and
necessary).
PAOE^-FA
(^
AE of Franchisees accrued monetary ohhgations and aii other outstanding
ohhgations to Franchisor, its subsidiaries and its affiliates shaii have heen satisfied.
(h)
Franchisee is not in default of any provision of this Franchise Agreement, any
amendment hereof or successor hereto, or any other agreement between Franchisee and Franchisor, or its
subsidiaries and affiliates.
(c)
Franchisee, Franchisee's Owners, and the proposed transferor shall have
executedageneralrelease, i n a f o r m satisfactory to Franchisor, of any and all claims against Franchisor,
its subsidiaries and affiliates, successors and assigns and their respective officers, directors, shareholders,
parmers, employees,servants, representatives and agents,in their corporate and individualcapacities,
including,withoutlimitahon, claims arising under this Franchise Agreement and federal, state and local
laws, rules and ordinances.
(d)
Fhe proposed transferee shall enter into a written agreement, in a form
satisfactory toFranchisor,assumingfull,unconditional,jomt and several liability for and agreeing to
perform from the date of the transfer, all obligations, covenants and agreements contained in this
Franchise Agreement; and, if transferee is a corporation or apartnership, transferee's shareholders,
parmers or other investors, as applicable, shall execute such agreement as transferee'sowners and shall
guarantee the performance of all such obligations, covenants and agreements in writing i n a form
satisfactory to Franchisor.
(e)
Fhe proposed transferee shall demonstrate to Franchisor'ssatisfaction that such
transferee meets the criteria considered by Franchisor when reviewing a prospective franchisee's
application forafranchise including but not limited to Franchisor'seducational, managerial and business
standards; transferee'sgood moral character, business reputation and credit rating; transferee'saptitude
and ability to operate the Franchised Restaurant in accordance with this Franchise Agreement's may be
evidencedby prior relatedbusinessexperienceorotherwise);transferee'sability, financialresources,
infrastrucmre, and capital for operahonofamulti-unitrestaurant business; and the geographic p ^
of other C h i l i ' s O r i l l ^ B a r restaurants owned or operatedby transferee and the t e r r i t o ^
respect to which transfereeisobligated to develop Chili's Orill^Barrestaurantspursuant t o a n y
development agreement between Franchisor and Franchisee,inrelation to the Franchised Restaurant.
(f)
Fhe proposed transferee shall execute, foraterm ending on the expiration date of
this Franchise Agreement and with such renewal term as may be providedby this Franchise Agreement,
the standard form franchise agreement then being offeredto new franchisees in the System andother
ancillary agreements as Franchisor may require;and if transfereeis acorporationor aparmership,
transferee's shareholders,parmers or other investors, as applicable, sball execute such agreements as
transferee's principals and shall guarantee tbe performance of all such obligations, contracts and
agreements in w r i t i n g i n a form satisfactory to Franchisor. Such agreements shall supersede this
Franchise Agreement and its ancillary documents in all respects and the terms of such agreements may
d i f f e r f r o m t h e t e r m s o f thisFranchise Agreement,including, without limitation,ahigher percentage
royalty fee,ahigher percentage technical services fee andahigher advertising contribution; provided,
however, that the transferee shall not he required to pay any initial franchise fee.
(g)
Fhe proposed transferee, at its expense, shall remodel andôr upgrade the
Franchised Restaurant to conform to the Current Image and then current standards and specifications of
P A G E ^ FA
tbe System and sbaE complete sucb remodelmg andôr npgradmg witbm tbe time specified by
Franebisor.
(b)
Erancbisee, Franchisee'sCwners, and tbe proposed transferor sball remain b^
for all of tbe obligations and liabilities related to tbis Franchise Agreement andôr the Franchised
Restaurant prior to the effective date of the transfer and sball execute any and all instrnments reasonably
requested by Franchisor to evidence such liability.
(i)
Fhe proposed transferee, tbe transferee'smanager and the transferee'soperating
parmershall complete, at transferee'scost, any training programs then in effect for franchisees upon such
terms and conditions as Franchisor may reasonably require.
0)
Franchisee shall payatransfer fee of Five Fbousand and 00^00 Dollars ^ 5 , 0 ^
or such greater amount asisnecessarytoreimhurseFranchisor for itsreasonablecostsandexpenses
associated with any transfer of this Franchise Agreement, including, without limitation, legal and
accounting fees (in addition to any other transfer fees that may be payable under applicable Development
AgreementandôrFranchiseAgreement(s^providedthatthe total transfer fees payable to Franchisor in
connection with any single transfer shall not exceed ^,000.00).
(k)
If the proposed transferee isacorporationoraparmership, then transferee sball
make and will be bound by any or all of the representations, warranties and covenants set forth in Article
6andFransfereeshallprovide to Franchisor evidence satisfactory to Franchisor that the terms of Articled
have heensatisfied and are true and correct on the date of transfer.
(1)
Franchisee, Franchisee's Cwners, and the proposed transferor and transferee
shall comply with any other conditions that Franchisor reasonably requires from time to time as part of
Franchisor'stransfer policies including,without limitation, evidence of landlord consent, subordinab^
of purchase price to monetary obligations under this Franchise Agreement, execution of confidentiality
and non compete agreements, etc.
Section
No Security Interest. Franchisee shall not grantasecurity or collateral interest in
tbis Franchise Agreement, the System, andôr the Chili'sMarks. Franchisee shall not grantasecurity or
collateral interest in the Franchised Restaurant,without Francbisor'sprior written consent,whicbsba^
not he unreasonably withheld. In connection therewith, the secured party will be required by Franchisor
to agree that in the event of anydefaultbyFranchisee under any documents related to the security
interest. Franchisor shall have the right and option (but not the obligation) to be substituted as obligor to
the secured party and to cure any default of Franchisee.
Sectinnl^
Transfer for Convemence of Ownership. Any proposed assignment andôr
transfer of this Franchise Agreement by Franclusee to an affiliated or subsidiary corporahon or other
entity formed by Franchisee solely for the convenience of ownership shall be subject to Francbisor'sprior
written consent which Franchisor may condition upon any or all of tbe requirements set forth in Section
13.2 (as determined by Franchisor in its sole discretion). With respect to any proposed assignment or
transfer under this Section 13.5, Franchisee shall be the owner of all of tbe voting stock or interest of such
corporation or entity and if Franchisee is more than one individual, each individual shall have the same
proportionate ownership interest in the corporation or entity as such individual bad in Franchisee prior
to the transfer.
F A G E ^ FA
Sedionl^
Right of Ffrst Refusal Tho "Right of First Refuse" attached hereto as
AttachmentEisherehy incorporated ioto this Franchise Agreement
Sections
Transfer Upon Death or Permanent Disahitity
(a)
Upon the death o f a n y person with aninterestin thisFranchise Agreement
andôr Franchisee (the "Deceaseds the executor, administrator or other personal representahv^
Deceased shall transfer such interest t o a t h i r d party approved hy Franchisor within twelve (12) mont^^
after the death. If no personal representative is designated or appointed or no probate proceedings are
instituted with respect to the estate of the Deceased, then the distrihuteeof such interest musthe
approvedhy Franchisor. If thedistrihuteeisnotapprovedhyFranchisor, thenthedistrihutee shall
transfer such interest t o a t h i r d party approved byFranchisor within twelve (12) months after the death of
the Deceased.
(h)
Uponthepermanent disability of any person with an interestintbis Franchise
Agreement or Franchisee, Franchisor may,inits sole discrehon, require such interest to be transferred to
athird party in accordance with the conditions described in this Article 13 within six (6) months after
notice to Franchisee. "Permanent disability" shall mean any physical, emotional or mental injury,illness
or incapacity which would preventaperson from performing the obligations set forth in tbis Franchise
Agreement or in the Guaranty attached to this Franchise Agreement for at least ninety consecutive days
and fromwhich condition recovery within ninety days from the date of determination of disability is
unlikely. Permanent disability shallbe determinedby alicensedpracticingpbysicianselectedby
Franchisor upon examination of the person; or if the person refuses to submit to an examination, then
such person shall be automatically deemed permanently disabled as of tbe date of such refusal for the
purpose of this Article 13. Fhe costs of any examination required by tbis Section 13.7(b)sball be paid by
Franchisor.
(c)
Upon the death or claim of permanent disability of any person with an interest in
this Franchise Agreement andôr Franchisee, Franchisee orarepresentative of Franchisee must promptly
notify Franchisor of such death or claim of permanent disability. Any transfer upon death or permanent
disability shall be subject to the same terms and conditions as described in this Arhcle 13 for any i n ^
vivos transfer. If ^n interest is not transferred upon death or permanent disability as required in this
Section 13.7,then Franchisor may terminate this Franchise Agreement.
Section 13.8
Non-Waiver of Claims. Franchisor'sconsenttoatransfer of any interest under
this Articlel3 shall not constituteawaiver of anyclaims it may have against transferor nor sball it be
deemedawaiver of Franchisor'sright to demand exact compliance with any of the terms of this Franchise
Agreement by the proposed transferee.
Section 13.9
Offerings hy Franchisee. Securities or parmership interests in Franchisee may
be offered to the public by private offering or otherwise, only with tbe priorwritten consent o f F r a n c h ^
(whether or not Franchisor's consent is requiredunder this Article 13), whichconsent shallnotbe
unreasonably withheld. A l l materials required for such offering hy federal or state law shall be submitted
to Franchisor f o r a l i m i t e d review as discussed below prior to their being filed with any governmental
agency; and any materials to be usedinany exempt offering shall be submitted to Franchisor for such
review prior to their use. No Franchisee offering shall imply (by use of the Chili'sMarks or otherwise)
that Franchisor isparhciparing in anunderwriting,issuance or offering of Franchisee orFranchisor
securities; and Franchisor'sreview of any offering shall he limited solely to the subject of the relationship
P A G E ^ FA
between Franchisee and Franchisor Franchisormay at its option, require Franchisee'sofrering materials
to contain a written statement prescrihedhy Franchisor concerning the limitationsdescrihed i n t h e
preceding sentence. Franchisee and the other participants in the offering must folly indemnify Franchisor
in connection with the offering. For each proposed offering. Franchisee shall pay to Franchisor a
non-refundahle fee ofFenFhousand and 0 0 ^ 0 0 ^
Franchisee shall give Franchisor
written noticeat least thirty ^ 0 ) d a y s prior tothe date of commencement of anyoffering or other
transaction covered hy this Section 13.9.
ARTtCFF14
DFFAUFTANDTFRMINATION
Section 14.1
OhllgationsMateriaF Franchiseeacknowledges and agrees that eachof the
Franchisee'sohligations described in this Franchise Agreement isamaterial and essential obligation of
Franchisee; that nonperformance of such obligations will adversely and substantially affect the Franchisor
and the System; and agrees that the exercise by Franchisor of the rights and remedies set fortb herein are
appropriate and reasonable.
Section 14.2
Default and AutomaticFermination. Facb of the following shall be deemed an
eventof default hyFrancbiseeand,uponsuchdefault, thisFranchise Agreement shallautomatically
terminate without notice to Franchisee or cure period.
(a)
Franchisee shall become insolvent or makesageneral assignment for the benefit
of creditors. Any purported assignment, transfer, conveyance, give away,gift, pledge, mortgage or other
encnmbrance (by operation of law or otherwise) by Franchisee andôr Franchisee'sCwners which does
not comply with Article 13.
(b)
Franchisee files a voluntary petition (or an involuntary petition involving
Franchisee is filed) under any section or chapter of federal bankruptcy laws or under any similar law or
stamte of the United States or any state thereof, or admits in writing its inability to pay its debts when
due or Franchisee is adjudicatedabankruptor insolvent in proceedings filed against Franchisee under
any section or chapter of federal bankruptcy laws or under any similar law or statute of the United States
or any state thereof.
(c)
If a bill in equity or other proceeding f o r t h e appointment of a receiver of
Franchisee or other custodian for Francbisee'sbusiness or assets is filed andconsented toby Franchisee.
Ifareceiveror other custodian (permanent or temporary) of Franchisee'sassets or property,or any part
thereof, i s a p p o i n t e d b y a n y c o u r t o f competent jurisdiction. If proceedingsforacompositionwith
creditors under any state or federal law should be instituted by or against Franchisee. I f a f i n a l judgment
remainsunsatisfiedorof record for thirty (30) days orlonger (unless supersedeasbondis filed). If
Franchisee is dissolved or if execution is levied against Franchisee'sbusiness or property. If suit or other
proceeding to foreclose any lien or mortgage against the Franchised Restaurant(or equipment therein) is
inshmted against Franchisee and not dismissed within thirty (30) days or if the real or personal property
of Franchisee's Restaurant shall he sold after levy thereupon by any sheriff or other person with
competent jurisdiction.
(d)
Franchisee or any of Franchisee'sCwners (i) violates any"Anti-FerrorismFaws",
as defined below,(ii) is listed under any such Anti-FerrorismFaws, (iii) has any dealings with any person
FAGF^DFA
listed under any such Anti-Terrorism Laws, and/or (iv) assets are blocked under any such Anti-Terrorism
Laws.
(i)
The term "Anti-Terrorism Laws" means Executive Order 13224 issued by
the President of the United States, the Terrorism Sanctions Regulations (Title 31, Part 595
of the U.S. Code of Federal Regulations), the Foreign Terrorist Organizations Sanctions
Regulations (Title 31, Part 597 of the U.S. Code of Federal Regulations), the Cuban
Assets Control Regulations (Title 31, Part 515 of the U.S. Code of Federal Regulations),
the USA PATRIOT Act, and all other present and future federal, state and local laws,
ordinances, regulations, policies, lists and any other requirements of any Governmental
Authority (including, without limitation, the United States Department of Treasury
Office of Foreign Assets Control) addressing or in any way relating to terrorist acts and
acts of war.
fiprfinn 14.3
Other Defaults bv Franchisee. Each of the following shall be deemed an event
of default by Franchisee under this Franchise Agreement.
(a)
Franchisee ceases to operate or otherwise abandons the Franchised Restaurant
for three (3) consecutive days unless the Franchised Restaurant has been closed (i) for a purpose that has
been expressly approved in writing by Franchisor; (ii) due to governmental order; or (iii) due to fire,
flood, other casualty, or other catastrophic forces beyond Franchisee's control; provided (1) such event
was not caused by Franchisee's intentional and/or negligent acts, (2) that Franchisee applies within thirty
(30) days after such event, for Franchisor's approval to relocate or reconstruct the Franchised Restaurant
(which approval shall not be unreasonably withheld), and (3) Franchisee thereafter diligently pursues
such reconstruction or relocation, and (4) any such approval may be conditioned upon the payment of an
agreed minimum royalty to Franchisor during the period in which the Franchised Restaurant is not in
operation.
(b)
Franchisee (i) breaches the lease agreement for the Location and/or loses the right
to possession and/occupancy of the Location, and/or (ii) loses the right to transact business in the
jurisdiction where the Franchised Restaurant is located.
(c)
Franchisee or any of Franchisee's Owners is convicted (regardless of any pending
appeal) of a felony, a crime involving moral turpitude, or any other crime or offense that Franchisor
believes is reasonably likely to have an adverse effect on the System, the Chili's Marks, the goodwill
associated therewith, or Franchisor's interest therein. Submission by Franchisee or any of Franchisee's
Owners of a franchise application and/or management commitment form (or other documentation
required under this Franchise Agreement) which contains any material false or misleading statements or
omits any material fact.
(d)
Franchisee or any of Franchisee's Owners engages in conduct that is deleterious
or reflects unfavorably on Franchisor, the System, the Chili's Marks, and/or the goodwill associated
therewith including, without limitation, conduct which exhibits a disregard for the physical and mental
well-being of employees, customers. Franchisor's representatives, the public at large (e.g., battery, assault,
sexual harassment, discrimination, and other forms of threatening, outrageous, or socially unacceptable
behavior).
PAGE 45 - FA
(e)
Franchisee fails to comply with t ^
health, safcty,or sanitation law,rulc, or regulation relating to clcardincssan^
Restaurant Franchisee's construction, maintenance, andôr operation of the Franchised Restaurant
representsathreat or danger to puhlic health or safety
(f)
Franchisee misuses or makes any unauthorized use of the Chili's Marks or
otherwisemateriallyimpairs the goodwill associated therewith or Franchisor'srights therein.
(g)
Franchisee andôr any of Franchisee's Cwners enters into a suhfranchise
agreement,managementagreement, consulting arrangement, suhcontractingarrangement,outsourcing
arrangement, or any other similar arrangement relating to this Franchise Agreement andôr the
FranchisedRestaurant
(h)
Franchisee fails to pay the Franchise Fee, Monthly Fee, Advertising Fee, andôr
any other amounts due hereunder.
(i)
Withoutlimitation t o S e c t i o n l 4 ^ h ) ahove, for allpurposes
under this Franchise Agreement, any failure hy Franchisee to pay the Royalty Fee
in full as and when due (without any retention, deduction, credit, andôr offset
whatsoever,exceptany deduction andôr credit expressly permittedunder the
definition of Cross Sales in Section 4.2(e) above) shall automatically he deemeda
failure to pay the Monthly Fee and an event of defaultbyFranchisee under this
Franchise Agreement Likewise, ^ f a i l u r e b y Francbiseetopay theFecbnical
Services Fee in full as and when due (without any retention, deduction, credit,
andôr offset whatsoever, except any deduction andôr credit expressly
permitted under the definition of Cross Sales inSection4.2(e) above) shall
automatically be deemedafailure to pay the Monthly Fee and an event of default
by Franchisee under this Franchise Agreement
(i)
Franchisee andôr any of Franchisee'sCwners fails to comply with any provision
of this Franchise Agreement
(j)
Franchisee repeatedly fails to comply with the provisions of this Franchise
Agreement (whether ornot cured after notice).
(k)
Franchisee has not opened the Franchised Restaurant for business to the general
publicwithin 180 days from the FffectiveDateofthis Franchise Agreement.
Sections
Remedies for D e f a n l t h y Franchisee. In the event o f a d e f a u l t under Section
14.3, tbenFranchisor may,atits option, elect any oneormore of the followingremedies.
(a)
With respect t o a d e f a u l t under Section 14.3(c), Franchisor may terminate this
Franchise Agreement immediately uponwritten noticewhich notice shallspecify the nature of the
default(s). With respect t o a d e f a u l t under Section 14.3(d), Franchisor may terminate this Franchise
Agreement upon three (3) days priorwrittennoticewluch notice shall specify the nature of the d e f a u ^
In the event Franchisee cures suchdefault(s) to the satisfaction of Franchisor prior to the expiration of
such3day period, then such default shall he deemed as cured and this Franchise Agreement shall not
terminate due to such default f f any suchdefault is not cured within such 3-day period, then this
F A G F ^ FA
Franchise Agreement shall termm^
expiration of the 3-day period.
(i)
With respect to other defanltsnnder Sectionl4.3, Franchisor
may terminate this Franchise Agreement npon ten (10) days prior written notice
to Franchisee which notice shall specify the nature of the defanlt(s). In the event
Franchiseecnressnchdefault(s) to thesatisfactionof Franchisor prior to the
expiration of such lO day period (or such shorter period in the event of an
emergency), thensoch default shallhe deemed as cured and thisFranchise
Agreement shall not terminate due to such default. If any such default is not
cured within such 10-day period, then this Franchise Agreement shail terminate
without further notice to Franchisee effective immediately upon the expiration
of the lO day period.
(h)
Franchisor may elect any other right or remedy available to Franchisor under this
Franchise Agreement, at law,or in equity.
Sectionl4^
NoCureFeriod. Franchisee agrees there is no cure period for any of the events
of default described in Section 14.2. Franchisee agrees there is no cure period for any of the events of
default described in Sectionl4.3 except as expressly set forth in Section 14.4. If any applicable law or rule
requiresanotice period andôracure period, then the notice period andôr cure period required under
such law or rule shall be substituted for the requirements herein.
Sectionl4^
No Waiver. Forbearance by Franchisor to enforce its rights and remedies in this
Article 14in the event ofadefault by Franchisee sball not constituteawaiver of such default and shallnot
constimteawaiver by Franchisor of its rights and remedies in this Articlel4in the event of any subsequent
defaultbyFranchisee.
Sectionl4.7
Remedies Not Exclusive. No right or remedy herein conferred upon or reserved
to Franchisor is exclusive of any other right or remedy provided or permitted by law orinequity.
Section 1^.8.
Default By Franchisor. If Franchisor defaults in the performance of any term of
this Franchise Agreement, thenFranchisee shall deliver written noticeofsuchdefault toFranchisor
within thirty (30) days after such default and such notice shall clearly and definitively specify each ac^
omission constituting such default. If Franchisee does not believe that Franchisor has cured such default
within sixty (60) days afterdelivery of suchdefault notice toFranchisor,tben Franchisee shall notify
Franchisor thatFrancbisee believessuch defaulthasnotbeencured.
If Franchiseefails t o n o t i f y
Franchisor within such 60-day period that such default has not heen cured, then such default shall be
deemed as cured.
ARTICLE 15
TERMINATION CREXFIRATICNCFFRANCHISEACREEMENT
Section l^Bl
Termination or Expiration. Upon termination or expiration of this Franchise
Agreement,Franchisee agrees that all rights and licenses grantedtoFranchisee under this Franchise
Agreement (including, without limitation, rights to use the System, the CFM, and tbe ChilF^
immediately terminate and any right, btle, and interest claimed hy Franchisee to any such matters shall
F A G E ^ FA
immediacy reveri to F r a n c h i ^
with the following ohiigatioos:
Franchisee shaE also comply
(a)
Franchisee shall immediately cease to operate theFranchised Restaurant and
shall not thereafter, directly or indirectly,represent to the pnhlic or hold itself out asapresent or formed
franchisee of Franchisor.
(h)
Franchisee shall immediately and permanently cease to use, in any manner
whatsoever, theSystem, the Chili'sMarks, theCFM,and theConfidentiallnformation. Inconnection
with the promotion, advertising, marketing, andôr operation of any other business conducted by
Franchisee,Franchisee shall not,underanycircumstances,use any reproduction,counterfeit,copyor
colorable imitation of theChili's Marks w h i c h i s l i k e l y tocause confusion, mistake, or deception, or
which is likely to dilute Franchisor's r i g h t s i n a n d t o the Chili's Marks. Franchisee shall not use any
designation of origin, description, or representation which falsely suggests or represents an association
andôrconnection(or former association or connection) with Franchisor.
(c)
Franclêe shall immediately de-identify (and make nonstrucmral changes to)the
Franchised Restaurant in accordance witha''De-ldentification Schedule''to be prepared by Franchisor so as
toreasonablydisbnguishthe building shell(andits interior) fromotherCluli'sRestaurants, except
forth in Section f5.2.
(d)
Franchisee shall immediately deliver to Franchisor the CFM, Confidential
Information, all written materials bearing the Chili'sMarks or identifying the Franchised Restaurs
computer hardware and software which may have been provided or licensed by Franchisor, such items as
may be listed in the De-Identification Schedule, and all other records, files, instructions, correspo
brochures, agreements, invoices, and other materials relating to tbe operation of the Franchised
Restaurant. Franchisee shall retain no copy or record of any of the foregoing, except Franchisee'scopy of
this Franchise Agreement and copies of any correspondence between the parties.
(e)
Franchisee shall take such actionas maybenecessary to cancel any assumed
name or equivalent registration which contains the Chili'sMarks and Franchisee shall furnish Franchisor
withevidencesatisfactorytoFranchisorof compliance w i t h t h i s o b l i g a t i o n w i t b i n f i v e ( 5 ) days after
termination or expiration of this Franchise Agreement.
(f)
W i t h i n l O days after such terminationorexpiration, Franchiseeshallpay all
sums owingtoFranchisorunder this Franchise Agreement including,without limitation, all damages,
costs (including costs under subparagraph (g) below), expenses, and reasonable attorneys'fees incurred
by Franchisor asaresult of such termination or expiration. In the event Franchisee fails to comply with
this subparagraph (f), then (in addition to any rights and remedies available to Franchisor), such failure
s h a l l g i v e r i s e t o a n d r e m a i n a l i e n i n f a v o r o f Franchisor (untilpaid in full) against any and allof the
personalproperty, fumishings,equipment, signs,fixtures,and inventory ownedbyFranchiseeat the
Franchised Restaurant (in addition to any other rights and remedies available to Franchisor under this
Franchise Agreement or applicable law).
(g)
In the event Franchisee fails or refuses to comply with the requirements of this
Section 15.1, then Franchisor shall have the right to enter the Location, without being guilty of trespa^^
any other tort, for the purpose of making or causing to be made such changes as may be required under
this Section 15.1, at the expense of Franchisee, which expense Franchisee agrees to pay upon demand.
P A G E ^ FA
Sedmnl5^
Fran^Ôprinn^Pur^
Option to Purchase the Franchised Restauranââche^
into this Franchise Agreement
"F^ch^s
Section 15.3
Snrvivah Fhe terms of this Article 15 shaii survive the termination or expiration
of this Franchise Agreement Franchisee shall pay to Franchisor all damages, costs and expenses,
including reasonahle attorneys'fees, incurred hy Franchisor subsequent to the termination or expiration
of this Franchise Agreement in ohtaining injunctive or other relief for the enforcement of any provisions
of this Article 15.
ARTICFF^
NOCOMFFTFCFAUSFANORFFATFDCOVFNANTS
Section l^Bt
Best Efforts. DuringtheFerm, Franchisee, Managing Owner andOperating
Farmer(asapplicahle)agree to devote full time and hest efforts to the management and operation of the
FranchisedRestaurant
Section ^ . 2
Receipt of Confidential Information. Franchisee and Franchisee'sOwners agree
(i) they will receive valuable specialized training and Confidential Information which is h e y o n d ^ ^
present skills and experience, and (ii) that such training and Confidential Information provide a
competitive advantage and will be valuable to them in the operation of the Franchised Restaurant, (iii)
access to such training and Confidential Information isaprimary reason for entering into this Franchise
Agreement, (iv) such training and Confidential Information are provided by Franchisor for the benefit of
tbe System and each ChilFsRestaurant under the System and (v) that the System and each such restaurant
individually and mutually benefit from Franchisee'scompliance with the covenants described below.
Section 16.3
No-Compete Clause. In consideration for such training and Confidential
lnformation(and the other benefits provided to Franchisee by this Franchise Agreement), Franchisee and
Franchisee'sCwners agree as follows:
(a)
During tbe Ferm, Franchisee and Franchisee's Owners shall not directly,
(i)
Restaurants to any Competitive Restaurant (defined below) or otherwise take
any action injurious or prejudicial tothe goodwill associatedwiththe Chili's
Marks and the System.
(ii)
employed by Franchisor or byanyother franchisee or developer of Franchisor,
or otherwise directly or indirectly induce such person to leave his or her
employment.
(iii)
Own, maintain, develop, operate, orhaveany interestinany
Competitive Restaurant
P A G F ^ FA
T h e ^ m " C o m p e t i t i v e R e 5 ^ U r a n ^ 5 h ^ be d e e m e d t O
mean
any broad-meno, casnaFdimngrestamantfeamrmgbamburge^ sandwiches,
steaks^ saiads,harbeene ribs, fajitas, andôrMexiean^Sonthwestemcnisine asa
primary menn item ineioding, without limitation, such restaurants as
Appiebee's,8eefCBrady's,Bennigan's,BTsRestaurant and Brewpub, Buffalo
Cafe, Buffalo Wild Wings, Cbeddar^^
Restaurant^Fub, Hooter's, Hops Crillhouse^Brewery,Houlihan's, Island's,
Johnny Rocket's, Logan's Roadhouse, Longhorn Steakhouse, Max ^ Erma's,
Ninety-Nine, C'Charley's,Cn The Border Mexican C r i l l ^ C a n h n a , R a f ^
RedRohm,RJCator'sFloridaFood^n-Fun,RoadhouseCrill,RuhyTuesday,
Texas Roadhouse, TCI Friday's, and Tumbleweed. The term "Competitive
Restauranf'shall also be deemedto mean any fastcasual restaurant featuring
hamburgers as a primary menu item, including, without limitation, such
restaurants as Five Cuys Burgers and Fries and Smashburger.
(b)
Commencing on (i) the expiration or termination of this Franchise Agreement or
(ii) on the date of an approved transfer of a l l o f Franchisee'sinterest in this Franchise Agreement and
continuing foraperiod of two (2) years after such date. Franchisee shall not directly,indirectly,or in any
manner whatsoever:
(i)
Restaurants to any competitor or otherwise take any action injurious or
prejudicial to the goodwill associated with the Chili'sMarks and the System.
(ii)
employed byFranchisor or by any other franchisee or developer of Franchisor,
employment.
(iii)
Cwn,maintain, develop, operate,or have any interest in any
(c)
Commencing on (i) the expiration or termination of this Franchise Agreement or
(ii) on the date which an individual or entity ceases to satisfy the definition of "Franchisee'sCwner" and
continuing for a period of two (2) years after such date. Franchisee's Cwner(s) shall not directly,
(i)
injurious or prejudicial to the goodwillassociated with the Chili'sMarks and the
System.
(ii)
Employ or seek to employ any person who is at tbat time
employed by Franchisor or by any other franchisee or developer of Franchisor,
employment.
PAGE 50 FA
(iii)
Ow^maintain, deveiop, operas orhaveany interestinany
(d)
In addition to any other rights and remedies available to Franchisor under this
FranchiseAgreementandintheeventofaviolationofSectionsl6.3(a)(ii),16.3(h)(ii),and
Franchisor may elect, in its sole discretion, to require Franchisee to pay to Franchisor an amount equal to
threes) times the annual salary of the person(s)involved in such violation plus an amount equal to costs
and attorney'sfees incurred hyFranchisorinconnection with such violation and such amounts shall be
deemed as liquidated damages.
Section 1^4
Managers and Employees. AtFranchisor'srequest, Franchisee shall require and
obtain execution of covenants similar to those set forth in this Article 16 (including covenants applicable
upon the termination ofaperson'srelationship with Franchisee) from any and all managers of Franchisee
and any other employees of Franchisee who have received or will receive training or Confidential
Information, and any bolder (except for limitedparmers)ofabeneficial interest of less tban one percent
(F^)of the securities of Franchisee and any corporation, parmership or limited liability company directly
or indirectly controlling Franchisee, if Franchisee is a corporation, parmership or limited liability
company(or of any general parmer that isacorporation, parmership or limited liability company or any
corporation, parmership or limited liability company directly or indirectly controllingageneralparmer
of Franchisee, if Franchisee is aparmership). Fhe covenants requiredby this Section 16.4 shallbe
substantially in the form contained inAttachmentB.
Section 16.5
SurvivaF Fhe terms of tbis Article 16 shall survive the termination, expiration,
o r a n y transferof thisFranchise Agreement. Fhepartiesagree tbis Articlel6shallbeconstrued as
independent of any other provision of this Franchise Agreement. If all or any portion of tbis Article 16 is
held unreasonable or unenforceable byacourt or agency having valid jurisdiction in an unappealed final
decision to which Franchisor isaparty,Franchisee and Franchisee'sCwners expressly agree to be bound
by anylesser covenant suhsumedwithin the terms of such covenant that imposes the maximnm duty
permitted hylaw,as if the resulting covenant were separately stated in and madeapart of this Article 16.
Section 1^6.6
Reduction i n Scope. Franchisee and Franchisee'sCwners agree; that Franchisor
shall have the right, in its sole discretion, to reduce the scope of any provision, or portion thereof, in tbis
A r t i c l e l 6 w i t h o u t their consent, effective immediately upon notice toFranchisee; and Franchisee and
Francbisee'sCwnersagreethatthey shallcomply forthwith withany provision assomodified, which
shallbe fullyenforceable notwithstanding the provisions of S e c t i o n a l .
Section 16.7
No Defense. Franchisee and Franchisee's Cwners expressly agree that tbe
existenceof anyclaims they mayhave against Franchisor,whetber or not arising fromthis Franchise
Agreement, shallnotconstimteadefense to the enforcement byFranchisor of theprovisions of this
Articlel6. In additionto any other rights and remedies,Franchisee and Franchisee'sCwners agree to
payallcostsandexpenses (including reasonable attomeys'fees) incurred byFranchisorinconnection
with tbe enforcement of this Article 16.
Section 16.8
Consent to Injunctive Relief. Franchisee and Franchisee'sCwners acknowledge
thataviolation of the terms of this Article 16 would resultin irreparable injury to Franchisor for which no
adequateremedyatlawmaybeavailable, and Franchisee and Franchisee'sCwners accordingly consent
to the issuance of an injunction prohibiting any conduct by Franchisee or Franchisee's Cwners in
violation of the terms of this Article 16.
FAGE^-FA
ARTICLED
INDEPENDENT C O N T R A C T O R A N D I N D E M N ^ C A T I O N
Sedioh^l
Independent Contrado^ The parties agree that Eranehisee is an independent
eontraetor,this Franchise Agreementdoesnot
them, and nothing i n this Franchise Agreement is intended to designate either party as an agent, iegai
representative, subsidiary, joint venturer,parmer,empioyee,orservant of t h e o t h e r f o r a n y purpose
whatsoever.
(a)
During the Term, Franchisee shaithoiditseif out to the puhiic as an independent
contractor operating theFranchised Restaurant under thisFranchise Agreement. Franchiseeagrees to
take such action as may he necessary to do so, inciudmg,withoutiimitation,exhihitinganotice of that
fact inaconspicuouspiace inthe Franchised Restaurant,the content of which Franchisor reserves the
right to specify.
(h)
Fhe parties agree that nothing in this Franchise Agreement authorizes Franchisee
or any of Franchisee's Owners to make any contract, agreement, warranty, or representation on
Franchisor'shehaif, or to incur anydeht or other ohiigationinFranchisor'sname; and that Franchisor
shaii in no event assume iiahiiity for, or he deemed iiahfe hereunder asaresuit of, any such action; nor
shaE Franchisor he hahiehy reason of any act or omission of Franchisee or Franchisee'sCwners or for any
ciaim or judgment arising therefrom against Franchisee, any of Franchisee'sCwners or Franchisor.
(c)
Franchiseeshaiihe the soieandexciusiveempioyerof its employees withthe
sole right to hire, discipline, and discharge such employees and the sole right to establish wages, hours,
benefits, employment policies, and other terms and conditions of employment for such employees all as
determined by Franchisee in its sole discretion without consultation or approval by Franchisor.
Franchisee shall be solely responsible for the payment of all social security taxes andôr other applicable
payrolFrelated,government-mandatedcontributionsandôr taxes and Franchisee shall indemnify and
hold Franchisor harmless from any liability for any such contributions andôr taxes.
Section ^ 2
Indemnity. Franchisee is responsible for all Damages (defined in Section 17.5)
related to Franchisee'sohligations under this Franchise Agreement and the development and operation of
the Franchised Restaurant. Franchisee shall, at all times, indemnify and hold Franchisor (including its
subsidiaries, affiliates, successors and assigns and their respective officers, directors, attorneys,
shareholders, parmers,agents, representatives, independentcontractorsandemployees^collectively
referenced hereinafter as''Indemnitees'') harmless to the fullest extent permitted bylaw (without rega
to tbe cause thereof or the negligence of Indemnitees) from all Damages related to Franchisee's
obligations under this Franchise Agreement and the development and operation of the Franchised
Restaurant including, without limitation. Damages related to the following matters:
(a)
The infringement, alleged infringement, or any other violation or alleged
violation by Franchisee or any of Franchisee's Cwners of any patent, mark or copyright or other
proprietary right owned or controlled by third parties(except as such may occur with respect to any right
tousethe Chili'sMarks or other proprietary information granted hereunder).
(b)
The violation,breachorasserted violationorbreachby Francbiseeoranyof
Franchisee'sCwnersof any federal,stateorlocallaw,regulation,ruling,standardordirective orany
PAGE^-FA
m d U 5 ^ y ^ n d a r d ( m ^ ^
e m p l o y e d
(c)
Libet slander or any other form of defamation of F r a n c h ^
developer or franchisee operating nnder fhe System, hy Franchisee or hy any ofFran^
(d)
Fhe violation or hreaehhy Franchisee or hy any of Franchisee'sCwners of any
provision of this Franchise Agreement or in any other agreement hefween Franchisee, its sohsidiaries^^
affiliates and Franchisor, its snbsidiaries and affiliates or the officers, directors, sh^
agents, representatives, independent contractors and employees thereof.
(e)
Acts, errors, or omissions of Franchisee, any of Franchisee's snhsidiaries or
affiliates and any of Franchisee'sCwners and the officers, directors, shareholders, parmers, agents,
representatives, independent contractors and employees of Franchisee and its snhsidiaries and affiliates
in connection with the estahlishment and operation of the Franchised Restaurant.
Section^B3
Notice to Franchisor. Franchisee and each of Franchisee'sCwners agree to give
Franchisornotice of any such action, suit, proceeding, claim, demand, inqoiry,or investigation. At the
expense and risk of Franchisee and each of Franchisee'sCwners, Franchisor may elect to assume (hut
under no circumstance is obligated to undertake) or associate counsel of its own choosing with respectto,
the defense andôr settlement of any such action, suit, proceeding, claim, demand, inquiry or
investigation. Such an undertaking byFranchisor shall, in no manner or form, diminish the obligation of
Franchisee and each of Franchisee'sCwners to indemnify the Indemnitees and to hold them harmless.
Sections
Settlement nr Cther Remedial Actions.ln order to protect persons orproperty,
or its reputation or goodwill, or the reputation or goodwill of others. Franchisor may,at any time and
withoutnotice, as it, initsjudgment deems appropriate, consent or agree to settlements or take such other
remedialorcorrectiveactions itdeems expedient with respect to theaction,suit,proceeding,claim,
demand,inquiry or investigation i f , i n Franchisor's sole judgment,therearereasonablegrounds to
believe that (i) any of the acts or circumstances enumerated in Section 17.2 have occurred or (ii) any act,
error, or omission as described i n Section 17.2(e) may result directly or indirectly in damage, injury,or
harm to any person or any property.
(a)
A l l Damages incurred under this Article 17 shall be chargeable to and paid by
Franchisee or any of Franchisee'sCwners pursuant to its obligations of indemnity under this Article 17,
regardless of any actions, activity or defense undertaken by Franchisor or the subsequent success or
failure of such actions, activity,or defense.
Section ^17.5
Definition of Damages. As used i n this Article 17,the term "Damages"shall
include,withoutlimitation, all liability, losses, damages (including,without limitations
exemplary and punitive damages), claims, fines, charges, costs, expenses, debts, lost profits, reasonable
attomey'sfees, court costs, settlement amounts, judgments, compensationfor damages to the Franchisor's
reputation and goodwill, costs of changing, substituting or replacing the same, and any and all expenses
of recall, refunds, compensation, public notices and other such amounts incurred in connection with the
matters described.
S^ti^l76
N n F l a h i l i t v . Indemnitees do not assume any liability whatsoever for acts,
errors, or omissions of those with whom Franchisee, any of Franchisee's Cwners, Franchisee's
PAGE 53 FA
subsidiaries and afrihates or any of the ofrieers, directors, shareholders, parsers, agents, representatives,
independent contractors and employees of Franchisee, its snhsidiaries or affiliates may contract,
regardless of the purpose.
Section 17.7
No Requirement to Pursue Third Party. Under no circumstancesshall the
Indemniteesherequiredorobligated toseek recovery from thirdparties or otherwisemitigatetheir
lossesinordertomaintainaclaimagainstPranchiseeoranyofPranchisee'sOwners. Franchisee and each
of Franchisee's Owners agree that the failuretopursue such recovery or mitigate loss will in no way
reduce the amounts recoverable from Franchisee or any of Franchisee'sCwners hy the Indemnitees.
Section 17.8
Survival. Fhe terms o f t h i s A r t i c l e l 7 s h a l l survive tbe termination, expiration,
or any transfer of this Franchise Agreement.
ARTICFF^
APPROVAFSANDWA1VFRS
Section 1^.1
Requests for Approvals. Whenever this Franchise Agreement requires the prior
approval or consent of Franchisor, Franchisee sball makeatimely written request to Franchisor therefor,
and such approval or consent shall he obtained in writing.
(a)
Franchisor makes no warranties or guarantees upon which Franchisee or
Franchisee'sCwners may rely,and assumes no liability or obligation to Franchisee or such persons, by
providing any waiver, approval, consent, or suggestion to Franchisee or Franchisee's Cwners in
connection with this Franchise Agreement, or by reason of any neglect, delay, or denial of any request
therefor.
Section 18.2
No Waiver. No delay,waiver, omission, or forbearance on the part of Franchisor
to exercise any right, option, duty, or power arisingout of anybreachor defaultbyFranchisee or
Franchisee'sCwners under this Franchise Agreement shall constituteawaiver by Franchisor to enforce
any such rigbt, option, duty, or power as against Franchisee or Franchisee'sCwners, or as to any
subsequent breach or default. Subsequent acceptance by Franchisor of any payments due to it hereunder
shall not be deemed to beawaiver by Franchisor of any preceding breach by Franchisee or Franchisee's
Cwners of any terms, provisions, covenants, or conditions of this Franchise Agreement.
ART1CFF19
NCT1CFS
provisionsof thisFranchise Agreement shall be (i)personallydelivered,(ii) delivered byovernigbt
delivery service, (iii) delivered hy c e r t i f i e d ^
email, electrorucdelivery,prepaid telex, or facsimile, provided sender confirms any delivery under thi^
clause(iv)hysendingaconfirmahoncopybyovernigbtdelivery service or certified^registered mail,
remrnreceipt requested, within one (l)business day after transmission thereof to the respective p a r ^
with this Article 19,then any such notice shall be deemed to have been received (i) at the time of personal
delivery, (ii) at the time of transmissionin tbecaseofemail,electronicdelivery,facsimileor telex,
provided confirmationissentas described above, (iii) on the next business dayinthe case of overnight
delivery service, or (iv) within three (3) business days after mailing in the case of registered or cert^^
FA
mail. The parties may change their notice information below by delivery of written notice to the other
party in accordance with this Article 19 with new notice information. Franchisor may elect (in its sole
discretion) to deliver copies of any notices to Franchisee under this Franchise Agreement to Franchisee's
lender(s) landlord^), and other similar parties.
/
w/ a copy to:
6820 LBJ Freeway
Dallas, Texas 75240
6820 LBJ Freeway
Dallas, Texas 75240
Notices To Franchisee and
Franchisee's Owners:
:
Attn:
ARTICLE 20
MISCELLANEOUS PROVISIONS
Section 20.1
Entire Agreement. This Franchise Agreement, the documents referred to herein,
and the Attachments hereto constitute the entire, full and complete agreement between Franchisor and
Franchisee concerning the subject matter hereof, and shall supersede all prior agreements, discussions,
correspondence, understandings and/or communications in any form or format between the parties
hereto with respect to the subject matter hereof. Except for those permitted to be made unilaterally by
Franchisor hereunder, no amendment, change, or variance from this Franchise Agreement shall be
binding on either party unless mutually agreed to by the parties and executed by their authorized officers
or agents in writing. In entering into this Franchise Agreement, no party is relying on any promise,
warranty, inducement or representation by the other party other than those expressly set forth herein;
provided, however, that nothing in this Franchise Agreement is intended to disclaim any representations
made by Franchisor i n the franchise disclosure document provided to Franchisee by Franchisor.
Section 20.2
Severability. Except as expressly provided to the contrary herein, each portion,
section, part, term, and/or provision of this Franchise Agreement shall be considered severable; and if, for
any reason, any section, part, term, and/or provision herein is determined to be invalid and contrary to,
or in conflict with, any existing or future law or regulation by a court or agency having valid jurisdiction,
such shall not impair the operation of, or have any other effect upon, such other portions, sections, parts,
terms, and/or provisions of this Franchise Agreement as may remain otherwise intelligible; and the latter
shall continue to be given full force and effect and bind the parties hereto; and said invalid portions,
sections, parts, terms and/or provisions shall be deemed not to be a part of this Franchise Agreement.
Section 20.3
No Benefit. Except as expressly provided to the contrary herein, nothing in this
Franchise Agreement is intended, nor shall be deemed, to confer upon any person or legal entity any
PAGE 55 - FA
rights or remedies under this Fmn^^
Owners, Franchisor, and Franehisor'sofrieers, directors, and empioyees).
Section 20.4
Agreement t o h e B o n n d . Franchisee and Franchisee's Owners, as appiicahie,
expressly agree to he hound hy any promise or covenant imp^
which is suhsumedwithin the terms of any provision hereof, as though it were separately articulated in
and madeapart of this Franchise Agreement, that may result from striking from any of the provisions
hereof any portionor portions whichacourt may hold to he unreasonahle and unenforceahle i n a f i n a l
decision to which Franchisor i s a p a r t y , o r from reducing the scope of any promise or covenant to the
extent required to comply with suchacourt order.
Section 20.5
Captions. All captions in this Franchise Agreement are intended solely for the
convenience of all parties, and noneshall he deemed to affect themeaningor constructionof any
provision hereof.
Section 20.6
Survival.
Any ohligation of Franchisee or Franchisee's Owners that
contemplates performance of such ohligation after termination, expiration, or any transfer of this
Franchise Agreement shall he deemed to survive such termination, expiration or transfer.
Section 20.7
References. All references herein to the masculine, neuter, or singular shall he
construed to include the masculine, femimne,n
the obligations individually undertaken hy the Franchisee's Owners hereunder,all acknowledgments,
promises, covenants, agreements and ohligationshereinmadeorundertakenhy Franchiseeshallhe
deemed jointly and severally undertaken hyallthose executing this Franchise Agreement on hehalf of
Franchisee.
(a)
Fach reference i n this Franchise Agreement toacorporation or parmership shall
hedeemed to also refer to alimitedliahility company and any other entity or organization similar
thereto.Fach reference to the organizational documents, owners, directors, and officers ofacorporation
in this Franchise Agreement shall he deemed to refer to the functional equivalents of such organizational
documents, owners, directors, and officers, as applicable, in the case ofalimited liability company or any
other entity or organization similar thereto.
Section 20.8
Counterparts. Fhis Franchise Agreement may be executed in one or more
counterparts and each counterpart so executed shall be deemed an original.
Section 20.9
Business Pays. Fhe term "business days" means any days excluding Saturday,
Sunday and the following national holidays: New Year'sOay,MartmFuther King Oay,Fresidents'Day,
Memorial Day, Independence Day, Fahor Day, Columbus Day, Veterans' Day, Fhanksgiving and
Christmas.
Section 20.10 Franchisee'sResponsihility For Franchisee'sCwners. Franchisee shall be solely
and completely responsible to ensure (and cause) each of Franchisee'sCwners to comply with the terms
of this Franchise Agreement. Franchisee agrees thatany violationof the termsof this Franchise
Agreementby Franchisee'sCwners shall constitute an event of defaultunder A r t i c l e d .
Section 20.11 Outsourcingby Franchisor. Franchisor may, i n i t s s o l e discretion, elect to
outsource andôr subcontract certarn of Franclusor'sobligations set fortb in this Franchise Agreement
PAGE 56 FA
subsidiaries afribates, eoutraet employees, tbird-party vendors, andôr otber tbird-parly suppliers;
provided (i) any sucb outsourcing andôr subcontracting sball not discbarge Franchisor from its
obligations under tbis Franchise Agreement, and (ii) any sucb outsourced or subcontracted obligations
shall be performed in accordance with the terms of this Franchise Agreement
ARTICFF^
OISFUTFRFSOFUTtON
Sectional
Fegat Remedies. Franchisor and Franchisee will each have tbe right inaproper
case to obtain specific performance, eviction from the premises of the Franchised Restaurant, temporary
restrainingorders and temporary or preliminary injunctive relief fromacourt of competent jurisdiction.
Franchisee agrees that Franchisor may have temporary or preliminary injunctive relief without bond, but
upon due notice, and Franchisee'ssole remedyinthe event of the entry of such injunctive relief will be
the dissolution of the injunctive relief, if warranted, upon hearing duly had (all claims for damages by
reason of the wrongful issuance of any injunction being expressly waived).
Section
Non-Binding Mediation. Fhepartiesagree that either party may submit any
claim, controversy, or dispute arising out of this Franchise Agreement to non-binding mediation;
provided the parties shall not be required to pursue mediation of any claim, controversy,or dispute asa
prerequisite to issuing defaultnotices,filingalawsuit or commencing other legal proceedings. Any such
non-binding mediation shall he conducted through either an individual mediator oramediation services
organization,providedthe mediator shall be (i) experienced in the mediation of food service business
disputes and (ii) agreed upon by the parties.
Section2L3
Consent to Jurisdiction. Venne. and Governing Faw.
Franchisee and
Franchisee's Cwners irrevocably (i) submit themselves to the jurisdiction of the State Courts ofFexas,
locatedinDallas County, Fexas, and the United States Federal District Court for the Northern Ci^^^
Fexas, Dallas Division; (ii) waive all questions of personal jurisdiction for the purpose of effecmating this
provision; (iii) agree that service of process may be made upon any of them in any proceeding relating to,
or arising out of,this Franchise Agreement (including the relationship contemplated by this Franchise
Agreement) by any means allowed by Fexas or Federal law; and (iv) agree tbat venue for any proceeding
relating to, or arising out of, this Franchise Agreement shallbe inDallas County, Fexas; provided
Franchisor may bring an achon for injunctive or other extraordinary relief in any State or Federal District
Court which has jurisdiction. With respect to all claims, controversies, disputes, andôr actions, this
Franchise Agreement shall be interpreted and construed underTexas law (without regard toFexas choice
of law rules),except that any Statelaw regarding (i) the offerand sale of franchises,(ii)franchise
relationships, andôr (iii) business opportunities will not apply unless the applicable jurisdictional
requirements are met independentlywithoutreference to this paragraph.
Franchisee,Franchisee's Cwners, andFranchisoracknowledgethe terms of this Section
provide each of the parties with the mumal benefit of uniform interpretation of this Franchise Agreement
and any dispute arising out of the relationship contemplated by this Franchise Agreement. Franchisee,
Franchisee'sCwners, and Franchisor acknowledge the receipt and sufficiency of mumalconsidera^^
such benefit.
Section 21.4
Place of Fxecution of Franchise Agreement. Franchisee, Franchisee'sCwners,
and Franchisor acknowledge (i) this Franchise Agreement was executed in Dallas County, Fexas; and (ii)
performance of certain obligations of Franchisee and Franchisee's Cwners under this Franchise
F A G F ^ FA
Agreement mending paym^
ofrieesinDaEa^ Texas.
Sedmn2L5
Costs and Attorneys'Fees. Frior to the eommeneement of litigation, arbitration,
or other dispute resolution procedure and in
attorneys' fees) in connection withFranchisee's failure to comply with (andôr failure to timely pay
amounts owing to Franchisor under) this Franchise Agreement, then Franchisee shall promptly reimburse
Franchisor for such reasonable costs and expenses. In the event of litigation, arbitration, or other dispute
resolution procedure between tbe parties to enforce this Franchise Agreement, the prevailing party in a^
such action shall be entitledto recover reasonable costs and expenses from the other party, including,
without limitation, court costs, attorneys'fees, and discovery costs.
Section
Rights of Parties are Cumulative. Franchisor's and Franchisee's rights under
this Franchise Agreement are cumulative and the exercise or enforcement of any right or remedy under
this Franchise Agreement will not preclude the exercise or enforcement byaparty of any other rigbt or
remedy under thisFranchise A g r e e m e n t w h i c h i t i s e n t i t l e d b y l a w o r thisFranchise Agreement to
exercise or enforce.
Section
WaiverofFunitive Damages and JuryTriah Fothe fullest extent permitted by
law,the parties waive any right to, or claim for, any punitive or exemplary damages against the other
party. Fhe parties also agreethat, in tbe event ofadispute between them, the party makingaclaim will
be limited to recovery of actual damages, if any. In addition, the parties irrevocably waive trial by jury in
^ny action, proceeding, andôr counterclaim brought by either party.
Section 21.8
Fimitationof Claims. Any andallclaims arising out of or relating to this
Franchise Agreement or the relationship among the parties to this Franchise Agreement will be barred
unless an action or proceeding is commencedwithin one year fromthe date Franchisee orFrancbisor
knew or should have known of the facts giving rise to such claim.
ART1CFF22
ACKNCWFFDCMFNTS
Section 221
Investigation hy Franchisee and Franchisee's Cwners.
Franchisee and
Franchisee'sCwners agree that (i) they have conducted an independent investigation of the Franchised
Restaurant (ii) the business venture contemplated by this Franchise Agreement involves business risks;
and (iii) Franchisee'ssuccess will be largely dependent upon the ability of Franchisee and its Franchisee's
Cwners as independent business people. Franchisor expressly disclaims tbe making of, and Franchisee
and Franchisee'sCwners agree not having received, any warranty or guarantee, express or implied as to
the potential volume, profits, or success of the business venture contemplated by this Franchise
Agreement. Further, Franchisee and Franchisee'sCwners acknowledge thatFranchisorhasmadeno
representationsthatFranchiseeorany of Franchisee's Cwners may or w i l l d e r i v e i n c o m e f r o m t h e
Section 22.2
Receipt of Documents. Franchisee and Franchisee'sCwners acknowledge they
have receivedacopy of Franchisor'sfranchise disclosure document and have h a d a f u l l and adequate
opportunity to be thoroughly advrsed of the terms and conditions of this Franchise Agreement by counsel
of their own choosing at least fourteen (14) calendar days prior to its execution and they are entering into
P A O E ^ FA
this Franchise Agreement after having made an independent investigation and not npon any
representation as to the profits andôrsaiesvoinme which Franchisee might he expected to realize.
Section 2^3
Acknowledgement hy Franchisee and Franchisee's Cwners. Franchisee and
Franchisee's Cwners acknowledge they have read and understood this Franchise Agreement, the
Attachments hereto, and agreements relating hereto, if any,and that Franchisor has accorded Franchisee
and Franchisee's Cwners ample timeand opportunity to consult withadvisorsofFranchisee'sown
choosing ahout the potential henefits and risks of entering into this Franchise Agreement.
Sections
Franchisor's Right To Vary The System and Cther Standards. Franchisee and
Franchisee's Cwners acknowledge and agree that other franchisees of the System may he granted
franchise rights at different times and in different situations pursuant to franchise agreements which may
suhstantially differ from this Franchise Agreement (including without limitation, royalty fees, ^
services fees,advertisingfees,andother fees). Franchisee and Franchisee's Cwners acknowledge and
agree that Franchisor reserves theright to vary theSystemand other standards, specifications, and
operating procedures (includingstandards and specifications related tohuilding, furniture; fixtures,
equipment,andsignage)to address different circumstances or for other reasons deemed sufficient hy
Franchisor, in its sole discretion.
IN WfFNFSSWFlFRFCF,the parties hereto have executed this Franchise Agreement to he effective
as of the Effective Date.
Franchisor:
Brinker International FayrollCompany,F.F.,
aDelawarelimited partnership
By:
Its:
BlFCManagement,FFC,
aDelaware limited liahility company
Ceneral Farmer
By:
Name:
Title:
Franchisee:
a
By:
PAGE 59-FA
corporation
Name:
Title:
PAGE 60 - FA
ATTACHMENT A TO FRANCHISE AGREEMENT
THE LOCATION
Approved Location
for the
Franchised Restaurant
PAGE 61 - FA
ATTACHMENTBTOFRANCHÂG^MENT
C O N ^ D E N ^ A ^ T Y AGREEMENT
This A g r e e m e m ^ E ^ e c t i o n of G h i h ^ G r i ^ ^ E a r T r a d e S ^
(this "GonfidentiahfyAgreemeot") is eofered into het^
("Eranchisor^
("Eranchisee^ and
("covenantors t o h e effeetiveasof
(the "Effective Date"^
REGfTAES
Franchisor, as the resnit of the expenditure of h ^
owns a u n i q u e a n d distinctive system (theSystem") relating to the estahhshmentandoperationof
fuiFservice restaurants under such tradenames as GhiiFs^GriE and Ear and G h i ^
"GhiiFsRestaurants")
The distinguishing characteristics of the System mciude,without limitation, distinctly
and interior design, decor, color scheme, furnishings; special recipes and menu items; uniform standards,
specifications, and procedures for operations; quality and uniformity of products and services offered^
procedures for inventory,management,and financialcontrol; training and assistance; and advertising
and promotional programs; all of which m^y he changed, improved, and further developed hy Franchisor
from time to time (collectively and as further defined in Section 1(a) helow, the "Gonfidential
Information").
The Gonfidential Information provides economic advantages to Franchisor and are not generally
known to, and are not readily ascertainahlehy proper means to, Franchisor'scompetitors who could
obtaineconomicvalue from knowledge and use ofthe Gonfidential Information.
Franchisor has taken, and intends to take all reasonable steps to maintain the confidentiality and
secrecy of Gonfidential Information.
Franchisor has granted Eranchiseealimited right to develop GhilFsRestaurants using the System
^nd Gonfidential Information pursuant to that certain Development Agreement between Franchisor and
Franchisee.
Franchisor and Franchisee have agreed in the Development Agreement on the importance to
Franchisor and to the Franchisee and other licensed users of the System of restricting use, access and
dissemination of Gonfidential Information.
Franchisor and Franchisee acknowledge it will be necessary for certain employees, directors,
officers, parmers, members, managers and owners of Franchisee to have access to and to use some or all
oftheGonfidentiallnformationintheoperationofGhilFsRestaurantsusing the System.
Franchisee has agreed toobtainfromthoseemployees,directors,officers,parmers, members,
managers andowners written agreements protecting Gonfidential Information andthe System against
unfair competition.
PAGE^-FA
Covenan^des^toremam^
member manager or owner of Franebisee and Covenantor desires to receive and nse Confidential
Information in the course of his or her employment Covenantor acknowledges that receipt of and the
right to use the Confidential Information constitutes independent valuable consideration for the
representations, promises and covenants made hy Covenantor herein.
NCWTHEREFCRE, with the intent ofheing legally hound herehy,in consideration of the mutual
covenantsandpromiseshereinafter set forth,andother goodand valuableconsideration, whichthe
parties aclmowledgeissufficienttocreatealegallybindingagreement, the parties agreeas set forth
herein.
(^
(a)
All informationand materials, including,without limitation, the CFM, any confidential
information, knowledge, or know-how concerning the Chili's Marks, the System, and methods of
operation of the Franchised Restaurant, and any and all information, drawings, knowledge, know-how
andtechniques used in or relatedto tbe Franchised Restaurant including,without limitation, soft^
licensedor providedby Franchisor,recipes, training materials,constructionplansandspecifications,
marketinginformation and strategies, and site evaluation and selection techniques shall be deemed as
"Confidential Information".
(b)
Covenantor shall receive Confidential Informationinconfidence and shall, at all times,
maintain theminconfidence, anduse t h e C o n f i d e n t i a l l n f o r m a t i o n o n l y i n t b e c o u r s e o f h i s o r h e r
employment by or association with Franchisee, or in tbe performance of his or her other responsibilities
to Franchisee, and only i n connection with this Confidentiality Agreement andôr operation by
Franchisee ofaChili'sRestaurant using the System for so long as Franchisee is licensed by Franchisor to
use the System.
(c)
Covenantor shall not, at any time, make copies of any documents or compilations
containingsomeor all of Confidential Information without Franchisor'sexpress written permission.
(d)
Covenantor shall not, at any time, disclose or permit the disclosure of Confidential
Information except to other employees of Franchisee and only to the limited extent necessary to train or
^ssistotheremployeesofFranchisee in the operation ofaRestaurantusing theSystem.
(e)
covenantor shall surrender the CFM and any other material containing some or all of
Confidential Information to Franchisee or to Franchisor, upon request, or upon termination of
employment hy or association with Franchisee or Covenantor, or upon conclusion of the use for which
CFM or other information or material may have beenfurnished to the Covenantor.
(f)
covenantor shall not, directly or indirectly, do any act or omit to do any act,which
would or would he likely to he injurious or prejudicial to the goodwill of the System.
^
Covenants Notto Compete.
(a)
In order to protect the goodwill and distinctive qualities of the System and the
confidentiality and value of Confidential Informations and in consideration for the disclosure to
Covenantor of Confidential Information, Covenantor further agrees and covenants that, during tbe time
F A G F ^ FA
Covenantor is employed by Fran^^
Franebisee, Covenantor sbali not
(i)
opportunity or customer of Franchisee's Restaurants using tbe System to any Competitive
Restaurant(as defined in tbe Franchise Agreements
(ii)
or any franchisee or Franchisee of Franchisor, or otherwise directly or indirectly induce such
persons t o l e a v e b i s o r h e r e m p l o y m e n t Fhis suhsectionshallnot apply toany employee
transfer between Franchisee and Franchisor.
(iii)
Directly or indirectly, for himself^herself or through, on behalf of or in
conjunction w i t h a n y person, parmership or corporation, or otherentity, without theprior
written consent of Franchisor, own, maintain, develop, operate, engage in, or have any interest
in, advise, help or make loans to any Competitive Restaurant
(b)
In further consideration for the disclosure to Covenantor of Confidential Information and
to protect tbe uniqueness of the System, Covenantor agrees and covenants for two (2) years following the
termination of his or her employment or relationship by Franchisee or Covenantor, Covenantor shall not
(i)
opportunity or customer of Franchisee's Restaurants using the System to any Competitive
Restaurant
(ii)
or any franchisee or Franchisee of Franchisor, or otherwise directly or indirectly induce such
persons to leave his or her employment
(iii)
Directly or mdirectly,for himself or herself^herself or through, on behalf of or in
conjunction with any person, parmership, corporation or other entity,without the prior written
consent of Franchisor, own, maintain, develop, operate, engage in, of haveany interestin,
advise, help or make loans to any Competitive Restaurant located in thetlnited States of
America.
^
Miscellaneous
(a)
Franchisee undertakes to use its best efforts to ensure tbat Covenantor acts as required by
this Confidentiality Agreement and the DevelopmentAgreement and any Franchise Agreement
(h)
Covenantor agrees that in t h e e v e n t o f a b r e a c h o f thisConfidentiality Agreement,
Franchisor would be irreparably injured and be without an adequate remedy at law. Therefore, in the
eventofsuchahreach, or threatened or attempted breach of any of the provisions hereof. Franchisor shall
be entitled to enforce the provisions of this Conhdentiality Agreement and shall be entitled, in add
any other remedies which are made available to it at law or in equity,includmg the right to terminate the
Franchise Agreement, to a temporary andôr permanent injunction and a decree for the specific
performance of the terms of this Corîdentiality Agreement andôr tbe Franchise Agreement without the
P A G E ^ FA
n e c e ^ y of showing a c m a l o ^
secority.
(c)
Covenantor and Franchise joiotiy^ndseveraEy agree to paya^
courteosts and reasonable attorneys' fees) inoorredhy FranehisorandEranehiseeinenforoingthis
(d)
Any failure hy Franchisor or the Franchisee to object to or take action with respeet to an
breach of any provision of this Confidentiality Agreementby Covenantor shallnot operateorbe
construed asawaiveroforconsent to that breach or any subsequent breach by Covenantor.
(e)
Except as expressly set forth helow,Covenantor irrevocably (i) submits himself^herself to
the jurisdiction of the State Courts ofFexas, located in Dallas County,Fexas, andthe United
FederalDistrict Court for t h e N o r t h e r n D i s t r ^
personal jurisdiction for the purpose of effecmating this provision; (iii) agrees that service of process may
be made upon anyof them in any proceeding relating to, or arising out of^this Franchise Agreement
(including the relationship contemplated by this Franchise Agreement) by any means allowed byFexas or
Federal law; and (iv) agrees that venue for any proceeding relating to, or arising out of, this Franchise
Agreement shall beinDallasCounty,Fexas; provided Franchisor or Franchisee may bring an action for
injunctive or other extraordinary relief in any State or Federal District Court which has jurisdiction. With
respect t o a l l claims, controversies, disputes, andôr actions, thisConfidentiality Agreement shallbe
interpreted and construedunderFexas law (without regard toFexas choice of law rules).
(f)
Fhe parties agree that each of tbe foregoing covenants shall be construed as independent
of any other covenant or provision of this ConfidentialityAgreement. If all or any portion ofacovenant
intbis Confidentiality Agreement is heldunreasonable or unenforceable b y a c o u r t or agency having
valid jurisdiction in an unappealed final decision to which Franchisor or Franchisee is a party.
Covenantor expressly agrees t o h e h o u n d h y any lessercovenant subsumed within the termsof snch
covenant that imposes the maximum duty permitted by law,as if the resulting covenant was separately
stated in and madeapart of this ConfidentialityAgreement.
(g)
FhisConfidentiality Agreement contains the entire agreement of thepartiesregarding
the subject matter hereof. Fhis ConfidentialityAgreement may be modified only b y a d u l y authorized
writing executed by all parties.
(h)
provisions of this ConfidentialityAgreement shall be
delivery service, (iii) delivered by certified^regis^
email, electronic delivery,prepaidtelex, or facsimile,provided sender confirms any delivery under this
clause (iv) by sending a confirmationcopy by overnight delivery service or certified^registered mail,
remrn receipt requested, within one (f)husiness day after transmission thereof to the respective parties at
with this subparagraph (h), then any such notice shall be deemed to have been received (i) at the time of
personaldelivery,(ii) at the time of transmission in the case of email, electronic delivery,facsimile or
telex, providedconfirmationissentasdescribedabove, (iii) onthe nextbusiness day i n t h e case of
overnight delivery service, or (iv) within three (3) business days after mailinginthe case of regist^^
certified mail. Fhe parties may change their notice information helow hy delivery of written notice to the
otherpartyinaccordancewiththis subparagraphs) with new notice information. Franchisor may elect
PAGE 65 FA
(in its sole discretion) to deliver copies of any notices to Franchisee and Covenantor under this
Confidentiality Agreement to their respective Iender(s) landlord(s), and other similar parties.
/
w/ a copy to:
6820 LBJ Freeway
Dallas, Fexas 75240
6820 LBJ Freeway
Dallas, Texas 75240
Notices Fo Franchisee
and Covenantor:
Attn:
(i)
Fhe rights and remedies of Franchisor under this Confidentiality Agreement are fully
assignable and transferable and shall inure to the benefit of its successors, assigns and transferees. Fhe
respective obligations of the Franchisee and the Covenantor hereunder are personal in nature and may
not be assigned by the Franchisee or Covenantor, as applicable, without the prior written consent of
Franchisor.
PAGE 66-FA
IN WITNESS WHEREOF, the parties hereto have executed this Confidentiality Agreement to be
Franchisor:
Brinker International Fayroll Company, L.F.,
By:
Its:
BIFC Management, LLC,
General Parmer
By:
Name:
Title:
Franchisee:
corporation
By:
Name:
Fitle:
Covenantor:
Name:
PAGE 67-FA
ATTACHMENT C TO FRANCHISE AGREEMENT
FRANCHISEE'S OWNERS, MANAGING OWNER, AND OPERAFING PARFNER
Managing Owner:
Operating Partner:
Franchisee's Owners
PAGE 68 - FA
Percentage of Ownership
ATTACHMENT P TO FRANCHISE AGREEMENT
PRE-AUTHORIZED BANK TRANSFER
(DIRECT DEBITS)
Name of Person or Legal Entity:
ID Number:
Account Name:
Address:
The undersigned depositor ("Depositor") hereby authorizes Brinker International Payroll Company, L.P.
("COMPANY") to initiate debit entries and/or credit correction entries to the undersigned's checking
and/or savings account(s) indicated below and the depository designated below ("Depository") and to
debit such account pursuant to COMPANY'S instructions for any and all amounts due to COMPANY.
The Depositor understands that all amounts debited from the account below will be credited to
COMPANY'S account. I N LIEU OF COMPLETING THE INFORMAFION REQUIRED ON FHE
FOLLOWING FOUR LINES, FRANCHISEE MAY ATTACH A CANCELLED OR VOIDED CHECK
HERETO.
Depository
Branch
City
State
Telephone Number of Bank
Contact Person at Bank
Bank Transit/ABA Number
Account Number
PAGE 69 - FA
Zip Code
Tîs authority is to r e m a i n i n g
from COMPANY and Depositor of the D^
maouerastoaffordDepositoryareasouahie opportunity t o a e t o u it. Notwithstanding theforegoiug.
Depository shaii provide COMPANY and Depositor with 30 days'prior written notice of the termm^
of this authority, f f an erroneous dehit entry is initiated to Depositor'saeeount, Depositor shaii have tbe
right to have the amount of such entry ereditedto such account hyDepository,if (a) within 15 calendar
days following the date on which Depository sent to Depositorastatement of account orawritten notice
pertaining to such entry or (h)45 days after posting,whichever occurs first, Depositor shall have sent to
Depositoryawrittennohce identifying such entry,stating that such entry was in error and requesting
Depository to credit theamount thereof tosuchaccount. These rightsare in additiontoany rights
Depositor may have under federal and state hanking laws.
Depositor
Depository
By:
By:
Title:
Title:
Date:
Date:
PAGE 70 - FA
ATTACHMENTETOFRANCHÂG^MENT
^GHTOF^RSTREFUSAL
C ^ ^ ^ ^ ^ ^ ^ ^ ^ R ^ ^ F ^
^cri^
^ ^s F r ^ ^ ^ A ^ ^ ^ ^ ^ s ^ ^ ^ ^ ^ ^
(1)
^ the event Franchisee receives (or ^
party related toaproposedsaie of the Franchised Restanrant(or any portion thereof or in^
then Franchisee shall give Franchisor written notice setting forth the name and address of the prospecti^^
purchaser, t h e p r i c e a n d terms of theoffer together withafranchiseapplicationcompletedhy the
prospectivepnrchaser, ^copyofthepurchaseandsaleagreementexecntedhyhoth Franchisee and
purchaser, and all exhibits, copies of any real estate purchase agreement or agreements, proposed
security agreements and related promissory notes, assignment documents, title insurance commitment
and any other information that Franchisor may request in order to evaluate the offer.
(2)
Franchisorshall thenhave the rightof first refusaltopurchase Franchisee's interest
covered hy such offer at the price and upon the same terms of the offer. Franchisor shall have thirty (30)
calendar days after receipt of Franchisee'snotice of offer and the furnishing of all reasonably requested
information within wluch to notify Franchisee in writing of its intent to accept or reject the offer. Silence
o n t h e p a r t of Franchisor shallconstituterejection. Franchisee may not rely upon any notice from
Franchisor of its intention to accept or reject the offer nor shall such notice be effective unless such notice
is inwriting and signedby an officer ofFranchisor.
(a)
In the event an offer f r o m a t h i r d party provides for payment of consideration
other than cash or involves certain intangible benefits,Franchisormayelect to purchase the interest
proposed to be sold for the reasonable equivalent in cash. Ifthe parties cannot agree withinareasonable
time on the reasonable equivalentincash of the noncash part of the offer, an independent appraiser shall
be designated byFranchisor to determine such amount, and his determination shall be binding.
(3)
If the proposed sale includes assets of Franchisee not related to the Franchised
Restaurant, then Franchisor may,at its option, elect to purchase only the assets related to the Franchised
Restaurant and an equitable purchase price shall be allocated to each asset included in the proposed sale.
(4)
If (inaddition to the Franchised Restaurant) theproposed saleincludes (i) other
FranchisedRestaurant(s) operatedbyFrancbisee (or affiliates of Franchisee or Developer) a n d ^ o r ^
Brinker-franchised restaurants other tban Chili's Restaurants (tbe "Brinke
then Franchisor may,at its option, elect to purchase: (i)ordy the Franchised Restaurant; (ii) only the o ^
Franchised Restaurant(s) operated by Franchisee (or affiliates of Franchisee or D e v e l o p e r ) ; ^
Brinker Non-Chili'sRestaurants; or (iv) any combinationof restaurantsset forth inclauses (i)D(iii)
whether on an individual restaurant basis or on an aggregate basis; and an equitable purchase price shall
be allocated to each restaurant.
(5)
Fotheextentanyfranchiseagreementsor other agreementsrelatingtotheBrinker
Non-Chili'sRestaurantsmaybeinconsistentwith,orcontiict with tbe terms of the right of
containedherein, the terms of this right of first refusal shall control.Fhis right o f ^
to any transfer, conveyance, assignment, consolidation, merger or any other transactioninwhicb legal or
PAOE^-FA
beneticial ownership of the fran^^
other than Franchisee; provided,^
person and the transfer or assignment is from one partner to another, hoth of whom are signatories^
Franchise Agreement, so iong as (i) the Managing Owner continues to satisfy the requirements set
this Franchise Agreement, and (ii) Franchisor is given written notice thereof prior to such transf^^^
(6)
if thisFranchise Agreement hasheenassignedtoacorporationinaccordance with
Section
of this Franchise Agreement, then this right of first refusal shaiiaisoappiy if voting common
stockinsuchcorporationissoid, assigned ortransferredtoindividuaisor entities other than those
approved hy Franchisor as owners of the voting common stock.
(7)
Fhe election hy Franchisor not to exercise its right of first refusal as to any offer shall not
affect its right of first refusal as to any subsequent offer.
(8)
Any sale,attemptedsale,assignment or other transfer of therightsgrantedeffected
without first giving Franchisor the right of first refusal described ahove shall be void and of no force and
effect
(9)
If Franchisor does not accept the offer referenced herein, then Franchisee may conclude
the sale to the purchaser who made the offer provided Franchisor'sconsent to the assignment be first
obtained, which consent will notbeunreasonably withheld uponcompliance with the conditions
imposed by Franchisor on the assignment including the conditions set forth inArticle 13.
(10)
Inaddition, Franchiseeagreesthat,priortoacquiringanyotherChilFs Restaurant
development rights or franchise which may be offered to it for sale or which it may offer to purchase,
such development rights or franchise will first be offered to Franchisor on the same terms, conditions and
price.
******
F A G F ^ FA
ÂCHMENTFTCFRANCHÂÊMENT
^ N C H ^ O ^ O P T ^
C ^ ^ ^ ^ ^ ^ s ^ ^ ^ ^ ^ ^ ^ ^ O ^ ^ ^
R ^ ^ ^ f ^ ^ ^ ^ ^ ^ ^ ^ 2 ^ r i ^
^ ^ ^ ^ ^ ^ 0 ^ ^ ^ ^ ^ ^ ^
f ^ S ^ ^^SI^ ^ S F ^ ^ ^
(1)
Within thirty (30) days prior to the expiration or termination of this Franchise
Agreement, Franchisor shaii have the ophon (hot ^
restaurant hmidingsheiiincinding any or a^
inventory related to the Franchised Restaurant and ^
the Franchised Restaurant atthe Purchase Frice,de
(2)
Fhe "Purchase Frice" shall he equal to the fair market value as if the sale were an "asset
sale" of therestauranthuildingshell and any o r a l l o f thefurnishings, fixtures,equipment,signs,
supplies, or inventory related to the Franchised Restaurant and excluding any liahilities related to
Franchisee andôr the Franchised Restaurant(the"FMV"). Franchisor may,at its option, elect to calculate
the Purchase Price hased upon the value of the Franchised Restaurant asa"going-concem"as determined
hyamultiple of FBlFDAfor such restaurant
(a)
IfFranchisee and Franchisor areunable to agree u p o n a F M V withina
periodoflO days after Franchisor'sexercise of such option, then the parties shall engage
an independent third party, knowledgeable and reputable in valuating restaurant
business operations, to appraise tbe FMVof the Franchised Business as if the sale were
to be an"assetsale"and assuming (i) the sale of the Franchised Business in an active
marketingprocessand (ii) there wereno restrictionsonthetransferof the equity
interests of the Franchisee.
(b)
For this valuation the parties agree that Franchisor will pay the lesser of
(i) 50^ of the cost of such third party appraiser or (11)^5,000; and that Franchisee will
pay the balance of the cost of such third party appraiser. Once the appraiser provides
the FMV of the Franchised Business, the parties will then agree either (i) to proceed to
close the transaction as soon as reasonably practicable, taking into account the need for
reasonable due diligence and obtaining the approval of any necessary third parties, or
(ii) to discontinue such discussions.
(c)
A l l amounts due and owing to Franchisor under the Franchise
Agreement shall be deducted from the Purchase Price and the Purchase Price shall also
exclude any items which are required to be returned or delivered to Franchisor under
Articled
(3)
Fhe closing of this transaction will take place no later than 30 days after the
determination of the Purchase Price or such later date as agreed by the parties taking into account the
need for reasonable due diligence andobtaining the approval of any necessary thirdparties. Closing
shall take place at Franchisor'scorporate offices or at such other location as the parties may agree.
P A O E ^ FA
(4)
A t losing, Franchisee w i l l dehv^^
^nd merchantable title to the
and with all sales and other transfer taxes p a i d h y Franchisee, and with all licenses or permits of
Franchised Restaurants which may he assigned or transferred.
(5)
At closing. Franchisee will also deliver to Franchisor an assignment of the lease for the
Location(or, if assignment is prohibited, subleases for the full remaining term and on the same terms and
conditions as Franchisee'slease). If Franchisee owns theFocation,then Franchisee agrees to lease the
Fremises to Franchisor pursuant to the terms of Franchisor'sstandard lease, f o r a t e r m of five years with
two successive five-year renewal options at fair market rental during the term.
(6)
If the closing of the purchase does not occur as set forth above because Franchisee fails to
^ct diligently inconnectionwiththe purchase, thenthe Purchase Frice will he reduced b y l O ^ . Fhe
Purchase Frice will be further reduced b y l O ^ per month for each subsequent month Franchisee fails to
act diligently to consummate the purchase.
(7)
Frior to closing. Franchisee and Franchisor will comply with any applicable Bulk Sales
provisions of the Uniform Commercial Code enacted in the state where Franchisee's Restaurant is
located.
(8)
If Franchisor exercises the option to purchase the Franchised Business, then (pending the
closing of such purchase). Franchisor has the right to appointamanager to maintain the operation of the
Franchised Restaurant or, at Franchisor'soption, require Franchisee to close the Franchised Restaurant
during such time period without removing any assets.
(a)
If Franchisor appoints a manager to maintain the operation of
Franchisee'sRestaurant pending closing of such purchase, all funds from the operation
of Franchisee'sRestaurant during the period of management by Franchisor'sappointed
managerwillhekeptinaseparate fund, and all expenses of the FranchisedRestaurant,
including compensation, other costs, and travel and livingexpenses of Franchisor's
appointed manager, will be charged to such fund.
(b)
As compensation for such management services. Franchisor will charge
s u c h f u n d l O ^ o f t h e C r o s s S a l e s d u r i n g t h e p e r i o d o f Franchisee'smanagement.
Cperation of the Franchised Restaurant during any such period will be on Franchisee's
behalf, provided that Franchisor will haveaduty only to utilize Franchisor'sgood faith
e f f o r t a n d w i l l not beliabletoFranchiseeforanydebts or obligations incurredby
Franchisee's Restaurant or to any of Franchisee's creditors for any merchandise,
materials, supplies or services purchased by Franchisee'sRestaurant during any period
in which Franchisee's Restaurant is managed by Franchisor's appointed manager.
Franchisee w i l l maintain in force all insurance policies required by this Franchise
Agreementuntil the date of closing.
(9)
In the event Franchisee fails to comply with this AttacbmentF,then (in addition to any
other rights and remedies available to Franchisor), Franchisee agrees that Franchisor shall be e n t i ^
sue for specific performance ofFrancbisee'sobligations under this AttachmentF.
PAOE^-FA
ATTACHMENTGTOFRANCHÂG^MENT
REQUIREMENTS F O R L O C A L A D V E R ^ N G P R O G R A M
L
Erancbisee must submit a semi-annuai or annual marketing piau to Eranebisor's
marketingdepartmentforapprovaE I n a d d i t i o n t o S e c t i o n l E ^ E r a n e b i s o r m a y from time-to-time,
provide Erancbisee witb an outline of tbe ^pprovaiproeessfor marketing piansand alladvertising
materials. EranebisormayaisoeonsuitwitbEranebisee regarding tbe strategy of Eranebisee'smarketing
plan and may discuss marketing materials available to Erancbisee.
2.
Erancbisee must obtain prior approval from Erancbisor on all advertising materials to be
used in tbe Eocal Advertising Program before production (including all in store and external marketing
pieces).
3.
A l l ^dvertisingmaterialsusedintbeEocal AdvertisingProgram must f a l l i n t o tbe
categories listed below.
(9)
Advertising Materials For Use Inside Erancbised Restaurant. Tbe EAE Fee may
be used to pay tbird parties, ad agencies, andôrFranclusor for costs incurred to develop, design,
obtain, or produce Erancbisor-approved advertising materialsforuseinsidetbeFrancbised
Restaurant (e g., food pbotograpby, table tents, rolodex table stands, menu inserts, drink
coasters, chalkboards, banners, danglers, stickers, posters, promotional t-sbirts,andspecial
promotional in storebounceback certificates).
^)
Advertising Materials For UseOntside Erancbised Restaurant.TbeEAE Fee mav
be used to pay thirdparties, ad agencies, andôr Franchisor for costs incurred to develop, design,
obtain,orproduceEranchisorapproved advertising materials for use outside the Franchised
Restaurant (e.g., advertisingontelevision, radio, and cinema including talent^residual costs,
direct mail pieces, free-standing insert ads, newspaper or magazine ads, internet ads, bumper
stickers, flyers, banners, door hangers, magnets, advertising on billboards, and advertising on
subway,mall, airport, and telephone kiosks.
(^
FnblicRelations orPromotional Events Fhe EAF Fee maybeused to paypublic
relations agency(ies) for costs incurred to develop, design, produce, and execute
Franchisor-approved public relations materials, events, or sponsorships (e.g., media press
releases, media kits,talent for in-store promotional events such as face painting, clowns, etc.,
promotional giveaways items such as pens, pins, t-shirts, etc.). Tbe EAR Fee may not be used to
pay vendor-funded items such as athletic, business or community event sponsorships, contest
POSmaterials, prizes givenawayforaconsumer promotion, and remote radio broadcasts.
(d)
Co-Operative Advertising Agreements Fhe EAP Fee may be used to pay third
parties for costs incurred as part of Franchisor-approved cooperative advertising efforts (e.g.,
advertisingwhich may be required under the lease agreementfor the Franchised Restaurant).
PAOF^-FA
4.
The materials listed below may be appropriate (and/or required) for use at the Franchised
Restaurant (subject to this Agreement and Franchisor's approval), but such materials are examples of
materials that will not satisfy Franchisee's obligations under the Local Advertising Program.
Value of gift certificates, buy none's. Be Our Guest certificates
Value of vendor-paid materials for any of the advertising materials referenced above
Value of any and all discounts on food or beverages
Value of comps for food, whether for VIP's or for promotions
Costs related to any menus (e.g., role-play menu, fax menu, kids menu, etc.)
Costs incurred in connection with incentive contests (e.g., beverage contests, etc.)
Value of vendor-funded table tents, promotional t-shirts, merchandising items, etc.
Costs related to newspaper or magazine subscriptions
Costs related to satellite or cable television at the Franchised Restaurant
Costs related to uniforms, logos for uniforms, name tags, etc.
Value of salaries and benefits for Franchisee's marketing employees
Value of monthly retainer fee to local marketing, advertising, or public relations agency
Costs related to travel to marketing meetings (e.g., airfare, lodging, meals, rental car, etc.)
Costs related to any signage at the Franchised Restaurant
******
PAGE 76-FA
ATTACHMENTHTOFRANCHÂG^MENT
GUARANTY OF
Pursuant to Section 6T(n^ of tius Pranctiise Agreement the undersigned agrees to he
individuaEy bound hy ail the terms and conditions of this Franchise Agreement including any
amendmentsormoditicationsthereto whenever made (collectively, thisFranchise Agreementând
unconditionally and irrevocably guarantee to Franchisor and its successors and assigns that all of
Franchisee'sobligationsunderthis Franchise Agreement will be punctually paid and performed.
Upon default by Franchisee or notice from Franchisor, the undersigned will immediately make
eacbpaymentandperformeachobligation required of Franchiseeunder thisFranchise Agreement.
Without affecting the obligations of the undersigned under this Guaranty,Franchisormay,witboutnotice
to the undersigned, renew, extend, modify, amend or release any indebtedness or obligation of
Franchisee, or settle, adjust, or compromise any claims against Franchisee.
Fhe undersigned waive all demands and notices of every kind with respect to this Guaranty and
this Franchise Agreement, including, without limitation, notice o t the amendment or modification of this
Guaranty or this Franchise Agreement,the demand for payment or performance byFranchisee, any
default byFranchisee o r a n y guarantor,andany release of any guarantor or other security for tbis
Franchise Agreement or the obligations ofFranchisee.
Franchisor may pursue its rights against tbe undersigned without first exhausting its remedies
against Franchisee and withoutjoining any other guarantor hereto and no delay on the part ofFranchisor
in the exercise of any right or remedy shall operate asawaiver of such right or remedy,and no single or
partial exercise by Franchisor of any right or remedy shall preclude the further exercise of such rigbt or
remedy.
Upon receipt by Franchisor of notice of the death of an individual guarantor, tbe estate of such
guarantor will be bound by this Guaranty but only for defaults and obligations hereunder existing at the
time of death, and the obligations of the other guarantors hereunderwill continue i n f u l l force and e f ^ ^
IN WlFNFSSWHFRFGF,the undersigned has executed this Guaranty to be effective as of the date
below.
Acknowledged andAgreed by ManagingGwner:
Name:
Fitle: Managing Gwner
Date:
FAGF^-FA
ATTACHMENT T TO FRANCHTSF. AGREEMENT
SITE DF.VEI .OPMF.MT ORT.TCATTDM.q
(Nnt applicable, if a DRndtrprntrnt AQreempnt has bp.tn executed)
Capitalir.ed terms used in this Sift? Dmelnmmmt Ohlwatinns shall have the
meanings ascribed to such terms in this Franchise. Agreement unless otherwise
defined herein.
I
Site Splertion
Franchisee acknowledges and agrees that Franchi.gpp has previously rprpivpH Franchisor's site
selection guidelines and criteria related to Chili's Restaurants and such site selection counseling
assistance as Franchisor deemed advisable. Franchisee acknowledges and agrees that Franrl
previously provided all required information and materials concerning snrh site in order for Franchisor
to accept or not accept the proposed site as the location for the Franchispd Resfanrant.
1L
Site Acquisition
If Franchisee w i l l purchase the premises for the Franchised Restanranh then upon request hv
Franchisor. Franchisee shall deliver a copy of tbe final purchase contract to Franchisor prior to its
execution. Within three (3) days after request by Franchisor, Franchisee shallfamishto Franchisor a copy
of the executed purchase contract. If tbe Franchisee w i l l o r r u p y the premises of the Franchised
Restaurant under a lease agreement, then upon request hy Franchisor. Franchisee shall deliver a copy of
the final lease agreement to Franchisor prior to its execution. Within three (3) days after request hy
Franchisor. Franchisee shall furnish to Franchisor a copy of the executed lease agreement. Unless
Franchisee has obtained Franchisor's written consent to tbe exclusion of a required provision, each lease
agreement shall include the terms set forth in clauses f a W M below.
W
That the premises shall be used for tbe operation of the Franchised Restaurant.
M
That lessor consents to the use of such Chili's Marks and signs, decor, color
scheme and related components of the System as Franchisor mav prescribe for tbe Franchised Restaurant.
{£l
Thst lessor agrees to furnish FranchMnr with copies of any and all letters and
notices sent to Franchisee pertaining to the lease and the premises, at the same time that such letters and
notices are sent to Franchisee,
{d}
That Franchisee for tenant) mav not sublease or assign all or any part of its
occupancy rights, or extend the term of or renew the lease, w i t h o u t Franchisor's prior written consent.
which shall not be unreasonably withheld,
W
That Franchisor shall have the right to enter the premises to make anv
modification necessary to protect the Chili's Marks or to m r e any default under the lease or the Franchise
Agreement.
PAGE 78-FA
^
T h ^ ^ n ^ ^ ^ ^
Franchisor shaE have the option f b u t n o t the obEgatm
r^htto^hiease^raôranvpartoftheterrn^theieasewithoutthe^^^
^ditioôn^h^^meritor^mptionortoo^^
^
That Franchisee and lessor shall nnt amend nr otherwise m o d ^ the
^
ô^^h^^^teri^^
coti^nt.
fh)
That lessor acknowledges andagrees^hat any furniture fixtures, equipment or
p e r s o n a l p r o p e r t y mamtamed h v F r a n c h i s e e o n theleased premises whetherleased or owned hv
Fr^ctiisâr^notttiep^
for herein or i n the Franchise Agreement f o r such Franchised Restaurant i n the event of Franchisees^
d e f a u l t u n d e r the lease or the Franchise A g r e e m e n t a n d mav he removed at expiration or termination of
the lease so long as such removal is accomplished w i t h o u t damage to the leased facility
^
Fre Construction Requirements^
W i t h i n a r e a s o n a h l e p e r i o d after t h e F f f e c t i v e Date Franchisor shall provide to F r a n c h ^ ^
s t a n d a r d p l a n ^ ^ n d specifications andôrdesignelements for the construction ofaChilFsRes.taurantand^
for the exterior and interior design and layout fixmres ti^rnishings and signs for
B e f o r e c o m m e n c i n g a n v c o n s t r u c t i o n o f t h e F r a n c h i s e d R e s t a u r a n t Franchisee at its expense shall
comply,toFranchiso^sreasonahle^tisfaction,withallofthefollowingrequ^
fa)
Franchisee sh^H^rnploy a qualified architect and engineer w h o arereasonahly
acceptable to Franchisor to prepare for F ^ ^
siteimprovementand constructionof theFranchisedRestauranthaseduponprototype
drawings
furnished hv Franchisor The prototype plans provided hv Franchisor shall not he used as construction
plans or blue prints for the Franchised Restaurant hut only as required design concepts whichshaE
adapted bv Franchisee and itsarchitectengineer and contractor to Franchisee'ssite
^
The standard plans and specifications andBor prototype
drawings p r o v i d e d to Franchisee are proprietary and confidential information
belonging to Franchisor mav not he copied or reproduced except to tbe extent
necessary hvFranchisee'sarchitectsengineers or contractors in the performance
of thefr duties. Franchisor m^y require that such plans and specjfi^hons be
returned to Franchisor a f t e r t h e o p e n i n g o f t h e Franchised Restaurant
^
Franchisee hereby releases and sha^l bold Franchisor harmless
(including its subsidiaries, officers, direeêmployees^^^
and all l i a h i l i t v l o s s o r damages relatingtoFranchisee'sdesignconstruction. and
^seo^ the Franclêd restaurant including, without limjtati^
damages related to design or structural fl^ws in fbe construction ofthe
Franchised
Restaurant
and
the standard
plans
and
specifications andBor
prototypedravîngsprovided toFranchisee.
^
Franchisee shall heresponsihle for o h t a i n i n g a l l ôningclassifications and
c l e a r a n c e s w h i c h m a v h e r e q u i r e d b y t h e s t a t e provincial or local laws ordinances or regulations or
F A G F ^ FA
which mav he necessary or advisable o w i n g to anv r e s H r t i v e mvenants relating to the Franchised
Restaurant location. After having obtained fHtth approvals and clearances, Franchisee shall submit to
Franchisor, for Franchisor's approval, final plans for construction based upon the preliminary plans and
specifications. Once approved bv Franchisor, such final plans shall not thereafter be materially changed
or modified w i t h o u t the prior written permission of Franchisor.
£cl
Franchisee shall obtain all permits and certifications required for the l a w f u l
construction and operation of the Franchised Restaurant and shall certify in w r i t i n g to Franchisor that all
such permits and certifications have been obtained.
Franchisee shall employ a qualified licensed general contractor who is
reasonably acceptable to Franchisor to consh-uct the Franchised Restaurant and to complete all
improvements. Franchisee shall obtain and maintain in force during the entire period of construction
huilHer's risk for equivalent local) insurance and performance and completion bonds in forms and
amounts and written bv a carrier or carriers reasonably satisfactory to Franchisor.
W
Franchisee shall employ a qualified person w h o is responsible for the purchasing
of materials, equipment and supplies f o r the Franchised Restaurant.
Tn that regard. Franchisee shall
require this person to attend an orientation at Franchisor's home office in Dallas. Texas, concerning
information and issues related to the procurement and d i s H h u t i o n of necessary items for the opening of
the Franchised Restaurant,
Construction and Authorization to Open,
Franchisee shall commence, or make every diligent attempt toward commencement of.
construction of fhe Franchised Restaurant fincluding acquisition of all necessary permits and licenses)
w i t h i n 150 davs after approval bv Franchisor of Franchisee's site or. if the approved location is occupied
by an existing tenant on the date of execution of the lease for the premises, then immediately upon
obtaining possession of the premises.
W
Franchisee shall provide written notice to Franchisor of the date construction of
the Franchised Restaurant commenced w i t h i n 10 days after commencement. Construction shall be
deemed to commence on the date on which excavation for footings is begun or other initial construction
or remodeling w o r k is commenced. Franchisee agrees that Franchisor and its agents shall have the right
to inspect the construction at all reasonable times for the purpose of ascertaining tbat all w o r k complies
w i t h the final plans approved hv Franchisor. However. Franchisee shall assume f u l l responsibility for
completing construction of the Franchised Restaurant in accordance w i t h the approved plans, employing
its architect, as necessary, to oversee such construction in accordance w i t h the plans. Franchisee shall
warrant and certify to Franchisor upon completion of construction that the structure has been built in
accordance w i t h the Franrhisor-approved plans and specifications, w i t h such exceptions, subject to
Franchisor approval, as are noted i n such certification.
Franchisee shall maintain reasonably ronHnuous construction of the Franchised
Restaurant anH its premises and shall complete construction fincluding all exterior and interior carpentry,
electrical, painting, and finishing w o r k , and installation of all furniture, fixtures, equipment and signs) in
accordance w i t h the approved final plans, at Franchisee's expense, w i t h i n 210 days after commencement
of constructinn fevdusive of time lost bv reason of strikes, lockouts, fire, other casualties, acts of God,
weather and other factors beyond the reasonable control of Franchisee).
PAGE 80-FA
M
Franchisee shall notify Franrhisnr of HIP date, of rompletion of construction and,
within a reasonable time thereafter. Franchisor may at its option conduct a final inspection of the
Franchised Restaurant and its premises.
id)
Prior to opening the Franchised Restaurant for business. Franchisee shall comply
with all opefljng requirements set forth in the Franchise Agreement, the CFM. and/or elsewhere in
writingbv Franchisor. Franchisee shall not, in anv event, open the Franchised Restaurant to the public for
business until Franchisee has received authorization to open from Franchisor.
PAGE 81-FA
PUBLIC COMPANY ADDENDUM
This "Public Company Addendum" is entered into between Brinker International Payroll
Company, L.P., a Delaware limited parmership ("Franchisor"), and
("Franchisee") to be
effective as
(the "Effective Date").
L
Introduction. Franchisor and Franchisee entered into Franchise Agreement dated
(the "Franchise Agreement") related to the operation of a Chili's Restaurants at
and the parties desire to modify certain provisions of the Franchise
Agreement regarding publicly-held corporations.
2.
Defined Terms. Capitalized terms used in this Public Company Addendum shall have
the meanings ascribed to such terms i n the Franchise Agreement unless otherwise expressly defined
herein.
3.
Definition of Public Company. The term "Public Company" as used in this Public
Company Addendum shall be deemed to mean a publicly-held corporation having its securities
registered pursuant to Section 12 under the Securities Exchange Act of 1934, as amended or a corporation
subject to the requirements of Section 15(d) under the Securities Exchange Act of 1934, as amended.
4.
Amendment to Franchise Agreement. Commencing on the Effective Date of this Public
Company Addendum, the terms of Section 6.1(i) and Section 6.1(m) of the Franchise Agreement shall not
apply to Franchisee so long as Franchisee is a Public Company.
(a)
Commencing on the Effective Date of this Public Company Addendum, the
terms of Sections 16.3(a)(iii), 16.3(b)(iii), and 16.3(c)(iii) of the Franchise Agreement shall not apply to
ownership of less than one percent (1%) beneficial interest in Franchisee so long as Franchisee is a Public
Company..
(b)
With respect to Section 13.2(a) of the Franchisee Agreement, Franchisor's prior
written consent shall not be required for a transfer of less than a
% interest so long as Franchisee is a
Public Company, except that Franchisor's prior written consent shall be required for a series of transfers
which, in the aggregate, amounts to a transfer of greater than a
% interest (even if each individual
transfer in such series falls below the
% threshold).
5.
Except as modified by this Public Company Addendum, the Franchise Agreement
remains in full force and effect as written therein.
Remainder of page intentionally left blank
PAGE l
IN WITNESS WHEREOF, the parties hereto have executed this Fublic Company Addendum to be
Franchisor:
By:
Its:
General Parmer
By:
Name:
Title:
Franchisee:
a
corporation
By:
Name:
Title:
PAGE 2
______
B^NKERINTERNAT^^
CALÔRNIAAMENDME^^
Forpurposesof complymg w^htherequuememsof Cabfo^
^ n ^ e ^ ^ m ^ L a w , GAL. CORP Section 3 1 0 0 0 ^ ^
Rations A c t CAE. B U S . ^ P R O F CODE Section 2 0 0 0 0 ^ ^
PayroE Company E.R. CFranctiiso^ and
("ErancEêe^ tieretiy amend ttie
Eranctiise Agreement between ttiem dated
(ttie"Agreement")asfoEow^
E
Sections 20000 ttiroogti 20043 of tbe C ^ ^
termination or non-renewal ofafrancbise. If tbe Agreement containsaprovision tbat is inconsistent witb
tbe CERA, tbe CERA wiEcontroE
2.
CEIE Section 3I5I2 provides tbat any condition, stipniation or provision purporting to
bind any person acquiring any franchise to waive compliance witb any provision of tbe CEfE or any roie
or order thereunder is void. CERA Section 20010 provides that any condition, stipuiation or provision
purporting to bind any person to waive compliance with any provisions of the CERA is contrary to pubEc
policy and void, if the Agreement containsaprovision that is inconsistent with either of these iaws, such
iawwiE control.
3.
The Agreement provides for termination upon bankruptcy. This provision may not be
enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 etseq.).
4.
The Agreement contains a covenant not to compete which extends beyond the
termination of the franchise. This provision may not be enforceable under California law.
5.
The Agreementcontainsaliquidateddamages clause. Under CalifomiaCivilCode
Section 1671, certain liquidated damages clauses are unenforceahle.
6.
The Agreement requires applicationofthelawsofTexas. This provision may not be
enforceable under California law.
7.
The Agreement requires mediation andôr litigation to be conductedinaforum outside
the State of California. CERA Section 20040.5 provides that any provisioninaFranchise Agreement
restrictingvenuetoaforum outside the State of California is void with respect to any claim arising under
or relating to a Eranchise Agreement involving a franchise business operating within the State of
California.
^.
Each provision of this Amendment shall be effective only to the extent that the
jurisdictional requirements of California lawapplicable tothe provisions are met independent of this
Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not
met.
9.
As to any state law described in this Amendment that declares void orunenforceable any
provision containedinthe Agreement, Franchisor reserves the right to challenge the erôrceabili^
statelaw.
10.
A l l other provisions of the Agreement are hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties acknowledge that they have read and understand the
contents of this Amendment, that they have had the opportunity to obtain the advice of counsel.
Intending to be legally bound, the parties have duly executed and delivered this Amendment on
,201 .
Witness
By:
Its:
General Partner
By:
Name:
Title:
FRANCHISEE
Witness
By:
Name:
Title:
B^NKERINTERNAÔNALPAYROLLCOMPAN^LP
^NOÂMENDMENTTOERANCHÂGREEMENT
For purposes of complymgw^h the requuements of Elm^
DôsureAetofl^^^tFFComp.^^70^^^^
tuteruahoual Payroll Company F.P. ("Franehlsor") and
amend the Franchise Agreement between them dated
("Franehlsee"^ hereby
(theÂgreement") as follows:
F
Sections 7 0 ^ 9 a n d 705^0 of the Illinois Franchise Act provide rights to Franeh^^
concernlngnonrenewal and termination of afranchlse. if the Agreement contalnsaprovlslon that Is
Incor^lstent with the Illinois Franchise Act, the Illinois Franchise Act will control.
2.
Any release of claims or acknowledgments of fact contained I n t h e Agreement that
wonldnegateorremovefromjndlclalrevlewanystatement,mlsrepresentahonor action that would
violate the Illinois Franchise Act, o r a r u l e or order thereunder, shall be void and Is hereby deleted with
respect to claims under the Illinois Franchise Act.
3.
if the Agreement requires litigation to be conductedlnaforum other than the State of
Illinois, the requirement Is void with respect to claims under the Illinois Franchise Act.
4.
If the Agreement requires that It be governed by tbe law ofastate, other than the State of
Illinois, to the extent that such law conflicts with the Illinois Franchise Act, tbe lllm^
control.
5.
Section 20.1,"FnhreAgreement,"ls amended as follows:
"Fhis Franchise Agreement, the documents referred to herein, and the Attachments hereto
constitute the entlre,full andcompleteagreement between Franchisor and Franchisee concerning the
subject matter hereof, and shall supersede all prior agreements (except for those mademthe Franchise
Disclosure Document that Franchisee received from Franchisor). Except for those permitted to be made
unilaterally by Franchisor hereunder, no amendment, change, or variance from this Franchise Agreement
shall be binding on either party urdessmumally agreed to by the parties and executed by their authorlz^^
officers or agentsmwrlhng."
6.
Section 2F7,"Wafver of Furudve Damages and luryFrlal,"should be amended by the
addition of the following as the last sentence of the section:
"However, this Section shall not act asacondlhon, stipulation or provision purporting to bind
any person acquiring any franchise to waive compliance with any provision of the Illinois Franchise Act."
7.
Fach provision of this Amendment shall be effective only to the extent that tbe
jurlsdlchonalrequlrements of lllmolslawapphcable totheprovlslonsaremetlndependentof this
Amendment. Fhis Amendment shall have no force or effect If such jurisdictional requirements are not
met.
8.
As to any state law describedlnthls Amendment that declares void orunenforceable any
provlsloncontamedlntheAgreement, Franchisor reserves the right to challenge the enforceability of th^
statelaw.
9.
All other provisions of the Agreement are hereby ratified and confirmed.
__201 .
Witness
By:
Its:
General Parmer
By:
Name:
Title:
FRANCHISEE
Witness
By:
Name:
Title:
BRINKERINTERNAÔNALPAYROLLCOMPAN^LP
MARYLAND AMENDMENTTOFRANCHÂGREEMENT
For purposesofcomplymgw^htherequuement5of M a r f a n
Fr^b^R^ônandDôsureL^MDBUSR^^
and Supp 2011) (the "Maryland Franchise Law"), Brinker International Fayroll Company, F.F.
("Franchisor") and
("Franchisee"), herehy amend the Franchise Agreement between
them dated
(the"Agreement") as follows:
F
If the Franchisee Is required In the Agreement to execute a release of claims or to
acknowledge facts that would negate or remove from judicial review any statement, misrepresentation or
action that would violate the Maryland Franchise F a w , o r a r u l e or order thereunder, such release shall
exclude claims arising under the Maryland Franchise Faw,and such acknowledgments shall he void with
respect to claims under the Maryland Franchise Law.
2.
Fhe Agreement provides for termination upon bankruptcy. Fhis provision may not be
enforceable under federal bankruptcy law (11 Fl.S.CA. Sec. 101 etseq.).
3.
Any requirement that litigation be conductedlnaforum other than the State of Maryland
shall not belnterpreted to limit any rights Franchisee may haveunder Section 14-216(c)(25) of the
Maryland FranchlseFaw to bring sultlnthe State of Maryland.
4.
Any claims that Franchisee may have under the Maryland Franchise Law musthe
brought within three (3) years after the grant of the franchise.
5.
Fach provision of this Amendment shall be effective only to the extent that the
jurisdlctionalrequlrementsof Maryland lawappllcable to the provisions are met Independent of this
Amendment. Fhis Amendment shall have no force or effect If such jurisdictional requirements are not
met.
6.
As to any state law descrlbedlnthls Amendment that declares void or unenforceable any
provision contamedlnthe Agreement, Franchisor reserves the right to challenge the erôrceablllty of th^
statelaw.
7.
,201 .
Witness .
By:
Its:
General Parmer
By:
Name:
Title:
FRANCHISEE
Witness
By:
Name:
Title:
B^NKERINTERNAÔN^
MINNESOTAAMENDMEN^
ERANCH^DI5CLOSUREDOCUMENT
For purposes of complymgw^hthe requirement of M i n n e s ^
FrauehiseAetMirm. Stat Seetiou 80^1 efseq. and the rules and regui^^
"Minnesota Franchise Act"), Brinker international Payroll Company F^P ("Franchisor") and
("Franchisee"), herehy amend the Franchise Agreement between them dated
L
Fhe Minnesota Department of Commerce requires that franchisors indemnify Minnesota
Franchisees against liability to third parties resulting from claims hy third parties that the Franchisee's
useofthefranchisor'sproprietarymarksinfringes trademark rights of the third party.
2.
Sec. 80d4,Subds. 3,4, a n d ^ o f the Minnesota Franchise Act requires, exceptincertain
specified cases, thataFranchisee be given 90 days notice of termination (with 60 days to cure) and 180
days notice for non-renewal of the Franchise Agreement. If the Agreement containsaprovision that is
inconsistent with the Minnesota Franchise Act, the provisions of the Agreement shall be superseded by
the MinnesotaFranchiseAct'srequirements and shall have no force or effect.
3.
If theFranchisee is required in the Agreement to execute a release of claims or to
action thatwould violate the Minnesota Franchise Act, such release shall exclude claims arising under the
Minnesota Franchise Act, andsuch acknowledgments shallbe v o i d w i t h respect to claims under the
Minnesota Franchise Act.
4.
If the Agreement requires that it be governed by the law ofaState other than the State of
Minnesotaor arbitrationor mediation, thoseprovisions shall not in any wayabrogate or reduce any
rights of the Franchisee as provided for in the Minnesota Franchise Act, including the right to submit
matters to the jurisdiction of the courts of Minnesota.
5.
Any provision that requires the Franchisee to consent toaclaims period that differs from
the applicable stamte of limitations period under Section 80C.17,Subd.5.of the Minnesota Franchise Act
may not be enforceable under Minnesota law.
6.
Sees. 80C21 of the Minnesota Franchises Act a n d M i n n . Rule286044001 prohibit
Franchisor from requiringlitigationtobeconductedoutsideMinnesota. Inaddition, nothing inthe
Franchise Disclosure Document or the Agreement can abrogate or reduce any of Franchisee'srights as
provided for in the Minnesota Franchise Act, including Franchisee'srights to any procedure, forum, or
remedies provided for in that law.
7.
Fhe Agreement andôr Franchise Disclosure Document is hereby amended to delete all
references toliquidateddamagesinviolationof Minnesota law; provided,that no such deletion sball
excuse Franchisee from liability for actual or other damages and the formula for liquidated damages in
the Agreement andôr Franchise Disclosure Document shall be admissible as evidence of actual damages.
^.
Fothe extent required by Minnesota Faw, the Agreement andôr Franchise Disclosure
Document is amended to delete all references toawaiver of jury trial.
9.
AE sections of the Agreement anchor Franchise Disclosnre Document referencing
Franchisor'srightto ohtafn injunctive relief are herehy amended to refer to Franchisors
ohtain.
10.
jurisdictional requirements of Mirmesotalawappiicable tothe provisions are met independent of this
Amendment. Fhis Amendment shall have no force or effect if such jurisdictional requirements are not
met.
11.
As to any state law described in this Amendment that declares void or unenforceable any
provision contained in the Agreement, Franchisor reserves the right to challenge the enforceability of the
statelaw.
12.
IN WlFNFSSWHFRFOF,the parties acknowledge that they have read and understand tbe
contents of this Amendment, that they havehad the opportunity to obtain the advice of counsel.
,201^
Brinker International Fayroll Company,F.F.,
aDelaware limited partnership
Witness
By:
Its:
BIPC Management LLC,
General Parmer
By:
Name:
Title:
FRANCHISEE
Witness
By:
Name:
Fitle:
^NKERINTEÂÔN^^
NEWYORKAMENDMENTTOERANCHÂGREEMENT
^
For purposes of complymg with the requirement of N e w Y ^
Geuerai Business Law, A r h e i e ^ ^ ^ ^ ^ ( t h e " N e w Y o r k L a w ^ B r i ^
Company L ^ ("Franehisor") and
("Franchisee") herehy amend the Franchise
Agreement between them dated
(the"Agreement")asfoiiows:
L
ff the Franchisee is required in the Agreement to execute a release of claims or to
action that would violate the NewYorkLaw,oraregulation, rule or order thereunder, such release shall
exclude claims arisingunder the New York Law,and such acknowledgments shall he void with respect to
all claims arising under the New York Law. Itis the intent of this provision thatnonwaiver provisions of
the Sections 6 ^ 4 a n d 687.5 of the NewYork Law he satisfied.
2.
If the Agreement requires that it be governed hy the law ofastate, other than the State of
NewYork,the choice of law provision shall not be considered to waive any rights conferred npon the
Franchisee under the NewYork Law.
3.
Each provision of this Amendment shall be effective only to the extent that tbe
jurisdictional requirements of NewYork Law applicable to the provisions are met independent of this
met.
4.
provision contained in the Agreement, Franchisor reserves the right to challenge tbe enforceability of the
statelaw.
5.
f R ^ ^ ^ r ^ ^ ^ f ^ ^ ^ ^ ^ ^
__201 .
Witness
By:
Its:
General Partner
By:
Name:
Title:
FRANCHISEE
Witness
By:
Name:
Title:
8^NKERINTERNAÔNALPAYROLLCOMPAN^LF
NORTHDAKOTAAMEND^
For purposes of complying with the requiremeutsof the NorthDakotaFrauehise fuvestmeut
Law,North Dakota Century Co^
Brinker tntemationai Payroii Company L ^ ("Franehisor") and
("Franchisee")
herehy amend the Franchise Agreement between them dated
(the"Agreement")as
follows:
L
ff the Franchisee is required in the Agreement to execute areiease of ciaimsor to
acknowledge facts that wouid negate or remove from judicial review any statement, misrepresentation or
actionthat wouidvioiate the N D F f F , o r a r u i e or order thereunder, such release shall exclude claims
arising under t h e N D F l L , a n d s u c h acknowledgments shallhe void with respect to claims under the
NDF1F
2.
Covenantsnot to compete areenforceahle only undercertainconditionsunderNorth
Dakota law. If the Agreement containsacovenant not to compete that is inconsistent with North Dakota
law,the covenant may he unenforceahle.
3.
If the Agreement requires litigation to he conductedinaforum other than the State of
North Dakota, the requirement is void with respect to claims under the NDFIF.
4.
If the Agreement requires that it he governed hy the law ofastate, other than the State of
NorthDakota,andthereisaconflicthetweenthelawand the NDF1F, the NDF1F will control.
5.
IftheAgreementrequires mediation or arhitration to he conducted i n a f o r u m other than
the State of North Dakota, the requirement may he unenforceable under the NDF1F. Arbitration
involvingafranchise purchased in tbe State of North Dakota must be held either inalocation mutually
agreeduponprior tothearbitrationor if theparties cannot agree onalocation,thelocationwill be
determined by the arbitrator.
6.
If the Agreement requirespayment of aterminationpenalty, the requirement may be
unenforceable under the NDF1F.
7.
Any provision that provides that the parties waive their right t o a j u r y trial may not be
enforceable under the NDF1F.
8.
Anyprovisionthatprovides that the Franchisee consents toawaiver of punitive and
exemplary damages may not be enforceable under the NDFIF.
9.
Any provision that requires the Franchisee to consent toaclaims period that differs from
the applicable statute of limitations period under the NDF1F may not be enforceable under the NDF1F.
fO.
If the Agreement requires thataparty must pay all costs and attomeys'fees associated
with an enforcement action regardless of which party prevails, that requirement is modified to provide
that the prevailing party must pay such costs and fees.
11.
jurisdictional requirements of North Dakota law applicable to the provisions are met independent of this
met.
12.
state law.
13.
, 201_.
Witness
By:
Its:
General Parmer
By:
Name:
Title:
FRANCHISEE
Witness
By:
Name:
Title:
B^NKERINTERNAÔNALPAYROLLCOMPAN^LP
ÔDE^LANDAMENDMENTTOFRANCHÂGREEMEN^
For purposes of complymg with the requuements of the Rhod^
Rf Geu L a w . ^ ^ 8 ^ t o ^ ^ B f ^ ( t h e ^ ^ ^
CEraoehisor")aud
("Franchisees hereby amend the Franchise Agreement hetweeo
them dated
(the"Agreement")asfoiiows:
L
S e e t i o n l 9 ^ T - 1 4 of the RiFIAprovides that any provision inaFranehise Agreement
restricting jurisdiction or venue to a forum outside of the State of Rhode tsiand or requiring the
appiicationof the iaws of another state is v o i d w i t h respect to claims otherwise enforceahie under the
RtFtA. tf the Agreement containsaprovision that is inconsistent with the RfFtA, the RfFfA will control.
2.
If the Franchisee is required in the Agreement to execute a release of claims or to
actionthatwouldviolate theRfFlA, o r a r u l e or order thereunder, such release shallexclude claims
arising under the R1F1A, and such acknowledgments shall be void with respect to claims under the R1F1A.
3.
jurisdictional requirements of Rhode Island law applicable to the provisions are met independent of this
met.
4.
statelaw.
5.
f R ^ ^ ^ r ^ ^ ^ f ^ ^ ^ ^ ^ ^ ^ ^
I N WITNESS WHEREOF, the parties acknowledge that they have read and understand the
,201 .
Witness
By:
Its:
General Parmer
By:
Name:
Title:
FRANCHISEE
Witness
By:
Name:
Title:
B^NKERINTERNAT^
WASHINGTON
For purposes of c o m p l y m g w i ^
F r a n c e luvesfmeotFrofoctiouAct Wash Rev. G o d o ^ l ^ ^
ImeruahooalFayrotiGompauy F F . ^ F r a u c h i s o r ^ a u d
amend the Franchise Agreement between them dated
("Franchisees hereby
L
Section
of the WFIFA provides rights to Franchisee concerning nonrenewal
and termination ofafranchise. Fothe extent the Agreement containsaprovision that is inconsistent with
theWFIFA, the WFIFAwili control
2.
If the Franchisee is required in the Agreement to execntearelease of claims, such release
shall exclude claims arising under the WF1FA; except when tbe release is executed underanegotiated
settlement after the Agreement is in effect and where the parties are represented by independent counsel.
If there are prov^sior^ in the Agreement that unreasonably restrict or limit the statute of limitati^
p e r i o d f o r c l a i m s b r o u g h t u n d e r the W F l F A , o r o t h e r rightsor remedies under the WF1FA, those
provisions may be unenforceable.
3.
If the Agreement requires litigation, arbitration, or mediation to be conducted i n a f o r u m
otherthantheStateof Washington, the requirement maybe unenforceable underWashington law.
Arhitrationinvolvingafranchisepurchased in the State ofWashington, must either be held in tbe State o^
Washington o r i n a p l a c e m u m a l l y agreed upon at the time of tbe arbitration, or as determined by tbe
arbitrator.
4.
If the Agreement requires that it be governed by the law ofastate, other than the State of
Washington,andthereisaconflictbetweenthelawandtheWFlFA, the WFlFAwill control
5.
jurisdictional requirements ofWashington law applicable to the provisions are met independent of this
Amendment. Fhis Amendment shall have no force or effect if such jurisdictional requirements are not
met.
6.
provision contained in the Agreement, Franchisor reserves the right to challenge the enforceability
statelaw.
7.
A l l other provisions of the Agreement are hereby ratified and confirmed.^
f R ^ ^ ^ ^ ^ ^ f ^ t i ^ ^ y ^ ^ ^
, 201_.
Witness
By:
Its:
General. Parmer
By:
Name:
Title:
FRANCHISEE
Witness
By:
Name:
Title:
EXHIBIT D
TABLE OF CONTENTS OF CHILES FRANCHISE MANUAL
FDD-2015
783265-v3\DALDMS
Exhibit D
2012 CFM TABLE OF CONTENTS
I N T R O D U C T I O N T O T H E C H I L I ' S G R I L L & B A R F R A N C H ISE M A N U A L (8 Pages)
Disclaimer and Warranty
Introduction to Chili's Franchise Manual
History of Chili's Grill & Bar
The Power of Welcome
Brinker's Cultural Beliefs
B E V E R A G E P R O G R A M S (3 Pages)
Introduction and Contact Information
Beverage Where to Find It
C O M P C A R D P R O G R A M (12 Pages)
Introduction to the Comp Card Program
Comp Card Policy
C R I S I S M A N A G E M E N T A N D P U B L I C R E L A T I O N S (3 Pages)
Introduction to Crisis Management and Public Relations
Crisis Management Where to Find It
C U L I N A R Y P R O G R A M S (4 Pages)
Introduction to Culinary Programs
Culinary Team Fact Sheet
Culinary Where to Find It
F I N A N C I A L S T A N D A R D S (9 Pages)
Introduction to Financial Standards
Consolidated Balance Sheet
Consolidated Income Statement
Consolidated Cash Flow Statement
Monthly P&L Statement
Monthly Gross Sales Statement
Franchise Payment Instructions
Sales Reporting Where to Find It
FRANCHISE DISCLOSURE DOCUMENT (323 Pages)
2012 Chili's Grill & Bar Franchise Disclosure Document
G I F T C A R D P R O G R A M (15 Pages)
Introduction to the Gift Card Program
Gift Card Policy
Gift Card Ordering
Gift Card FAQs
Gift Card Ordering
Gift Card Bulk Info Letter
GUEST EXPERIENCE MEASUREMENT (GEM) (12 Pages)
Introduction to GEM
FDD-2015
783265-v3\DALDMS
Exhibit D - Page 1
GEM Where to Find It
Chili's GEM Survey - Short Version
Short vs. Shorter Comparison
GEM Contest Rules
GEM Guest FAQs
GEM Integrity
GUEST RELATIONS (2 Pages)
Introduction to Guest Relations
INFORMATION TECHNOLOGY (9 Pages)
Introduction to Information Technology
Chili's Franchise IT Guide
LAUNCH GUIDES (2 Pages)
Introduction to Launch Guides
LEARNING AND DEVELOPMENT (3 Pages)
Introduction to Learning and Development
Learning and Development Where to Find It
MARKET PLANNING TOOLS (9 Pages)
Introduction to Market Planning Tools
Disclaimer Agreement
Market Development Request
DEVO Where to Find It
MARKETING AND ADVERTISING PROGRAMS (49 Pages)
Introduction to Marketing and Advertising Programs
Chili's Brand Identity Style Guide
Chili's Marketing and Advertising Portal
Franchisee Marketing Orientation
Give Back Nights
Marketing Where to Find It
NEW RESTAURANT DEVELOPMENT (31 Pages)
Introduction to New Restaurant Development
General Contractor Guidelines
Construction Checklists
Construction Checklists Where to Find It
Design Review Process
Introduction to Procurement and Budgeting Guide
Procurement Budgeting Guide
NEW RESTAURANT OPENING (2 Pages)
Introduction to New Restaurant Opening
ONLINE ORDERING (2 Pages)
Introduction to Online Ordering
FDD-2015
783265-v3\DALDMS
Exhibit D - Page 2
Q A F O O D S A F E T Y (66 Pages)
Introduction to QA Food Safety
QA Food Safety Where to Find It
SAFE Manual
RECRUITING AND HIRING (78 Pages)
Introduction to Recruiting and Hiring
Chili's Recruiting Toolkit
Job Descriptions
R E M O D E L A N D R E I M A G E (3 Pages)
Introduction to Remodel and Reimage Programs
Prototypes and Signage Where to Find It
R E P A I R A N D M A I N T E N A N C E P R O G R A M S (64 Pages)
Introduction to Repair and Maintenance
CFM Repair and Maintenance
Facilities Winter Checklist
Rollershade Instructions
Dishwasher Maintenance
Shake Machine Maintenance
R E S T A U R A N T O P E R A T I O N S (236 Pages)
Introduction to Restaurant Operations
Brand Standard Franchise Use
Dress Guidelines FAQs
Dress Guidelines Poster 2012
HotSchedules
Perfect 10 Key Information and Payout
Perfect 10 Bartender
Perfect 10 Team Service
Perfect 10 To Go
QA Leaders Guide
Team Selling Launch Guide
Team Service Launch Guide
To Go Refresh Guide
Restaurant Evaluation
Clean and Well Maintained Program
V E N D O R S , S U P P L I E R S , A N D P U R C H A S I N G (25 Pages)
Introduction to Vendors, Suppliers and Purchasing
QA Supplier Requirements
Chili's Franchise Ordering Guide
BrinkerStore Ordering Information
Chili's Vendor Master
HOH Factory Contact List
Supplemental Vendor List
Who to Call - FOH Purchasing
Chili's Items Moved from Brinker DC
970 Total Pages
FDD-2015
783265-v3\DALDMS
Exhibit D - Page 3
EXHIBIT E
FDD-2015
783265-v3\DALDMS
Exhibit E
AGENT NAME
Corporation Service Company
The Prentice-Hall Corporation
System, Inc.
United States Corporation
Company
CSC-Lawyers Incorporating
Service Incorporated
System, Inc.
Company
System, Arkansas
Company
STREET
9360 Glacier Highway
SUITE
Suite 202
Suite 202
CITY
Juneau
Juneau
STATE
AK
AK
ZIP
99801
99801
COUNTY
No County
No County
Suite 202
Juneau
AK
99801
No County
150 South Perry St.
Montgomery
AL
36104
Montgomery
150 South Perry St.
Montgomery
AL
36104
Montgomery
150 South Perry St.
Montgomery
AL
36104
Montgomery
300 S. Spring Street
Suite 900
Suite 900
Little Rock
Little Rock
AR
AR
72201
72201
Pulaski
Pulaski
Suite 900
Little Rock
AR
72201
Pulaski
2338 W. Royal Palm
Suite J
Phoenix
AZ
85021
Maricopa
Suite J
Phoenix
AZ
85021
Maricopa
Suite J
Phoenix
AZ
85021
Maricopa
Suite 750
Los Angeles
CA
900132344
Sacramento
CA
958333505
Sacramento
2710 Gateway Oaks Dr. Suite 150N ' Sacramento
CA
Sacramento
2710 Gateway Oaks Dr. Suite 150N
Sacramento
CA
1560 Broadway
1560 Broadway
Suite 2090
Suite 2090
Denver
Denver
CO
CO
958333505
958333505
80202
80202
1560 Broadway
Suite 2090
Denver
CO
80202
Denver
061201537
061201537
061201537
061031800
Hartford
RH
IVU.
System, Inc.
Company
Commissioner of Business
Oversight
Department of Business
Oversight
which will do business in
California as CSC-Lawyers
Incorporating Service
System, Inc.
Company
System, Inc.
Company
2338 W. Royal Palm
Rd.
2338 W. Royal Palm
Rd.
320 West 4th Street
50 Weston St.
Hartford
CT
System, Inc.
Company
Banking Commissioner - State
of Connecticut
50 Weston St.
Hartford
CT
50 Weston St.
Hartford
CT
260 Constitution Plaza
Hartford
CT
2710 Gateway Oaks Dr. Suite 150N
FDD-2015
783265-v3\DALDMS
Exhibit E - Page 1
Sacramento
Denver
Denver
Hartford
Hartford
AGENT NAME
Securities and Business
Investment Division
Connecticut Dept. of Banking
System, Inc.
Company
System, Inc.
Company
System, Inc.
Company
STREET
SUITE
CITY
STATE
ZIP
COUNTY
Washington
DC
20005
No County
Washington
DC
20005
No County
Washington
DC
20005
No County
1090 Vermont Avenue,
NW
N.W.
N.W.
2711 Centerville Rd.
Suite 400
Suite 400
Wilmington
Wilmington
DE
DE
19808
19808
New Castle
New Castle
Suite 400
Wilmington
DE
19808
New Castle
1201 Hays Street
1201 Hays Street
Tallahassee
Tallahassee
EL
EL
32301
32301
Leon
Leon
1201 Hays Street
Tallahassee
EL
32301
Leon
#300
Norcross
GA
30092
Gwinnett
#300
Norcross
GA
30092
Gwinnett
#300
Norcross
GA
30092
Gwinnett
Suite 1600,
Pauahi
Tower
Suite 1600,
Pauahi
Tower
Suite 1600,
Pauahi
Tower
Room 203
Honolulu
HI
96813
Honolulu
Honolulu
HI
96813
Honolulu
Honolulu
m
96813
Honolulu
Honolulu
HI
96813
Suite 729
Suite 729
Des Moines
Des Moines
IA
IA
50309
50309
Polk
Polk
505 5 Avenue
Suite 729
Des Moines
IA
50309
Polk
12550 W. Explorer
Suite 100
Boise
ID
83713
Ada
System, Inc.
Company
CSC Services of Hawaii, Inc.
40 Technology Pkwy.
South
40 Technology Pkwy.
South
40 Technology Pkwy.
South
1003 Bishop Street
PHCS Hawaii, Inc.
1003 Bishop Street
System, Inc.
1003 Bishop Street
Hawaii Commissioner of
Securities
Department of Commerce &
Consumer Affairs
Business Registration Division
System, Inc.
Company
335 Merchant Street
th
505 5 Avenue
505 5 Avenue
th
th
Drive
FDD-2015
783265-v3\DALDMS
Exhibit E - Page 2
AGENT NAME
System, Inc.
Company
Illinois Corporation Service
Company
Illinois Attorney General
System, Inc.
Company of Illinois
System, Inc.
Company
Indiana Secretary of State
STREET
12550 W. Explorer
Drive
12550 W. Explorer
Drive
801 Adlai Stevenson
Dr.
500 South Second St.
801 Adlai Stevenson
Dr.
801 Adlai Stevenson
Dr.
251 East Ohio St.
251 East Ohio St
SUITE
Suite 100
CITY
Boise
STATE
ID
ZIP
83713
COUNTY
Ada
Suite 100
Boise
ID
83713
Ada
Springfield
IE
62703
Sangamon
Springfield
Springfield
IE
IL
62706
62703
Sangamon
Springfield
IE
62703
Sangamon
Suite 500
Suite 500
Indianapolis
Indianapolis
IN
IN
46204
46204
Marion
Marion
251 East Ohio St.
Suite 500
Indianapolis
IN
46204
Marion
302 West Washington
St.
200 S.W. 30*-4%2Sm
SW Wannamaker Dr.
200 S.W, 30*-a22DQ.
SW Wannamaker Dr.
200 S.W. 30*__S*2900
SW Wannamaker Dr.
421 West Main St.
Room El 11
Indianapolis
IN
46204
Suite 204
Topeka
KS
Suite 204
Topeka
KS
Suite 204
Topeka
KS
Frankfort
KY
666446
6614
666446
6614
666446
6614
40601
Franklin
Frankfort
KY
40601
Franklin
Frankfort
KY
40601
Franklin
Baton Rouge LA
708026129
Co poration Service Company
Th<: Prentice-Hall Corporation
System, Kansas, Inc.
Un ted States Corporation
Co npany
d/b/a CSC-Lawyers
Incorporating Service Company
421 West Main St.
System, Inc.
421 West Main St.
Company
320 Somerulos St.
Shawnee
Shawnee
Shawnee
System, Inc.
320 Somerulos St.
Baton Rouge
LA
708026129
Company
320 Somerulos St.
Baton Rouge
LA
708026129
System, Inc.
Company
Maryland Securities
Commissioner
Maryland Securities Division
Service Company
84 State St.
84 State St.
Boston
Boston
MA
MA
02109
02109
East Baton
Rouge
Parish
East Baton
Rouge
Parish
East Baton
Rouge
Parish
Suffolk
Suffolk
84 State St.
Boston
MA
02109
Suffolk
200 St. Paul Place
Baltimore
MD
21202
Baltimore
MD
21202
7 St. Paul Street
Suite 1660
FDD-2015
783265-v3\DALDMS
Exhibit E - Page 3
AGENTNAME
The Frenti^Hati Corporation
System-Maryland
The United States Corporation
Company
The Prentiee Hati Corporation
System, Inc.
Company
SeverinMBeiiveau, Clerk
oôCorporation Service Co.
CSC Uawyers Incorporating
Service(Company)
The Prentice Hall Corporation
System, Inc.
Company
Michigan DeptofCommerce
Corporations and Securities
Bureau
The Prentice Hali Corporation
System, Inc.
Company
CSC Eawyers Incorporating
Service Company
System, Inc.
Company
COUNTY
STREET
7 St. Paul Street
SUITE
Suite 1660
CITY
Baltimore
STATE
MD
ZIP
21202
7 St. Paul Street
Suite 1660
Baltimore
MD
21202
45 Memorial Circle
45 Memorial Circle
Augusta
Augusta
ME
ME
04330
04330
Kennebec
Kennebec
45 Memorial Circle
Augusta
ME
04330
Kennebec
45 Memorial Circle
Augusta
ME
04330
Kennebec
601 Abbot Rd.
East Lansing MI
48823
Ingham
601 Abbot Rd.
East Lansing MI
48823
Ingham
601 Abbot Rd.
East Lansing MI
48823
Ingham
G. Mermen Williams
Building
525 West Ottawa Street
380 Jackson St.
380 Jackson St.
1st Floor
Lansing
MI
48913
Suite 700
Suite 700
St. Paul
St. Paul
MN
MN
55101
55101
Ramsey
Ramsey
380 Jackson St.
Suite 700
St. Paul
MN
55101
Ramsey
Suite 500
St. Paul
MN
MO
Cole
MO
65101
Cole
MO
65101
Cole
506 South President St.
Jefferson
City
Jefferson
City
Jefferson
City
Jackson
551012198
65101
MS
System, Inc.
Company
Jackson
MS
Jackson
MS
Helena
MT
The Trentice Hall Corporation
System, Inc.
Company
System, Inc.
26 West Sixth Avenue
Helena
MT
Helena
MT
Raleigh
Raleigh
NC
NC
39201- Hinds
5301
39201- Hinds
5301
39201- Hinds
5301
59624- Lewis &
1691
Clark
59624- Lewis &
1691
Clark
59624- Lewis &
1691
Clark
27603
Wake
27603
Wake
FDD-2015
783265-v3\DALDMS
th
85 7 Place East
221 Bolivar St.
221 Bolivar St.
221 Bolivar St.
P.O. Box
1691
P.O. Box
1691
P.O. Box
1691
327 Hillsborough Street
Exhibit E - Page 4
AGENT NAME
Company
STREET
SUITE
316 North Fifth St.
System, Inc.
Company
Securities Commissioner
North Dakota Securities Dept.
Service Company
System, Inc.
Company
d/b/a Lawyers Incorporating
Service
System, Inc.
Company
316 North Fifth St.
P.O. Box
1695
P.O. Box
1695
P.O. Box
1695
316 North Fifth St.
STATE
ZIP
NC
27603
COUNTY
Wake
Bismarck
ND
58502
Burleigh
Bismarck
ND
58502
Burleigh
Bismarck
ND
58502
Burleigh
Bismarck
ND
585050510
600 E. Blvd. Ave.
State Capital - 5 Floor
233 South 13 Street
Suite 1900
Lincoln
NE
233 South 13 Street
Suite 1900
Lincoln
NE
233 South 13 Street
Suite 1900
Lincoln
NE
th
Lancaster
68508
Lancaster
68508
Lancaster
68508
14 Centre Street
Concord
Merrimack
NH
03301
14 Centre Street
Concord
NH
03301
Merrimack
14 Centre Street
Concord
NH
03301
Merrimack
830 Bear Favern Rd.
West
Trenton
West
Trenton
NJ
08628
Mercer
NJ
08628
Mercer
West
Trenton
Santa Fe
NJ
08628
Mercer
NM
87501
Santa Fe
Santa Fe
NM
87501
Santa Fe
Santa Fe
NM
87501
Santa Fe
Ft. Defiance
Navaho
Nation
86504
No County
Las Vegas
NV
89119
Clark
Las Vegas
NV
89119
Clark
Las Vegas
NV
89119
Clark
Albany
NY
Albany
Albany
NY
122072543
122072543
System, New Jersey, Inc.
830 Bear Favern Rd.
Company
830 Bear Tavern Rd.
125 Lincoln AvoI21
East Marcy St.
Th ! Prentice-Hall Corporation 125 Lincoln Ave 123
Sy; tern, Inc.
East Marcy St.
125 Lincoln Ave.123
Co npany
East Marcy St/
Lee R. Belone, Registered Agent Rural Address No. 40
through The Prentice-Hall
P.O. Box 1969
Corporation System, Inc.
CSC Services of Nevada, Inc.
2215-B Renaissance
Drive
2215-B Renaissance
Drive
System, Nevada, Inc.
2215-B Renaissance
Company
Drive
80 State St.
System, Inc.
CITY
Raleigh
Suite
3%101
Suite
5^101
Suite
333101
80 State St.
FDD-2015
783265-v3\DALDMS
Exhibit E - Page 5
Albany
AGENT NAME
Company
New York Secretary of State
Service (Corporation Service
Company)
System, Inc.
Company
System, Oklahoma, Inc.
Company
System, Inc.
Company
System, Inc.
Company
Director, Dept. of Business
Regulation; Securities Division
System, Inc.
Company
System, Inc.
Company
System, Inc.
Director, Dept. of Labor and
Regulation; Division of
Securities
Company
One Commerce Plaza
99 Washington Ave.
50 West Broad St.
Suite 1800
Columbus
OH
ZIP
122072543
122310001
43215
50 West Broad St.
Suite 1800
Columbus
OH
43215
Franklin
50 West Broad St.
Suite 1800
Columbus
OH
43215
Franklin
OK
OR
OR
731398511
731398511
731398511
97301
97301
Oklahoma
285 Liberty St., NE
285 Liberty St., NE
Oklahoma
City
Oklahoma
City
Oklahoma
City
Salem
Salem
285 Liberty St., NE
Salem
OR
97301
Marion
SUITE
STREET
80 State St.
115 S.W. 89* St.
th
115 S.W. 89 St
th
115 S.W. 89 St.
CITY
Albany
STATE
NY
Albany
NY
OK
OK
COUNTY
Albany
Franklin
Oklahoma
Oklahoma
Marion
Marion
2595 Interstate Dr.
2595 Interstate Dr.
Suite 103
Suite 103
Harrisburg
Harrisburg
PA
PA
17110
17110
Dauphin
Dauphin
2595 Interstate Dr.
Suite 103
Harrisburg
PA
17110
Dauphin
Cranston
RI
02920
1511 Pontiac Avenue
222 Jefferson Blvd.
222 Jefferson Blvd.
Suite 200
Suite 200
Warwick
Warwick
Rl
RI
02888
02888
Kent
Kent
222 Jefferson
Boulevard
1703 Laurel Street
1703 Laurel Street
Suite 200
Warwick
RI
02888
Kent
Columbia
Columbia
SC
SC
29201
29201
Richland
Richland
1703 Laurel Street
Columbia
SC
29201
Richland
503 South Pierre St.
Pierre
Pierre
SD
SD
57501
57501
Hughes
Hughes
445 E. Capitol Ave.
Pierre
SD
575013185
Pierre
SD
57501
Hughes
2908 Poston Ave.
Nashville
TN
37203
Davidson
2908 Poston Ave.
Nashville
TN
37203
Davidson
FDD-2015
783265-v3\DALDMS
Exhibit E - Page 6
AGENT NAME
System, Inc.
Company
d/b/a CSC-Lawyers
Incorporating Service Company
System, Inc.
Company
System, Inc.
Company
Clerk, Virginia State
Corporation Commission
System, Inc.
Company
Th i Prentice-Hall Corporation
System, Inc.
Cojnpany
Director of Financial Institutions
Securities Division
System, Inc.
Company
Service Company
Administrator, Div. of Securities
Wisconsin Dept. Of Financial
Institutions
System, Inc.
Company
STREET
SUITE
2908 Poston Ave.
CITY
STATE
ZIP
COUNTY
Nashville
TN
37203
Davidson
211 E. 7th St.
Suite 620
Austin
TX
787013218
Travis
211 E. 7th St.
Suite 620
Austin
TX
Travis
211 E. 7th St.
Suite 620
Austin
TX
2180 South 1300 East
Suite 650
UT
Suite 650
UT
84106
Salt Lake
Suite 650
Salt Lake
City
Salt Lake
City
Salt Lake
City
Richmond
787013218
787013218
84106
UT
84106
Salt Lake
VA
23219
Richmond
Richmond
VA
VA
23219
23219
No County
No County
Richmond
VA
23219
No County
North Suite 2
Montpelier
VT
Washington
North
Montpelier
VT
Montpelier
VT
Tumwater
Tumwater
WA
WA
056020
5641
0560%
5641
0560311
5641
98501
98501
1300 East Main St.
Tyler Building
1111 E. Main Street
1111 E. Main Street
16 Floor
16 Floor
H U E . Main Street
16 Floor
-659—State 100
Mam St.
#9—SWelOO
th
th
th
Main St.
friiteZ
449—State! 00 North SuifeU
Main St.
300 Deschutes Way SW Suite 304
150 Israel Rd. S.W.
Travis
Salt Lake
Washington
Washington
Thurston
300 Deschutes Way SW
Suite 304
Tumwater
WA
98501
Thurston
300 Deschutes Way SW
Suite 304
Tumwater
WA
98501
Thurston
8040 Excelsior Drive
Suite 400
Madison
WI
53717
Dane
Madison
WI
53703
345 West Washington
Ave.
Suite 400
Madison
WI
53717
Dane
Suite 400
Madison
WI
53717
Dane
Charleston
WV
25302
Kanawha
209 W. Washington St.
FDD-2015
783265-v3\DALDMS
Exhibit E - Page 7
AGENT NAME
System, Inc.
Company
System, Inc.
Company
CITY
Charleston
STATE
WV
ZIP
25302
COUNTY
Kanawha
Charleston
WV
25302
Kanawha
1821 Logan Ave.
1821 Logan Ave.
Cheyenne
Cheyenne
WY
WY
82001
82001
Laramie
Laramie
1821 Logan Ave.
Cheyenne
WY
82001
Laramie
STREET
SUITE
FDD-2015
783265-v3\DALDMS
Exhibit E - Page 8
EXHIBIT F
LIST OF STATE ADMINISTRATORS
FDD-2015
783265-v3\DALDMS
Exhibit F
LIST OF STATE AD]
[STRATORS
California
Minnesota
Commissioner of Business Oversight
Department of Business Oversight
320 West 4 Street, Suite 750
Los Angeles, CA 90013-2344
Market Assurance Division
85 7 Place East, Suite 500
St. Paul, MN 55101-2198
th
th
Hawaii
New York
Commissioner of Securities
Business Registration Division
Department of Commerce
and Consumer Affairs
335 Merchant Street, Room 203
Honolulu, HI 96813
Bureau of Investor Protection & Securities
New York State Department of Law
Office of the Attorney General
120 Broadway, 23 Floor
New York, NY 10271
Illinois
North Dakota
Franchise Bureau
Office of Attorney General
500 South Second Street
Springfield, IL 62706
Securities Department
State Capitol - 5th Floor
600 East Boulevard Avenue
Bismarck, ND 58505-0510
Indiana
Oregon
Chief Deputy Commissioner
Indiana Securities Division, Franchise Section
Secretary of State
302 West Washington Street, Room El 11
Indianapolis, IN 46204
Department of Consumer and
Business Services
Division of Finance and
Corporate Securities
Labor and Industries Building
Salem, Oregon 97301
rd
Maryland
Rhode Island
Maryland Division of Securities
Franchise Examiner
200 St. Paul Place
Baltimore, MD 21202-2020
Michigan
Michigan Attorney General's Office
Consumer Protection Division
Attn: Franchise Section
525 West Ottawa Street
G. Mennen Williams Building, 1st Floor
Lansing, MI 48933
Department of Business Regulation
Securities Division
1511 Pontiac Avenue
John O. Pastore Complex-69-1
Cranston, Rhode Island 02920-4407
South Dakota
Franchise Administration
Department of Labor and Regulation
445 E. Capitol Avenue
Pierre, South Dakota 57501-3185
FDD-2015
783265-v3\DALDMS
Exhibit F-Page 1
Virginia
State Corporation Commission
Division of Securities and Retail Franchising
Tyler Building, 1300 East Main Street
Richmond, VA 23219
Washington
Administrator
Department of Financial Institutions
Securities Division
P.O.Box 9033
Olympia, WA 98507-9033
( W ) 902-8760
Wisconsin
Franchise Administrator
Department of Financial Institutions
P.O. Box 1768
Madison, WI 53701
FDD-2015
783265-v3\DALDMS
Exhibit F-Page 1
EXHIBIT G
FDD-2015
783265-v3\DALDMS
Exhibit G
anrhise Agreement si^nrd. but restaurant nnt open.
HMS-Host
Gorporationimcmational, Inc.
Volenti Southeast'
ManagwnemPcppepi North, LLC
as^w
701.032.002
9
701.098.055
4701.867.00
m
Valenti Southeast Management
701.098.054
8
701.098.073
7
•v
w/.A
Chili's Too - Anchorage Airport
5000 West International Airport Road, #SA2830
^
n # & % f #it/
Anchorage
AK
E.a&k:':
99502
907-243-4331
ALAK
36830
99515
#420z-&&%a
Birmingham
AL
35242
205-980-0290
Chili's-Trussville
1676 Gadsen Highway
Birmingham
AL
35235
205-661-6102
Chili's-AwWmQimW.
Dimond Center Mall
444W)naMm-BA*MnQ ^
Suite 162
Chili's - Inverness
101 Inverness Comers
AuburnAnchora
nimond Boulevard.
a
701.098.001
0
Chili's-Decatur
1003 Beltline Rd., SW
Decatur
AL
35601
256-355-8850
701.098.074
4
Chili's-Florence
370-A Cox Creek Parkway
Florence
AL
35630
256-760-8081
701,098.000
7
Fultondale
AL
35068
205-849-4474
701.098.000
4
Chili's -Fultondale
203 Howell Street
Chili's-Gadsden
340 Albert Rains Blvd.
Gadsden
AL
35901
256-547-8185
701.098.054
9
701.098.054
5
701.098.077
2
701.098.000
arTBDi
Chili's -Wildwood
209 State Farm Parkway
Chili's - Huntsville
4925 University Drive, Suite B
Homewood
AL
35242
205-942-3129
Huntsville
AL
35816
256-722-9620
Chili's - Jones Valley
2740 Carl T. Jones Drive SE
•Chili's Mobile ITBD1
TQO^^WiMiw^fl^jûthitSRO U.S. 72
Huntsville
AL
35802
256-882-1230
MfWkHunLSYill AL
S
Mobile ' ,
:
366%!
TBD1
251 776 70061
TBD1
Y^^^^M^^??^^
^'-f^^f^K / f ^ W * ^
^'
. chiii-s -mm
Chili's - Eastchase Parkway
3555 Eastchase Parkway
C f w p w i r t H w I n l e m a t i n n a l . Inc
701.098.000
3
701.098.055
1
701.032.005
9
WM&Host
GefpefatienTnTcmational Inc.
701.032.006
1
Pepper Dining, Inc.
408.002.152
4
408.002.133
6
HMS-Host
Pepper Dining, Inc.
•>
T
• ••
iakf
^ ^ ^ 4 *
Montgomery
's'Y.
m
;
16695 1251-77^
.* V w ; ^ ^
fiS}'-J
AL
36117
334-270-1973
Chili's - Tuscaloosa
1030 Skyland Blvd. East
Tuscaloosa
AL
35405
205-750-8881
Chili's Too - Oakland Airport
Oakland Airport
One Airport Drive
Oakland
CA
94621
510-563-3865
Chili's Kiosk-Oakland
Oakland International Airport
Terminal 1, Gl
One Airport Drive, Box 39
Chili's-Bristol
1379 Farmington Avenue
Oakland
CA
94621
Bristol
CT
06010
860-585-8415
Chili's-Cromwell
4 Sebethe Drive
Cromwell
CT
06416
860-632-1779
Pepper Dining, Inc.
408.002.082
9
Chili's-Danbury
81 Newtown Road
Danbury
CT
06810
203-778-6703
Pepper Dining, Inc.
408.002.083
8
Chili's - E. Haven
58 Frontage Road
East Haven
CT
06512
203-467-1533
Pepper Dining, Inc.
408.002.081
3
Glastonbury
CT
06033
860-657-2333
Pepper Dining, Inc.
408.002.082
1
408.002.139
5
408.002.081
6
408.002.080
Chili's - Glastonbury
2855 Main Street
Chili's - Hamden
2100 Dixwell Avenue
Hamden
CT
06514
203-248-2283
Chili's - Lisbon
151 River Road
Lisbon
CT
06351
860-376-5862
Chili's-Buck! and Street
250 Buckland Street
Manchester
CT
06040
860-648-0833
Chili's-Milford
Milford
CT
06460
203-574-5140
Pepper Dining, Inc.
Pepper Dining, Inc.
Pepper Dining, Inc.
Exhibit G - Page 1
imaammm
. State
3
408.002.119
0
1500 Boston Post Road Rt. I
Chili's-Montvillc
2000 Norwich - New London
Pepper Dining, Inc.
408.002.080
6
Pepper Dining, Inc.
Pepper Dining, Inc.
aayrify
: :
^-f,--.,?,^:*
Montville
CT
06382
860-848-1114
Chili's-New Britain
590 Hartford Road Rt 71
New Britain
CT
06053
860-229-0155
408.002.084
2
Chili's-New London
369 North Frontage Road
New London
CT
06320
860-444-0335
Pepper Dining, Inc.
408.002.081
4
Chili's - Newington
3017 Berlin Turnpike & Pascone Ave.
Newington
CT
06111
860-667-9063
Pepper Dining, Inc.
408.002.142
4
Chili's-Shelton
828 Bridgeport Avenue
Shelton
CT
06484
203-926-9500
Pepper Dining, Inc.
408.002.084
3
Chili's-Simsbury
530 Bushy Hill Road
Farminton Valley Mall
Simsbury
CT
06070
860-658-1334
Pepper Dining, Inc.
408.002.082
2
Chili's - Southington
11 Spring Street
Southington
CT
06489
860-628-5022
Pepper Dining, Inc.
408.002.083
3
Chili's- Wallingford
1085 N. Colony Road
Wallingford
CT
06492
203-697-9313
Pepper Dining, Inc.
408.002.082
5
Chili's-Waterbury
225 Union Street
Brass Mill Commons
Waterbury
CT
06702
203-757-6397
Pepper Dining, Inc.
408.002.134
3
Chili's-Windsor
1035 Kennedy Road
Windsor
CT
06095
860-687-1388
Quality Dining, Inc.
701.040.001
2
Newark
DE
19713
302-738-6355
701.040.002
8
Chili's - Christiana
425 Stanton-Christiana Road
Chili's - Wilmington
4147 Concord Pike
Wilmington
DE
19803
302478-8682
DNC-Travel Hospitality Services,
Inc.
701.090.000
3
Chili's Too - Ft. Lauderdale Airport
Terminal 3
320 Terminal Drive
Ft. Lauderdale
FL
33315
954-359-1500
DNC Travel Hospitality
SftwMwiHnst Intematinnal Inc
701.090.000
4701.032.00,
Chili's Too - FertEL Lauderdale International
Airport
Terminal 1
320 Terminal Drive
Ft. Lauderdale
FL
33315
954-359-1500
XExt. 11
m
•1C Tmvol Hospitality Sorvtcos. Inc.
D ^^Favet44esprtaJity Sarvêes
,701.090.000
5
.,*k#&O0O
2
• "Chili's.Kiqsky Ft,'I.Qudordalc Aiipph^
. TammeW f " ' '
:•
.3304'effmftal4^Fiw •
' ", - t "
Ft74vdu(feFdalo r
_
:
c
1
' .V "! ' t
\ .4
- •
53^5
-. V
dale-Aifporti.
..Tc'rminal^l,, Qoncourso^B;
'.V.-' -.
:320 Tenflinal-Byive'--''-v* .^'j' • ' . • V A
;;>.•,%•'• ^>i-
.%
' SJy-,
Wf>':
' .
mm-':
M^.r
mm
HMS Host
701.032.005
1
Chili's Too - Jacksonville International Airport
2400 Yankee Clipper Drive
Jacksonville
FL
32218
904-741-0400
Ext. 25
Aramark Educational Services,
Inc.
701.816.000
6
Chili's - Florida International University-MMC
Graham Center Building # 156
11200 SW8th Street
Miami
FL
33199
305-348-3426
Master Concessionair LLC
701.039.000
1
Chili's Too - Miami International Airport
Concourse G Terminal, 2nd Level
4200 N.W. 36th
Miami
FL
33122
305-869-4830
Master Concessionair LLC
701.039.000
3
Chili's Kiosk - Miami Airport
Miami International Airport, Terminal E
4200 N.W. 36th.
Miami
FL
33122
J4M5 Host
701.032.000
7
Chili's Too - Orlando International Airport
9333 Airport Blvd.
Orlando
FL
32827
407-851-1334
Ext. 116.33
Inc.
701.816.000
2
Chili's Too - Florida State University
79 North Woodward Street
Tallahassee
FL
32306
850-645-8466
HMS Host
701.032.001
9
Chili's Too - Tampa International Airport
Main Terminal
Tampa
FL
336071433
813-396-3977
Ext. 304
HMS Host
GerfHât+fmlntemaTional, Inc
701.032.004
3
Chili's Too - Tampa Airport
Tampa International Airport
Tampa
FL
336071433
813-396-3944
Ext. 225
Exhibit G - Page 2
^
^ ^ ^ ^
B ^ ^ ^ ^ a r ^ ^ ^ ^ ^ ^ ^ ^
HMSHost
eeFpergtienlntgrnatipnal. In?.
701.032.005
3
ftonnnmo Hielan Restaurant
GrouprU*
701.041.001
0
Airside C
Chili's Too - West Palm Beach Airport
Palm Beach International Airport
Concourse C, Departure Level
1000 Turn age Boulevard
Chili's-Albany
2821 Ledo Road
Ronmiroo Hielan Restaurant
Group r&P
Bonnaroojimlifl Restaurant
Groups
701.811.058
3
BonnarooJiielaa Restaurant
GrouprLP
West Palm
Beach
FL
33406
561-683-0834
Ext. 252
Albany
GA
31707
229-432-1035
Chili's - Augusta
273 Robert C. Daniel Jr. Parkway
Augusta
GA
30909
706-667-0007
701.811.000
7
Chili's-Evans
700 Ronald Reagan Drive
Evans
GA
30809
706-860-3464
701.041.000
4
Chili's-Hinesville
623 West Oglethorpe Highway
Hinesville
GA
31313
912-408-4800
• TOW
feB6V€fM.iJ4Srr, iS^po'SugWoof;' .Suite .538 ^V-.'
i
r^r'.^'^^
^K'^
Q
.
t'^vF^
BonnarooHiclan Restaurant
Groupj-LP
701.811.000
6
Chili's-Macon
5080 Riverside Drive
Macon
GA
31210
478-757-0169
Sennarooiiklan Restaurant
GrouprW
701.041.000
3
Chili's - Milledgevilley
2596 North Columbia Street
Milledgeville
GA
31061
478-452-1900
BeHftafeeJiifiian Restaurant
GrouprLR
701.041.001
2
Statesboro
GA
30458
912-764-6333
BofmarooHielan Restaurant
GrouprtrP
(kmnamoHielan Restaurant
GroupptF-
701.041.001
4
Chili's-Statesboro
435 Commerce Blvd.
Chili's -Tifton
707 W. 7th Street
Tifton
GA
31794
229-382-3138
701.041.001
1
Chili's-Valdosta
1700 Baytree Road
Valdosta
GA
31602
229-244-8604
Pacific Heritage
701.053.000
4
Chili's - Pearl Ridge Mall
98-130 Pali Momi Street.
Aiea
HI
96701
808-484-2900
Hawaii & Texas Dining Authority
701.030.000
2
Chili's-Waikiki
2350 Kuhio
Honolulu
HI
96815
808-922-9697
Pacific Meritage
701.053.000
3
Chili's-Kahala Mall (Oahu)
4211 Waialae Avenue
Honolulu
HI
96816
808-738-5773
Pacific Meritage
701.053.000
5
Chili's-Kapolei (Oahu)
590 Farrington Highway
Kapolei
HI
96707
808-693-8722
Pacific Meritage
701.053.000
2
Chili's-Mililani (Oahu)
95-1249 Meheula Parkway, Bldg. P
Mililani
HI
96789
808-627-0888
Pacific Meritage
701.053.000
1
701.853.093
9
Chili's-Waikele
94-797 Lumiania Street
Waipahu
Hi
96797
808-677-7775
Chili's-Ankeny
2601 SE Delaware
Ankeny
IA
50021
515-963-8400
ERJ Dining IV, In^LLG
701.853.092
4
Chili's-Cedar Rapids
1250 Collins Road
Cedar Rapids
IA
52402
319-378-9694
ERJ Dining IV, InorLLQ
701.853.091
9
Chili's-Clive
11411 Forest Avenue
Clive
IA
50325
515-226-1744
ERJ Dining IV, \mUQ.
701,853.092
5
Chili's-Coralville
2651 2nd Street
Coralville
IA
52241
319-351-1488
ERJ Dining IV, fmkLLC
701.853.093
0
Chili's-Davenport
4020 E. 53rd Street
Davenport
IA
52807
563-359-1144
ERJ Dining IV, InoiLQ
701.853.093
2
Chili's-Sioux City
110 Nebraska Street
Sioux City
IA
51101
712-258-0700
Shoot The Moon, LLC
701.815.090
1
Chili's-Franklin
7997 Franklin Road
Boise
ID
83709
208-327-0088
Shoot The Moon, LLC
701.815.090
3
Chili's-Broadway
916 Broadway
Boise
ID
83706
208-389-2200
Shoot The Moon, LLC
701.815.092
7
701.815.093
6
701.815.000
4
Chili's -Coeur d'Arlene
482 West Sunset Avenue
Coeur d'Arlene
ID
83815
208-676-1826
Chili's-Idaho Falls
620 N. Utah Avenue
Idaho Falls
ID
83402
208-552-2577
Chili's-Meridian
3078 Eagle Road No.
Meridian
ID
83646
208-884-5292
701.815.000
Chili's - Pocatello
Pocatello
ID
83202
208-637-1600
ERJ Dining IV, ImbLLQ
Shoot The Moon, LLC
Shoot The Moon, LLC
Shoot The Moon, LLC
Exhibit G - Page 3
'Vi:*
Franchisee Name
vsauiauiaMBM&m&NbL,
titefcjgk
1
701.815.091
8
1599 South Yellowstone
Chili's-Twin Falls
1880 Blue Lakes Blvd. North
ERJ Dining IV, k e L L G
701.842.107
3
ERJ Dining IV, WrLLQ
: Phone ' J
-AtSiMLUj B & k i&'ssajc/gWKLiuJK
Twin Falls
ID
83301
208-734-1167
Chili's - Algonquin
1480 Randall Rd.
Algonquin
IL
60102
847-854-9955
701.842.005
2
Chili's - Arlington Heights
640 E. Rand Rd
Arlington
Heights
IL
60004
847-818-8171
ERJ Dining IV, WrLLC
701.842.073
2
Chili's-West Aurora
1290 N. Orchard Road
Aurora
IL
60506
630-907-1365
| ERJ Dining IV, IfH^LQ
701.842.058
5
Chili's - Batavia
491 N. Randall Road
Batavia
IL
60510
630-761-4479
| ERJ Dining IV, WrLLQ
701.842.019
1
Chili's-Stratford Square
310 W. Army Trail Road
Bloomingdale
IL
60108
630-894-9966
701.842.025
6
701.842.040
1
Chili's-Normal
2107 N. Veterans Pkwy.
Bloomington
IL
61704
309-663-8060
Chili's -Bolingbrook
1275 W. Boughton
Bolingbrook
IL
60440
630-378-5461
| ERJ Dining IV, WrLLC
701.842.016
4
Chili's-Calumet City
1580Torrence Ave.
Calumet City
IL
60409
708-862-6700
|F.RIDinin Im-lV LLC
701.818.000
8
701.842.041
5
Chili's - Carbondale
1240 East Main Street
Carbondale
IL
62901
618-529-8083
Chili's-Champaign
1905 N. Prospect Ave.
Champaign
IL
61822
217-398-2161
701.842.000
3
701.842.084
5
701.032,000
9
Chili's - Marshfield
1750 West 119th Street
Chicago
IL
60643
773-264-3611
Chili's - State and Ontario
2 East Ontario Street
Chicago
IL
60611
312-943-1510
Chili's Too - Chicago O'Hare Airport
Terminal 3, Space #M02
Rotunda Building 6
Chicago
IL
60666
773-686-6111
HMSHost
701.032.001
0
Chicago
IL
60666
773-686-8492
HMSHost
701.032.001
2
Chili's Bar & Bites - Chicago O'Hare Airport
Terminal 1, Space #b04
Rotunda Building 6
O'Hare Field
Terminal 2
Rotunda Building 6, Arrival Level
Chicago
IL
60666
773-686-6126
HMSHost
701.032.002
5
Rotunda Bldg. 6, Terminal G
Guard Post #8
Chicago
IL
60666
773-686-6180
ERJ Dining IV, te^LLC
701.842.096
2
Chili's-Chicago Ridge
9720 Ridgeland Ave.
Chicago Ridge
IL
60415
708-424-9866
701.842.058
6
Chili's-Crystal Lake
5620 Northwest Hwy
Crystal Lake
IL
60014
815-356-9216
701.842.010
6
701.842.094
2
Chili's - Downers Grove
1330A W. 75th St.
Downers Grove
IL
60516
630-963-5515
Chili's-East Peoria
800 Riverside Drive
East Peoria
IL
61611
309-694-4460
| ERJ Dining IV, tefeLLC
701.842.085
9
Chili's - Evanston
1765 Maple Avenue
Evanston
IL
60201
847-328-9068
|ERJ Dining III. WrLLC
701.818.057
1
Chili's - Fairview Heights
6311 North Illinois
Fairview
Heights
IL
62208
618-398-9805
| ERJ Dining IV, In^LLC
701.842.033
6
701.842.014
4
Chili's-Gumee Mills
6030 Grand Avenue
Gumee
IL
60031
847-855-1025
Chili's - Hoffman Estates
2220 Barrington Rd.
Hoffman Estates
IL
60195
847490-9988
| ERJ Dining IV, In^LLQ
701.842.086
1
Chili's-Homer
14025 South Bell Road
Homer
Township
IL
60491
708-645-0175
ERJ Dining IV, IneJ.LC
701.842.130
Chili's-Homewood
Homewood
IL
60430
708-957-5804
Shoot The Moon, LLC
| ERJ Dining IV, teerLLQ
P
| ERJ Dining IV, W^LLC
ERJ Dining IV, fe^LLQ
|ERJ Dining IV, toeiLQ
WMSHost
ERJ Dining IV, int-LLQ
Exhibit G - Page 4
: r \ "
: Sio&lD
i
r
•
:
• ~-xr-
•
" ^ ^ ^ J j ^ :
4
701.842.098
4
17928 Halsted St
Chili's -Kildeer
20505 N. Rand Rd., Suite 300
701.842.096
4
T
•
Stale',
.(;,•*?
Mmm
W
.
: ,
^
Kildeer
IL
60047
847-550-9608
Chili's - Machesney Park
1510 West Lane Road
Machesney Park
IL
61115
815-282-8805
701.842.077
4
Chili's -McHenry
2409 North Richmond Road
McHenry
IL
60050
815-578-0223
701.842.100
1
Chili's-Morris
88 W. Gore Road
Morris
IL
60450
815-941-2005
ERJ Dining II, Iw^LLQ.
701.097.071
9
701.842.021
5
Chili's-Mt. Vernon
4511 Broadway St.
Mt. Vemon
IL
62864
618-244-4687
Chili's-Naperville
264 S. Route 59
Naperville
IL
60540
630-355-0566
701.842.117
3
Chili's-New Lenox
2390 E. Lincoln Hwy
New Lenox
IL
60451
815-463-8743
ERJ Dining IV, MeLLC
701.842.000
1
Chili's - No. Riverside
7225 West Cermak
No. Riverside
IL
60546
708-221-0051
|ERJ Dining IV, l f t ^ U £
701.842.068
8
Chili's-Orland Park
15735 Harlem Avenue
Orland Park
IL
60462
708-342-1626
| ERJ Dining IV, fafrLLC
701.842.077
8
701.842.005
8
Chili's-Oswego
2820 Route 34
Oswego
IL
60543
630-554-1536
Chili's-Peoria
4825 N. University St.
Peoria
IL
61614
309-692-0468
| ERJ Dining IV, fat^LLC
701.842.073
8
Chili's-North Plainfield
12740 S. Route 59
Plainfield
IL
60544
815-254-0639
| ERJ Dining IV, tefrLLC
701.842.038
0
Chili's-Rockford
6330 E. State St.
Rockford
IL
61108
815-227-0188
| ERJ Dining IV, fe^LLC
701.842.000
2
Chili's-Romeoville
259 S.Weber Road
Romeoville
IL
60446
815-886-4429
| ERJ Dining IV,
te^LQ
701.842.070
8
Chili's -Rosemont
7140 Mannheim Road
Rosemont
IL
60018
847-298-9031
ERJ Dining IV, fee4L£
701.842.068
2
Chili's-Round Lake
300 East Rollins Road
Round Lake
Beach
IL
60073
847-201-1289
| ERJ Dining IV, IneiLQ
701.842.105
4
Chili's-Shorewood
1005 Brookforest Ave.
Shorewood
IL
60431
815-609-1185
| ERJ Dining IV, te^LLC
701.842.020
6
701.842.071
3
Chili's - Skokie
5435 Touhy
Skokie
IL
60077
847-679-1425
Chili's-South Elgin
620 Randall Road
South Elgin
IL
60177
847-841-8708
|ERJ Dining IV, WrLLG
701.842.029
9
Chili's - Springfield
2891 S. Veterans
Springfield
IL
62704
217-546-8505
701.842.030
2
Chili's-St. Charles
3795 E. Main Street
St. Charles
IL
60174
630-584-8013
| ERJ Dining IV, fafeLLC
701.842.107
2
701.818.000
4
701.842.034
2
Chili's -Streamwood
1041 S. Sutton
Streamwood
IL
60107
630-483-2352
Chili's-Vemon Hills
371 Town Line Road
Vemon Hills
IL
60061
847-932-4043
Chili's-W. Dundee
901 W. Main St.
W. Dundee
IL
60118
847-426-9590
ERJ Dining IV, t n ^ U ^
701.842.133
8
Chili's - Waukegan
890 S. Waukegan
Waukegan
IL
60085
847-689-0540
ERJ Dining IV.-kerLLC
701.842.013
2
Chili's -Wheaton
240 Danada Square W.
Wheaton
IL
60189
630-690-2334
k^lAT
701.842.046
0
Chili's-College Mall
2811 E. Third Street
Bloomington
IN
47401
812-334-0535
701.842.033
0
701.842.104
4
Chili's-Westfield
14735 N. Meridian
Carmel
IN
46032
317-574-1556
Chili's-Clifty Crossing
1079 N. National Road
Columbus
IN
47201
812-348-7596
| ERJ Dining IV, k ^ L L C
| ERJ Dining IV, fafrLLC
| ERJ Dining III, WrLLC
| ERJ Dining IV,
| ERJ Dining IV, WeLLC
Exhibit G - Page 5
^
^^^m^gîg^^^^l^ ^ ^ ^ g ^ b ^
#
"4^6':^
^
701.842.111
2
Chili's-Dyer
893 Joliet Street
Dyer
IN
46311
219-864-8552
701.040.001
8
Chili's - Evansville
600 North Green River Road
Evansville
IN
47715
812-475-1510
701.842.120
1
Chili's - Franklin College
2299 N. Morton Street
Franklin
IN
46131
317-736-6162
701.040.000
4
Chili's-Ft. Wayne
317 E. Coliseum Blvd.
Ft. Wayne
IN
46805
260-471-2979
701.040.004
1
Chili's-Goshen
4018 Elkhart Road
Goshen
IN
46526
574-875-0444
tofey£
701.842.078
1
Chili's - Greensburg
2305 N. State Road 3 Bypass
Greensburg
IN
47240
812-662-9870
ERJ Dining IV, fafrLLC
701.842.025
4
Chili's - Greenwood
1281 N. US Hwy 31
Greenwood
IN
46142
317-881-6991
| ERJ Dining IV, In&LLC
701.842.035
7
701.842.032
1
Chili's - Southlake
2425 Southlake Mall
Hobart
IN
46410
219-791-1504
Chili's-Eagle Creek
6943 W. 38th Street
Indianapolis
IN
46254
317-328-1767
| ERJ Dining IV, tefrLLC
701.842,032
2
Chili's - Keystone
3960 E. 82nd Street
Indianapolis
IN
46240
317-577-0309
| ERJ Dining IV, InfeLLC
701.842.104
5
701.842.062
6
Chili's - Traders Point
6020 W 86th Street
Indianapolis
IN
46278
317-876-3420
Chili's - Kokomo
1323 S. Reed Road
Kokomo
IN
46902
765-457-1485
701.040.000
8
Chili's-Lafayette
3980 State Rd., 26 East
Lafayette
IN
47905
765-449-8430
701.842.100
6
701.040.002
7
701.040.000
1
Chili's-Martinsville
620 Birk Road
Chili's-Michigan City
5300 Franklin Street
Martinsville
IN
46151
765-349-8227
Michigan City
IN
46360
219-872-2266
Chili's-Mishawaka
4810 Grape Rd.
Mishawaka
IN
46545
574-271-1330
| ERJ Dining IV, I B ^ L L C
701.842.057
0
Chili's-Muncie
809 W. McGalliard
Muncie
IN
47303
765-287-8741
| ERJ Dining IV,
701.842.074
6
Chili's-Noblesville
16815 S. Mercantile Blvd.
Noblesville
IN
46060
317-770-3355
| ERJ Dining IV, InerLLQ
701.842.069
4
Chili's-Plainfield
2681 East Main Street
Plainfield
IN
46168
317-837-5120
ERJ Dining IV, InerLLQ
701.842.060
2
Chili's-Hwy 40
4383 E. National Road
Richmond
IN
47374
765-935-7591
ERJ DiningJI, lnerLi£
701.097.000
1
Chili's-Seymour
2085 East Tipton Street
Seymour
IN
47274
812-524-4547
ERJ Dining IV,
teLL£
701.097.001
0
Chili's - Terre Haute
5601 South US Highway 41
Terre Haute
IN
478024158
812-645-0131
| ERJ Dining IV, In^LLC:
701.842.073
1
701.097.001
1
Chili's-Valparaiso
250 Silhavy Road
Valparaiso
IN
46383
219-465-7344
Chili's-Clarksville
940 East Lewis & Clark Parkway
Clarksville
IN
47129
812-670-3000
701.856.110
1
Chili's-Hutchinson
1801 E. 17th Avenue
Hutchinson
KS
67501
620-669-8207
Chili's - Kansas City Speedway
1710 Village West Parkway
Kansas City
KS
66111
913-334-9728
Chili's - Lawrence
2319 Iowa St.
Lawrence
KS
66046
785-331-3700
Group4=P
701.856.000
1
701.856.050
0
701.856.057
5
Chili's-Manhattan
213 Fort Riley Blvd.
Manhattan
KS
66502
785-537-1250
Groups
701.856.056
6
701.856.058
Chili's - Merriam
5880 Antioch
Merriam
KS
66202
913-262-0067
Chili's-Olathe
Olathe
KS
66061
913-390-9404
| ERJ Dining IV, te^LLC
| ERJ Dining IV, feft-LLC
| ERJ Dining IV,
| ERJ Dining IV, Ino.-LLC
| ERJ Dining IV, tnfeLLC
| ERJ Dining IV, te&LLC
| ERJ Dining II, I ^ I J - C
Group-k-P
Group-W
Group-Wi
MttV^wheHiclm Restaurant
Exhibit G - Page 6
^ P r ' ^ v ' : ^ t^M?.""
State"
#^^#56%
Group-U*
Group-LP
Mnv MiinhoHidan Resraurfmr.
Group-tP
i
701.856.033
7
14920 S. Harrison St.
Chili's-S. Overland Park
7001 W. 119th
701.856.060
4
Group-LP
Groups
- .-.^S?'
vi..*aF?NM5r'
- Phohc ^
•
. . z^Lfi •
Overland Park
KS
66209
913-345-0131
Chili's-Salina
2255 S. 9th St.
Salina
KS
67401
785-820-8300
701.856.088
5
Chili's - Shawnee Mission
15305 W. 67th St.
Shawnee
KS
66217
913-631-0862
701.856.028
0
Chili's-Topeka
2021 SW Wanamaker
Topeka
KS
66604
785-271-9777
701.856.000
1
701.856.027
1
701.856.040
2
Chili's - N . Wichita
2333 N. Greenwich Road
Wichita
KS
67226
316-630-0283
Chili's - E. Wichita
7887 E. Central
Wichita
KS
67206
316-686-4110
Chili's-W. Wichita
10520 W. Central
Wichita
KS
67212
316-721-2700
ERJ DiningJI IflfrM.C
701.097.000
3
Chili's - Bardstown
101 W. John Rowan Blvd.
Bardstown
KY
40004
502-337-6120
| ERJ Dining II, te^LLC
701.097.000
9
701.097.057
3
701.097.056
8
701.097.060
0
Chili's - Florence
5000 Houston Road
Florence
KY
41042
859-980-0650
Chili's - Frankfort
345 Leonardwood
Frankfort
KY
406014109
502-223-0810
Chili's-Richmond
2851 Richmond Road
Lexington
KY
405091506
859-269-1979
Chili's-Man O'War
108 Marketplace Drive
Lexington
KY
40503
859-971-9392
| ERJ DiningJI, k&LLC
701.097.000
2
Chili's-Hikes Lane
3623 Bardstown Road
Louisville
KY
40218
502-301-8888
] ERJ DiningJI, te^LLC
701.097.000
4
Chili's-Poplar Level
3007 Poplar Level Road
Louisville
KY
40214
502-638-5202
ERJ DiningJI, WrLLC
701.097.000
5
Chili's - Preston/265
11600 Antonio Way
Louisville
KY
40229
502-301-8181
ERJ DiningJI,
teLLC
701.097.000
6
Chili's - Old Brownsboro
9720 Von Alltnen Court
' Louisville
KY
40241
502-301-8880
ERJ DiningJI, WrLLC
701.097.023
7
701.032.006
2
Chili's - Louisville
421 Hurstboume
Louisville
KY
402225036
502-425-6800
Chili's Too - Louisville
Louisville International Airport
600 Terminal Drive
Louisville
KY
40209
ERJ Dining II, WrLLC
701.097.001
2
Chili's-Dixie Highway
6641 Dixie Highway
Louisville
KY
40258
502-694-9445
Pepper Dining, Inc.
408.002.106
8
Chili's - Andover
131 River Road
Andover
MA
01810
978-686-5075
Pepper Dining, Inc.
408.002.114
9
Chili's - West Auburn
820 Southbridge St.
Auburn
MA
01501
508-832-4093
Pepper Dining, Inc.
408.002.083
5
Chili's - Bellingham
257 Hartford Avenue
Bellingham
MA
02019
508-966-3439
Pepper Dining, Inc.
408.002.083
4
Chili's - Braintree
170 Pearl Street, Ivory Plaza
Braintree
MA
02184
781-849-6151
Pepper Dining, Inc.
408.002.080
9
408.002.132
0
Chili's-Burlington
108 Middlesex Turnpike
Burlington
MA
01803
871-273-9303
Chili's-Chelsea
1040 Revere Beach Parkway
Chelsea
MA
02150
617-884-7960
408.002.081
1
408.002.082
4
Chili's-Danvers
10 Newbury Street
Danvers
MA
01923
978-777-0750
Chili's-Dedham
930 Providence Hwy
Dedham
MA
02026
781-329-0200
408.002.090
0
Chili's-Wareham
2885 Cranberry Highway
E. Wareham
MA
02538
508-295-2800
Group-LP
Group-bPGroup-W)
H i e , a n
R e S l a i i r a n t
| ERJ DiningJI,
| ERJ DiningJI, WrLLG
| ERJ DiningJI, ^ L L C
HMSHost
Pepper Dining, Inc.
Pepper Dining, Inc.
Pepper Dining, Inc.
Pepper Dining, Inc.
Exhibit G - Page 7
:w
Pepper Dining, Inc.
' " P ^ T Ad,3^r-
%7c,h '
!
^
Zip
1
408.002.083
1
Chili's -Hadley
426 Russell Street
Hadley
MA
01035
413-253-4008
408.002.097
9
Chili's - Leominster
42 Orchard Hill Park Drive
Leominster
MA
01453
978-537-1720
Pepper Dining, Inc.
408.002.096
1
Chili's-Lowell
26 Reiss Ave.
Lowell
MA
01851
978-937-1565
Pepper Dining, Inc.
408.002.117
Chili's-Plainville
107 Taunton Street
Plainville
MA
02762
508-695-5105
Pepper Dining, Inc.
408.002.128
5
Chili's - Commerce Way
2 Plaza Way
Plymouth
MA
02360
508-747-2138
Pepper Dining, Inc.
408.002.082
7
Chili's-Raynham
500 South Street
Raynham
MA
01186
7
508-824-6536
Pepper Dining, Inc.
408.002.083
9
Chili's-Reading
70 Walkersbrook Drive
Reading
MA
01867
781-942-4670
Pepper Dining, Inc.
Ft pperÊfetngrtooy
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Pepper Dining, Inc.
408.002.105
1
Chili's-Somerset
825 GAR Hwy.
Pepper Dining, Inc.
408.002.153
1
408.002.152
8
Chili's-E. Springfield
302 Cooley Street
Pepper Dining, Inc.
408.002.152
5
Chili's - West Bridgewater
726 West Center Street
Pepper Dining, Inc.
408.002.082
3
Chili's-W. Springfield
1175Riverdale Street
Pepper Dining, Inc.
408.002.084
0
Chili's - Westford
137 Littleton Road
Pepper Dining, Inc.
408.002.153
2
Chesapeake Foods, Inc.
jr°-
%
508-756:1800
.MA
Somerset
MA
02726
508-679-0474
Springfield
MA
01128
413-426-9507
Walpole
MA
02032
508-668-6102
West
Bridgewater
MA
02379
508-427-9906
West
Springfield
MA
01089
413-746-8827
Westford
MA
01886
978-692-8498
Chili's - Wilmington Crossing
269 Main Street
Wilmington
MA
01887
978-657-0793
701.010.000
7
Chili's-Annapolis
2339 Forest Dr.
Annapolis
MD
21401
410-266-9737
701.010.001
8
Chili's-Bowie
16401 Heritage Boulevard
Bowie
MD
20716
301-809-1900
701.010.003
5
Chili's-Easton
28587 Marlboro Avenue
Easton
MD
21601
410-763-7077
701.010.002
1
Chili's - Arundel Mills
7000 Arundel Mills Circle, Store #R2
Hanover
MD
21076
410-796-0200
701.010.003
7
Chili's-Nursey Rd.
1715 W. Nursery Rd.
Linthicum
MD
21012
410-694-8080
701.010.001
3
Chili's-Rockville
11428-A Rockville Pike
Rockville
MD
20852
301-881-8588
701.010.002
4
Chili's-Salisbury
2750 N. Salisbury Blvd.
Salisbury
MD
21801
410-860-4700
701.010.001
1
Chili's-Waldorf
2960 Festival Way
Waldorf
MD
20601
301-870-7348
Pepper Dining, Inc.
408.002.101
5
Chili's-Bangor
638 Stillwater Ave.
Bangor
ME
04401
207-947-5770
Pepper Dining, Inc.
408.002.082
0
Chili's-South Portland
465 Maine Mall Road
South Portland
ME
04106
207-773-1595
701.040.003
3
Chili's-Battle Creek
6123 B. Drive North
Battle Creek
MI
49014
269-979-8527
RMS Host
701.032.002
3
Chili's Too - Detroit Airport
Detroit Metropolitan Airport
Centra] Services Building
Detroit
MI
48242
734-229-1304
701.040.002
2
Chili's-Flint
4125 Miller Road
Flint
MI
48507
810-720-0170
701.040.003
Chili's-Beltline
Grand Rapids
MI
49525
616-361-1972
Pepper Dining, Inc.
Chili's-Walpole Mall
90 Providence Highway
Exhibit G - Page 8
*•.':'*
,4:
6
701.040.000
6
~'%-7W-=?-9
2135 East Beltline NE
Chili's -Kentwood
4580 28th Street
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Kentwood
MI
49512
616-949-5892
701.040.002
9
Chili's - Norton Shores
3583 Henry Street
Norton Shores
MI
49441
231-780-5441
701.040.000
2
Chili's-Okemos
5055 Marsh Road
Okemos
MI
48864
517-347-7188
701.040.000
5
701.040.002
1
701.040.003
1
701.040.002
4
Chili's-Portage
6195 South Westnedge Ave,
Portage
MI
49002
269-324-0560
Chili's-Saginaw
4363 Bay Road
Saginaw
Ml
48603
989-797-4470
Chili's-St. Joseph
1275 Hilltop Road
St. Joseph
MI
49085
269-983-5518
Chili's-Traverse City
2670 Crossing Circle
Traverse City
MI
49684
231-929-0200
701.040.003
0
Chili's-Wyoming
770 54th Street S.W.
Wyoming
Ml
49509
616-261-9733
701.842.103
0
701,842.018
5
701.842.020
5
701.842.032
3
701.842.022
4
Chili's-Blaine
1430 109th Ave., NE
Chili's - Bloomington
7801 Normandale Blvd.
Chili's-Bumsville
14161 Aldrich Ave.
Blaine
MN
55449
763-783-9222
Bloomington
MN
55435
952-831-1201
Bumsville
MN
55337
952-898-3101
Chili's - Eagan
3625 Pilot Knob Road
Eagan
MN
55122
651-686-5152
Chili's-Maplewood
1800 Beam Ave.
Maplewood
MN
55109
651-773-9501
701.842.028
6
701.842.018
1
701.842.103
6
Chili's-Plymouth
4000 Vinewood Lane
Plymouth
MN
55442
963-557-7000
Chili's-Roseville
1840 W. County Road B2
Roseville
MN
55113
651-633-7718
Chili's-Shakopee
8098 Old Carriage Court
Shakopee
MN
55379
952-445-2234
HMSHost
e*Fp«Rri4«ftJntp.rD«tipnH(,Tnc,
701.032.000
3
Chili's Too - MSP International Airport
4300 Glumack Dr., Room #312
St. Paul
MN
551113010
612-726-5360
HMS Host
701.032.006
4
St. Paul
MN
551113010
Woodbury
MN
55125
651-739-8177
| ERJ Dining IV, feerLLC
| ERJ Dining IV, W^LLC
| ERJ Dining IV, tofcLLC
| ERJ Dining IV, t n ^ U r
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| ERJ Dining IV, tefcLLC
701.842.108
6
Chili's Kiosk - Minneapolis St. Paul International
Airport
4300 Glumack Drive, Room #312
Terminal 1/Main
Chili's - Woodbury
9945 Hudson Place
| ERJ Dining III, W LLC
701.818.000
6
Chili's-Arnold
901 Arnold Commons Drive
Arnold
MO
63010
636-757-0787
|ERJ Dining I I I . t e L L Q
701.818.000
2
Chili's-Chesterfield
955 Chesterfield Center Rd.
Chesterfield
MO
63017
636-368^530
Muy Mucho Group LP
701.856.076
5
Chili's-Columbia
41 Conley Road
Columbia
MO
65201
573-442-6067
ERJ Dining III, \n&lA£,
701.818.115
5
Chili's-Fenton
711 Gravois Road
Fenton
MO
63026
636-326-4134
| ERJ Dining III, Ins-LLC
701.818.085
5
Chili's-Florissant
13901 New Halls Ferry Road
Florissant
MO
63033
314-831-0548
MwWWuGhaHielan Restaurant
Group-kP
701.856.043
7
Chili's - Independence
18900 E. 39th St.
Independence
MO
64057
816-795-0100
Mw-MuGheHielan Restaurant
Group-yi
701.856.095
0
701.856.048
7
701.856.064
6
Chili's-Jefferson City
3515 Missouri Blvd.
Jefferson City
MO
65109
573-761-4765
Chili's - Barry Rd.
8350 NW Roanridge
Kansas City
MO
64151
816-741-4433
Chili's - Liberty Kansas City
9600 NE Barry Rd.
Kansas City
MO
64157
816-407-9427
Mirt^MiiGhoHielan Restaurant
Group-LP
Group-Ui
Exhibit G - Page 9
'.u™**??™ J
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& v
i
Phone,
701.818.095
5
Chili's - Kirkwood
1130 South Kirkwood Road
Kirkwood
MO
63122
itv
i-sr-aaar,;
314-984-8176
701.856.068
4
Chili's-Lee's Summit
1688NW Chipman Road
Lee's Summit
MO
64081
816-347-1720
Group-fcP
701.856.104
1
Chili's - St. Joseph
5105 N. Belt Highway
St. Joseph
MO
64506
816-279-5750
Group-LP
HMS Host
701.032.001
1
Chili's Too - St. Louis Lambert Airport
East Terminal
10701 Natural Bridge Road
St. Louis
MO
63145
314-429-3400
M m Host
701.032.004
4
Chili's Too - St. Louis Airport - Terminal C
Lambert International Airport
Terminal C
10701 Natural Bridge Broad
P.O. Box 10187
St. Louis
MO
63145
314-429-3400
ERJ Dining III, te&LLQ
701.818.061
8
Chili's-Mid Rivers Mall
101 Westfield Drive
St. Peters
MO
63376
636-397-4447
701.098.000
6
Chili's-Columbus
1207 Hwy 45 North
Columbus
MS
39701
662-328-4644
701.098.000
8
Chili's-Meridian
105 South Frontage Road
Meridian
MS
39301
601-482-3280
701.098.069
9
Chili's-Olive Branch
7910 Craft-Goodman Road
Olive Branch
MS
38654
662-895-8899
701.098.000
1
Chili's - Starkville
125 Highway 12 West
Starkville
MS
39759
662-323-2455
Shoot The Moon, LLC
701.815.000
2
Chili's-Great Fails
2400 Market Place Dr.
Great Falls
MT
59484
406-452-6700
Shoot The Moon, LLC
701.815.000
3
408.002.142
9
408.002.024
8
Chili's-Helena
2790 N. Washington St.
Helena
MT
59602
406-442-3500
Chili's - So. Ridge at Ashville
420 Airport Road
Arden
NC
18704
828-684-5067
Chili's-Asheviile
253 Tunnel Road
Asheviile
NC
28805
828-252-4999
Pepper Dining, Inc.
408.002.153
3
Chili's-Boone
1934 Blowing Rock Road
Boone
NC
28607
828-266-9626
HMS Host
701.032.000
6
Chili's Too - Charlotte International Airport
5501 Josh Birmingham Parkway
Charlotte
NC
28219
704-359-4555
Pepper Dining, Inc.
408.002.006
6
Chili's - Tyvola
5521 Westpark Dr.
Charlotte
NC
28217
704-522-1036
Pepper Dining, Inc.
408.002.017
5
Chili's - Crown Point
2521 N. Sardis Rd.
Charlotte
NC
28227
704-847-7849
Pepper Dining, Inc.
408.002.018
4
Chili's-Pineville
8302 Pineviile-Matthews Rd.
Charlotte
NC
28226
704-543-6265
Pepper Dining, Inc.
408.002.041
1
Chili's - UNCC
500 University Center Blvd.
Charlotte
NC
28262
704-510-0626
Pepper Dining, Inc.
408.002.086
4
Chili's - Whitehall Commons
8164 S. Tryon Street
Charlotte
NC
28273
704-583-5490
Pepper Dining, Inc.
408.002.111
0
408.002.112
1
408.002.152
9
Chili's-Northlake Mall
8325 Northlake Commons Blvd.
Chili's -Blakeney
9730 Rea Road
Charlotte
NC
28216
704-494-8403
Charlotte
NC
28277
704-543-5353
Chili's-The Arboretum
8136 Providence Road
Charlotte
NC
28277
704-541-8799
HMSHost
(^mftratiflftlntemational. Inc.
701.032.001
3
Chili's Too - Concord Mills
Concord Mills Mall
8111 Concord Mills Blvd., Suite 101
Concord
NC
28027
704-979-2314
Pepper Dining, Inc.
408.002.071
6
Chili's-Carolina Mall
1365 Concord PkwyN.
Concord
NC
28025
704-721-3859
| ERJ Dining III, Ift^LL£
Pepper Dining, Inc.
Pepper Dining, Inc.
Pepper Dining, Inc.
Pepper Dining, Inc.
Exhibit G - Page 10
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NC
28043
828-286-0008
Gastonia
NC
06033
860-657-2333
Chili's - East Carolina University
The Croatan Building
100 Dixon Drive
Greenville
NC
27858
252-737-4442
408.002.132
3
Chili's-Hickory
2181 US Hwy 70 SE
Hickory
NC
28602
828-328-8447
Pepper Dining, Inc.
408.002.048
5
Chili's - Lake Norman
16632 Stateville Rd.
Huntersville
NC
28078
704-895-0133
Pepper Dining, Inc.
408.002.114
4
Chili's-Monroe
2861 W. Hwy. 74
Monroe
NC
28110
704-225-8499
Chili's-Mooresville
603 River Highway
Mooresville
NC
28117
704-799-4603
Chili's -Statesville
149 Tumersburg Highway
Statesville
NC
28625
704-872-5077
Pepper Dining, Inc.
408.002.098
1
Chili's-Forest City
128 Sparks Crossing
Forest City
Pepper Dining, Inc.
408.002.021
4
Chili's - Gastonia
3086 E. Franklin Blvd.
Inc.
701.816.000
7
Pepper Dining, Inc.
408.002.131
5
408.002.137
Pepper Dining, Inc.
7
FRT.DininfiTV I;T.C' ' y. /." ' ' - ^ - 701" 853.067
„,;• '.-*'>•<•
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Pepper Dining, Inc.
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701.856.093
1
Chili's-LaVista
7875 S. 84th St.
LaVista
NE
i";?;-/
68128
402-592-4900
701.856.092
3
701.856.090
7
Chili's - Lincoln
6730 S. 27th St.
Lincoln
NE
68512
402-420-2800
Chili's-Omaha I
3202 S. 143rd Plaza
Omaha
NE
68144
402-333-6303
701.814.000
2
Chili's-Scottsbiuff
826 W. 36th St.
Scottsbiuff
NE
69361
308-633-1580
Pepper Dining, Inc.
408.002.082
8
Chili's-Dover
14 Weeks Lane
Dover
NH
03820
603-749-0939
Pepper Dining, Inc.
408.002.100
3
408.002.081
7
408.002.083
7
Chili's - Keene
4 Ash Brook Road
Keene
NH
03431
603-352-1984
Chili's-Nashua
285 Daniel Webster Hwy
Nashua
NH
03060
603-888-3200
Chili's-North Nashua
610 Amherst Street
Nashua
NH
03063
603-578-0400
Pepper Dining, Inc.
408.002.082
6
Chili's-Salem
297 South Broadway, Rt. 28
Salem
NH
03079
603-890-1777
Pepper Dining, Inc.
408.002.114
8
408.002.117
2
Chili's - Seabrook
403 Lafayette Road
Seabrook
NH
03874
603-474-3597
Chili's-Tilton
18 Lowes Drive
Chili's - W. Lebanon
K-Mart Plaza
200 South Main
Tilton
NH
03276
603-286-8075
West Lebanon
NH
03784
603-298-0335
Group-L-P
Group-LP
Group-LP
Bighorn Associates, L.C.
Pepper Dining, Inc.
Pepper Dining, Inc.
Pepper Dining, Inc.
"S'
%
Pepper Dining, Inc.
408.002.083
0
701.040.002
6
701.040.004
5
701.040.001
5
Chili's-Cherry Hill
1906 West Route 70
Cherry Hill
NJ
08002
856-662-2822
Chili's -Delran
4000 US Route 130
Delran
NJ
08075
856-461-1023
Chili's-Deptford
1760 Clements Bridge Road
Deptford
NJ
08096
856-384-1212
HMSHost
701.032.001
4
Chili's Too - Jersey Gardens Mall
651 Kapowski Road
Elizabeth
NJ
07201
908-282-4813
701.040.003
8
701.040.002
0
701.040.004
4
Chili's - Hamilton
125 Marketplace Blvd.
Hamilton
NJ
08691
609-585-0028
Chili's - Mays Landing
4305 Black Horse Pike
Mays Landing
NJ
08330
609-407-1735
Chili's-Millville
114 Bluebird Lane
Millville
NJ
08332
856-293-6948
Exhibit G - Page 11
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701.040.001
1
Chili's-Mt. Laurel
4162 Church Road
Mount Laurel
NJ
08054
856-273-0020
HMS Host
Gwnofatwmfntemational. Inc.
701.032.003
8
Chili's Too - Newark Liberty Airport
Box 29, Terminal B
Newark
NJ
07114
973-824-0680
701.040.001
7
701.032.004
6
Chili's-West Windsor
3465 U.S. Hwy. 1
Princeton
NJ
085405925
609-987-8020
Las Vegas
NV
89119
702-261-4300
Amherst
NY
14226
716-832-3730
Pepper Dining, Inc.
408.002.061
0
Chili's Too - Las Vegas McCarran International
Airport
Terminal D
5757 Wayne Newton Boulevard
Chili's-Amherst
1145 Niagara Falls Blvd.
Pepper Dining, Inc.
408.002.136
5
Chili's - Finger lakes Crossing
1624 Clark Street Road
Auburn
NY
13021
315-252-5545
Pepper Dining, Inc.
408.002.065
2
Chili's - Clarence
4153 Transit Road
Clarence
NY
14221
716-634-0505
Pepper Dining, Inc.
408.002.094
9
Chili's-Clifton Park
5 Northside Drive
Clifton Park
NY
12065
518-383-4289
Pepper Dining, Inc.
408.002.073
3
Chili's-Colonic
60 Wolf Road
Colonic
NY
12205
518489-4664
Pepper Dining, Inc.
408.002.065
6
Chili's-Dewitt
3691 ErieBlvd E.
Dewitt
NY
13214
315445-2200
Pepper Dining, Inc.
408.002.099
8
Glenmont
NY
12077
518-436-4320
Pepper Dining, Inc.
408.002.112
9
408.002.095
1
Chili's-Glenmont
382 Route 9W
Chili's-Big Flats
3347 Chambers Road South
Horseheads
NY
14845
607-739-8437
Chili's-Ithaca
608 5. Meadow St.
Ithaca
NY
14850
607-272-5004
HMS Host
Pepper Dining, Inc.
Pepper Dining, Inc.
408.002.087
4
Chili's-Clay
3954 Route 31
Liverpool
NY
13090
315-652-6799
Pepper Dining, Inc.
408.002.152
7
Chili's-Niagara Falls
1500 Military Road
Niagara Falls
NY
14303
716-297-7326
TKT of New York, Inx.
701.070.000
1
701.070.000
4
Chili's - Rochester
3830 West Ridge Road
Rochester
NY
14626
585-227-2750
Chili's-Jefferson Rd.
100 Marketplace Drive
Rochester
NY
14623
585-424-6111
TKT of New York, Inc.
701.070.000
2
Chili's-Victor
7491 Victor/Pittsford Road
Victor
NY
14564
716-924-0220
Chilgo LLC
406.002.037
8
Chili's - Montrose
4022 Medina Road
Akron
OH
443332447
330-668-2882
701.842.037
9
Chili's-Beaver Creek
2762 N. Fairfield Road
Beaver Creek
OH
45431
937-429-3979
Chilgo LLC
406.002.040
0
Chili's-Boardman
7303 S. Market Street
Boardman
OH
445125611
330-758-4117
Chilgo LLC
406.002.038
4
Chili's-Canton
4133 Beldon Village Mall
Canton
OH
44718
330-499-0071
ERJ Dining IV, tae^LQ
701.842.034
5
Chili's - Symmes
11329 Montgomery Road
Cincinnati
OH
45249
513-469-9888
| ERJ Dining IV, InarLLC
701.842.036
2
Chili's-Sawmill
3675 W. Dublin Granville Rod
Columbus
OH
43235
614-761-2101
HMS Host
701.032.005
4
Chili's Too - Port Columbus International Airport
4600 International Gateway
Concourse A - Post Security
Columbus
OH
43219
614-238-7614
ERJ Dining IV, IneLLQ
701.842.042
5
Chili's - Dayton
1110 Miamisburg Centerville Rd.
Dayton
OH
45459
937-434-7117
| ERJ Dining IV, tac-JXC
701.842.111
4
Chili's-Princeton Rd.
3393 Princeton Road
Hamilton
OH
45011
513-895-6222
TKT of New York, Inc.
| ERJ Dining IV, InfrLLC
r
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Exhibit G-Page 12
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Chilgo LLC
406.002.040
1
Chili's-Macedonia
6652 Macedonia Commons Blvd.
Macedonia
OH
44056
Chilgo LLC
406.002.029
5
Chili's-N. Olmstead
25061 Country Club Road
N. Olmsted
OH
44070
440-777-0117
701.040.003
4
Chili's-Rossford
9886 Old U.S. 20
Rossford
OH
43460
419-873-0696
701.040.002
3
Chili's - Sandusky
5200 Milan Road
Sandusky
OH
44870
419-621-8586
701.842.046
8
Chili's-Tri County
855 E. Kemper Road
Springdale
OH
45246
513-671-1102
701.040.000
7
Chili's-Toledo II
4801 Talmadge Road
Toledo
OH
43623
419-472-7688
701.040.001
4
Chili's-City Line
175 E. City Avenue
Bala Cynwyd
PA
19004
610-667-4444
701.040.004
3
701.040.004
6
701.040.002
5
701.040.001
9
701.040.004
9
Chili's - Stroudsburg
1772 N. 9th Street
Bartonsville
PA
18321
570-421-8303
Chili's-Bensalem
2601 Street Road
Bensalem
PA
19020
215-638-2216
Chili's - Downingtown
26 Quarry Road
Downingtown
PA
19335
610-518-1200
Chili's-Oxford Valley
610 Commerce Blvd.
Fairless Hills
PA
19030
215-943-5555
Chili's-Jenkintown
817 Old York Road
Jenkintown
PA
19046
215-887-1747
701.040.001
6
Chili's - King of Prussia
739 W. Dekalb Pike
King of Prussia
PA
19406
610-992-0899
701.040.003
9
701.040.004
2
Chili's - Montgomeryville
544 Dekalb Pike
North Wales
PA
19454
215-699-9699
Chili's-West Sadsbury
770 Commons Drive
Parkesburg
PA
19361
610-857-9443
701.040.000
9
701.040.003
5
701.040.004
0
Chili's-Philadelphia
3801 Chestnut
Philadelphia
PA
19104
215-222-7322
Chili's-Center City
1239 Filbert Street
Philadelphia
PA
19107
215-569-0850
Chili's - Quartermaster Plaza
2320 Oregon Avenue
Philadelphia
PA
19145
215-468-3757
Six Shooters, Inc.
701.055.000
2
Chili's-State College
137 South Allen Street
State College
PA
16801
814-234-5924
701.040.005
1
701.040.001
0
Chili's -Stowe
220 Upland Square Drive
Stowe
PA
19464
610-326-1737
Chili's-Wayne
312 W. Lancaster Avenue
Wayne
PA
19087
610-687-1001
701.040.001
3
Whitehall
PA
18052
610-264-4400
Six Shooters, Inc.
701.055.000
1
701.040.004
8
Chili's-Allentown
815 Grape St.
Chili's-Wilkes-Barr
375 Wyoming Valley Mall
Wilkes-Barre
PA
18702
570-829-5833
Chili's-Cheltenham
2451 Cheltenham Avenue
Wyncote
PA
19095
215-881-6790
| ERJ Dining IV, In^LLC
330-467-1328
701.040.003
2
Chili's- Wyomissing
2703 N. Meridian Blvd.
Wyomissing
PA
19610
610-374-9328
Pepper Dining, Inc.
408.002.081
0
408.002.107
0
Chili's - East Providence
50 Highland Avenue Rt 6
East Providence
Rl
02914
401-431-4062
Chili's-GW Highway
622 George Washington Hwy
Lincoln
Rl
02865
401-333-4085
408.002.081
9
408.002.081
5
Chili's -Middletown
855 West Main Street
Middletown
RJ
02842
401-848-9380
Chili's-Providence
255 Collyer Street
North
Providence
RI
02904
401-421-4850f
408.002.076
Chili's - Smithfield
Smithfield
RI
02917
401-232-2280
Pepper Dining, Inc.
Pepper Dining, Inc.
Pepper Dining, Inc.
Pepper Dining, Inc.
Exhibit G - Page 13
fttn
/
FrariihisccName
;
7^
:r5'
"
; rV-
.1"WW.
. j-isati:;
-Ji^;'.
Pepper Dining, Inc.
BounarooEMaa Restaurant
Groupr&P
Pepper Dining, Inc.
408.002.080
1
701.811.074
1
408.002.055
7
-^wv;-.. • •
- - Address
1
>* •
.- AV.Sf-:.
/mr
City
'
State
^
210 Smithfield Crossing
Chili's - Warwick
1276 Bald Hill Road
•:^C
Zip /
' -
; ^
Phone
^.-ii:.
-
Warwick
Rl
02886
401-821-0310
Chili's-Aiken
2599 Whiskey Road
Aiken
SC
29803
803-648-8148
Chili's-Anderson
3801 Clemson Blvd.
Anderson
SC
29621
864-231-9082
BonnarooHielan Restaurant
CrouprLR
701.041.000
2
Chili's - Camden
1635-A Springdale Drive
Camden
SC
29020
803-713-0002
Inc.
701.816,099
7
Chili's Too - Clemson University
Harcombe Dining hall
Clemson University
Clemson
SC
29634
864-656-0753
BemtareeHiclan Restaurant
GrouppU*
701.811.055
0
701.811.055
Chili's-Harbison
280 Q. Harbison Blvd.
Columbia
SC
29212
803-732-2911
Chili's-Spring Valley
7715 Two Notch Road
Columbia
SC
29223
803-699-1843
701.041.000
5
408.002.055
3
408.002.075
8
Chili's-Florence
3015 W. Radio Dr.
Florence
SC
29500
843-413-6059
Chili's-Haywood
490 Haywood Rd.
Greenville
SC
29607
864-281-0547
Chili's-Woodruff Rd.
1209 Woodruff Road
Greenville
SC
29607
864-297-0263
408.002.079
1
701.811.000
3
701.811.000
2
Chili's -Mathis
501 Bypass 72 N.W.
Greenwood
SC
29649
864-229-4052
Chili's - Lexington
295 Ginny Lane
Chili's - Carolina Forest
100 Orchard Rd.
Lexington
SC
29072
803-659-0850
Myrtle Beach
SC
29579
843-903-0607
701.811.055
5
Chili's-Myrtle Beach
4401 North Kings Highway
Myrtle Beach
SC
29577
843-448-6319
701.811.000
1
408.002.066
5
Chili's-No. Charleston
5274 International Blvd.
No. Charleston
SC
29418
843-554-3313
Chili's-Rock Hill
630 Tinsley Way
Rock Hill
SC
29730
803-980-8334
ftennarooHielan Restaurant
GrouprtP
BonnarooHifilan Restaurant
GrouprLP
701.811.000
4
Chili's-Dorchester Rd.
9890 Dorchester Road
Summerville
SC
29485
843-851-1935
701.041.000
1
Chili's-Sumter
2505 Broad Street
Sumter
SC
29150
803-905-5600
Chili's-Rapid City
2125 Haines Avenue
Chili's-Sioux Falls
3720 W. 41st Street
Rapid City
SD
57701
605-388-8100
ERJ Dining IV, i»&l±£
701.853.094
0
701.853.092
Sioux Falls
SD
57106
605-361-3900
HMSHost
Goiporationlntemntmnal, Inc.
701.032.000
4
Chili's Too - DFWI
Terminal B, Gate 19
P.O. Box 619007
Dallas
TX
75261
972-574-6268
HMSHost
Gf>meratmnIntemationaL Inc.
701.032.000
8
Chili's Too - DFW2
Terminal C, Gate 19
P.O. Box 619007
Dallas
TX
75261
972-574-5640
Military Restaurants, Inc.
(a/k/a Military Restaurant
Holdings)
Inc.
701.858.000
5
Chili's-Ft. Hood
Building 50 TJ Mills Blvd.
Ft. Hood
TX
76544
254-526-7271
701.090.000
1
Houston
TX
77032
281-230-3485
Inc.
701.090.000
2
Houston
TX
77032
281-233-3191
DNC-Travel Hospitality Services
701.090.000
Chili's Too - Houston Airport
Terminal B
3100 Terminal Way
George Bush Houston Intercontinental Airport
Chili's Too - Houston Airport
Terminal A
3100 Terminal Way
George Bush Houston Intercontinental Airport
Chili's Kiosk - Houston Airport
Houston
TX
77032
BonnarooHielan, Restaurant
Group^k-P
BonnareoHidan Restaurant
Group L-f*
r
Pepper Dining, Inc.
Pepper Dining, Inc.
Pepper Dining, Inc.
BonnarooHkJafl Restaurant
Group tP
BoftfKtfeeHielaa Restaurant
Group-LP
r
BonnarooHklaq Restaurant
GrouprLR
BonnarooHielan Restaurant
Groupt-LP
Pepper Dining, Inc.
Exhibit G - Page 14
rg*,'?' ^"^"^YBf.
^' "
•. • Fran this ^pfamc
;
H
.^Mflri'
^ f •
j_'f;Storcip*
8
; . < - -r- \,- •
V. Address-. •
City
~_ a.
-^v.
.-..^ i--. . - 1
Terminal C, Baggage Claim
Houston International Airport
Chili's Too - University of Texas-San Antonio
San Antonio
1 UTSA Circle
University Center 1.01.12
(
—'
r - ".T*T
, ZipC
:
v
Phone -U
^ I-LfiL."- .Jd
TX
78249
210-458-6981
Alexandria
VA
22315
703-922-5100
Chili's - Alexandria
6610 Richmond Highway
Alexandria
VA
22306
703-718-8877
701.010.001
9
Chili's- Crystal City
320 23rd Street, Suite250
Arlington
VA
22202
703-418-2333
701.010.000
2
Chili's - Bailey's Crossroads
5501 Leesburg Pike
Bailey's
Crossroads
VA
22041
703-379-2035
701.010.001
4
408.002.094
7
Chili's - Charlottesville
100 Zan Road
Charlottesville
VA
22901
434-975-0800
Chili's - Chesapeake Square
2636 Taylor Road
Chesapeake
VA
23321
757-488-1600
Pepper Dining, Inc.
408.002.153
0
Chili's-Battlefield
237 Battlefield Boulevard South
Chesapeake
VA
23322
757-546-3626
701.010.003
1
701.010.003
0
Chili's-Chester
12305 Jefferson Davis Highway
Chester
VA
23831
804-751-2580
Chili's-Culpepper
15181 Montanus Drive
Chili's - PftiffosFrederickshnrP
Culpepper
VA
22701
540-829-9870
VA
22030
22407
?63?40-SQ4-54
S-7-8884222
Inc.
701.816.000
9
701.010.002
0
Chili's - Springfield
6250 Inter Parcel Road
701.010.003
2
Pepper Dining, Inc.
7@W1&0GO
4701.010.00
22
• wW4a*Wigbw9y2|04 Plank Road
gJnyis
•3101 Plonk Rutid
^4
701.010.003
3
Chili's - Massaponax
10010 Southpoint Parkway
Fredericksburg
VA
22407
540-898-6666
701.010.003
8
701.010.002
2
Chili's-Gainesville
4995 Wellington Road
Gainesville
VA
20155
571-261-1129
Chili's - Virginia Center
9950 Brook Road
Glen Allen
VA
23059
804-266-6000
Pepper Dining, Inc.
408.002.006
0
Chili's-Hampton
1066 W. Mercury Blvd.
Hampton
VA
23666
757-825-0348
701.010.001
5
Chili's - Harrisonburg
1752 East Market Street
Harrisonburg
VA
22801
540-564-1142
701.010.000
5
701.010.002
8
408.002.105
8
Chili's-Manassas
10600 Sudley Manor Drive
Manassas
VA
22110
703-330-0208
Chili's - Chesterfield Crossing
12231 Chattanooga Plaza
Midlothian
VA
23112
804-744-0711
Chili's - Newport News
12571 Jefferson Ave.
Newport News
VA
23602
757-833-6012
Pepper Dining, Inc.
408.002.065
9
Chili's - MacArthur Center
300 Monticello Avenue, #309
Norfolk
VA
23510
757-627-7440
Military Restaurant, Inc.
(a/k/a Military Restaurant
Holdings)
701.858.000
7
Chili's-NorfolkNaval Base
Building CD 14
Norfolk Naval
Station
VA
23511
757-440-6900
701.010.001
2
Reston
VA
22091
703-758-9268
Inc.
701.816.000
5
Chili's-Reston
11840 Sunrise Valley Dr.
Chili's - Virginia Commonwealth University
355 West Gary Street
Richmond
VA
23284
804-828-8484
701.010.002
3
701.010.002
6
Chili's - Short Pump
11720 W. Broad Street
Richmond
VA
23223
804-364-9611
Chili's-Stafford
1030 Stafford Market Place
Stafford
VA
22556
540-288-1212
701.010.002
5
701.010.002
Chili's-Staunton
1025 Richmond Road
Staunton
VA
24401
540-887-0082
Chili's-Dulles Crossing
Sterling
VA
20166
571-434-7200
Pepper Dining, Inc.
Exhibit G - Page 15
^BsaEaersr
_
„ .-.Tî
.
7
701.010.000
6
^-^r^mm^m'-w
45555 Eastern Plaza
^ ' - Tyson's Comer
. _2 _'A . ..:.;~L t : --"i
Chili's
5051 Leesburg Pike
. Vienna
VA
22182
703-734-9512
Pepper Dining, Inc.
408.002.084
1
Chili's - Red Mill Commons
1177Nimmo Parkway
Virginia Beach
VA
23456
757-430-1669
Pepper Dining, Inc.
408.002.106
9
Chili's - Virginia Beach
4085 Virginia Beach Blvd.
Virginia Beach
VA
23452
757-431-2663
Pepper Dining, Inc.
408.002.064
5
Chili's-Williamsburg
1652 Richmond Rd.
Williamsburg
VA
23185
757-229-9865
701.010.001
7
701.010.000
8
408.002.104
2
Chili's-Winchester
200 Featherbed Lane
Winchester
VA
22601
540-535-1070
Chili's -Woodbridge
14432 Gideon
Woodbridge
VA
22192
703-490-3118
Chili's-Bennington
24 Hannaford Square
Bennington
VT
05201
802-447-1958
Pepper Dining Vermont, Inc.
408.002.075
4
Williston
VT
05495
802-288-9995
HM&Host
701.032.004
9
Chili's -Williston
125 Cypress Place
Chili's Too - Seattle-Tacoma Airport
Concourse D, Gate 7
17801 International Blvd.
Seattle
WA
98158
206433-5611
Ext. 5438
HMSHost
701.032.005
0
Chili's Too - Spokane Airport
Terminal A & B Food Court
9000 West Airport Drive
Spokane
WA
99224
509-624-3400
Shoot The Moon, LLC
701.815.093
5
Chili's-Northtown Mall
4750 N. Division Street, #1120
Spokane
WA
99207
509-483-7000
Shoot The Moon, LLC
701.815.093
7
701.818.032
5
701.818.037
4
Chili's - Spokane Downtown
207 West Spokane Falls Blvd.
Spokane
WA
99201
509-458-2345
Chili's - Appleton
1170 North Casaloma
Chili's - Brookfield Lakes
17915 West Blue Mound
Appleton
WI
54913
920-954-1188
Brookfield
WI
53045
262-792-9790
ERJ Dining III, k e L L C
701.818.098
8
Chili's -Delavan
2003 East Geneva Street
Delavan
WI
53115
262-728-8510
|ERJ Dining III,tnerLLC.
701.818.079
4
Chili's-East Franklin
6439 South 27th Street
Franklin
WI
53132
414-761-5889
|ERJ Dining HI, W & L C
701.818.098
3
701.818.000
5
Chili's - South Germantown
N96 W18640 County Line Road
Germantown
WI
53022
262-250-1254
Chili's-Mason Street
2363 W. Mason Street
Green Bay
WI
54303
920-491-1078
701.818.070
9
701.818.018
8
Chili's-Pleasant Prairie
6903 75th Street
Kenosha
WI
53142
262-697-2667
Chili's-Madison
7301 Mineral Point
Madison
WI
53717
608-833-8851
701.818.032
7
Chili's - East Madison
4344 East Towne Boulevard
Madison
WI
53704
608-242-9300
Chili's Too - Milwaukee Airport
General Mitchell Milwaukee Airport
5300 S. Howell Avenue
Milwaukee
WI
53207
414-744-2425
701.032.006
0
701.818.000
3
701.818.000
1
701.818.073
6
Chili's - Oconomowoc
1239 Corporate Center Drive
Oconomowoc
WI
53066
262-567-4233
Chili's-Plover
165 Crossroads Drive
Plover
WI
54467
715-295-0156
Chili's -Kohler
4001 Highway 28
Sheboygan Falls
WI
53085
920-453-9580
701.818.000
5
Chili's - Sunset Drive
1260 West Sunset Drive
Waukesha
WI
53189
262-549-9898
Pepper Dining Vermont, Inc.
| ERJ Dining III, hwî^LC
ERJ Dining III, WtLLC
ERJ Dining III, te^LLC
ERJ Dining III, WrLLC
| ERJ Dining III, Ift^LLC
ERJ Dining IIL We^LQ
HMSHost
Corporationlntemiitioniil, Inc.
|ERJ Dining III, InerLLC
| ERJ Dining III, M L L C
|ERJ Dining III, WrLLC
| ERJ Dining III, WeLLC
Exhibit G - Page 16
; ^
^
^
4^!-^*?
^Wdru^p*
^
^
&
^
r^Phdoc
StatW
ii —
| ERJ Dining III, to^LLQ
701.818.099
6
Chili s-Miller Parkway
1601 Miller Parkway
West
Milwaukee
WI
53214
701.814.091
2
Chili's-Cheyenne
1320 Del Range Blvd.
Cheyenne
WY
82009
307-635-1224
701.814.000
1
Chili's-Laramie
2523 Grand Avenue
Laramie
WY
82070
307-745-3540
Exhibit G - Page 17
414-389-9739
EXHIBIT H
LIST OF U.S. FRANCHISEES WHO HAVE LEFT THE SYSTEM AND
FRANCHISEES WHO HAVE 1NVOI ,\ INTARIT ,Y OR VOL! JNTARH ,Y CLOSED A RESTAURANT
FDD-2015
783265-v3\DALDMS
Exhibit H
LIST OF U.S. FRANCHISERS WHO HAVE LEFT THF, SYSTEM AND
RESTAURANTS TERMINATED:
FRANCHISEES WHO HAVE INVOUJNTARTI,Y OR VOLUNTARILY CLOSED A RESTAURANT
Valenti Southeast Management. LLC
Tampa. FL
X00-486-0158
(still operates other restaurants)
FLORIDA
Delaware North Companies Travel Hosnitalitv Services. Inc. O restaurants')
Buffalo. NY 14202
716-858-5044
fstill operates other restaurants')
GEORGIA
Host International, Inc,
Bethesda,MD 20817
740-694-4100
fstill operates other restaurants^
MASSACHUSETTS
Pepper Dining, Inc.—
Stamford, CT 06902
203-353-5900
Hingham, MA 0201!
Aramark Educational Sorvioos. Inc.
Philadelphia, PA 19107
215 238 4013
Gainsvifle, FL 32611
Host International, Inc.
BothoGda, MD
210 694 1100
fstill operates other restaurants^
Atlanta, GA 30320
Host International, Inc,
Bothcsda, MD
2*10 691 4100
QfflQ
Atlanta, GA 30320
Forgo, ND 58103
^ Q u a l i t y Dining4V, I n c Louisvillo, KY
502 251 7130
FDD-2015
783265-v3\DALDMS
Exhibit H - Page 1
Host International Inc.
Bothesda, MD
240 691 4100
LasVogaG,NV 89119
Bethesda, MD
2-10 694 II00
Jamaica, NY 11430
Multirestauronts Managomont. Inc.
Dallas, TX
214 353 3959
Dallas, TX 75235
Multirestauronts Management, Inc.
Dallas, TX
21/1 353 3959
Dallas, TX 75235
Aramark Educational Services. Inc.
Philadelphia, PA 19107
215 238 4013
Waco, TX 76706
CEASED OPERATIONS
-Hest International, [no.
Bothosda, MD
240 691 '1100
Atlanta, GA 30320
Bothosda, MD
240 694 1100
San Diego, CA 92101
Host Internntional, Inc.
Bothosda, MD
240 691 4100
Atlanta, GA 30320
RESTAURANTS REACQUIRED!
Master Restaurant Developers, LLC
do Hi span ia Capital Partners LLC
Chicago, IL 60606
Miami, FL 33169
FDD-2015
783265-v3\DALDMS
Exhibit H - Page 2
Bothosda, MD
240 694 4100
Golden, CO 80401
Host International, inc.
Bethesda, MB
240 694 1100
San Diego, CA 92101
Bothosda, MD
240 691 4100
4220 Edison Lakes Parkway
Mishawaka. IN 46545
574-271-4600
Los Angeles, CA 90045 5807
(still operetes other restaurants)
VIRGINIA
Chesapeake Foods. Inc.
Vienna, VA 22182
703-827-0320
fstill operates other restaurants')
If you buy this franchise, your contact information may be disclosed to other buyers when you leave the
franchise system.
FDD-2015
783265-v3\DALDMS
Exhibit H - Page 3
EXHIBIT I
STATE SPECIFIC ADDENDA TO FRANCHISE DISCLOSURE DOCUMENT
FDD-2015
783265-v3\DALDMS
EXHIBIT I
ADDENDUM TO
FRANCHISE DISCLOSURE DOCUMENT
FOR THE STATE OF VIRGINIA
1.
In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail
Franchising Act, Item 17.h. of the Franchise Disclosure Document for Brinker International Payroll
Company, L.P. is supplemented by the following:
"Under Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a
franchisor to cancel a franchise without reasonable cause. If any ground for default or termination stated
in the franchise agreement does not constitute "reasonable cause," as that term may be defined in the
Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable."
FDD-2015
783265-v3\DALDMS
EXHIBIT I
ITEM^
RECENT
This disclosure document summarises certain provisions of the franchise agreement and other
information in plain language. Read this disclosure document and all agreements carefully.
If Brinker International Payroll Company,^
document to youl^calendar days hefore you signahinding agreement with, or makeapayment to, the
franchisor or anafîliate inconnection with theproposedlranchise sale, or sooner i f required hy
applicable state law. Applicable state laws in^Connecticut and Michigan require us to provide you the
disclosure document at least lObusinessdaysbefore you signabinding agreement with,ormakea
payment to, the ânchisor or an affiliate in connection with the proposed franchise sale,^Maine, New
ôrkandRhodelslandreûireustoprovide you the disclosure document at the earlier of the first
personal meeting orlObusiness days before you signabinding agreement with, or makeapayment to,
the franchisor or an af^liate in connection with the proposed franchise sale, a n d ^ I o w a requires us
provide you the disclosure document at the earlier of theîrst personal meeting or 14days before you
signabinding agreement with, or makeapayment to, the franchisor or an affiliate in connection with the
proposed franchise sale.
If Brinker International Payroll Company,^P.does not deliver this disclosure document on time or if it
containsalalse or misleading statement, oramaterialomission,aviolation of federal law and state law
may have occurred and should be reported to the Federal Trade Commission,âshington, B.C.20580
and any applicable state agency. ^Please see B^hibitPIoralist of state agencies.)
F^hibitBcontainsalist of our agents for service of process.
The name, principal business address, and telephone number ofthe franchise seller of^ring the franchise
is:
^ ^ ^ ^ ^ ^ ^ ^ ^ ^
Telephone Number
DcnReybum
^0LBIPree^^ll^TX7^
972-770-4937
l^rrvLv^k
^0LBlPêâvâllasTX75240
972-770-5989
Issuance Date: September 20, 2013, as amended May BJJL 2014
I received a disclosure document dated September 20, 2013, as amended May SJJL 2014. The disclosure
document included the following Exhibits and Attachments:
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I
Financial Statements
Franchise Agreement (including state amendments)
Table of Contents of Chili's Franchise Manual
Agents for Service of Process
List of State Administrators
List of Current U.S. Franchisees
List of Franchisees Who Have Left the System
State Specific Addenda to Franchise Disclosure Document
Dated:
Individually or as an Officer
of
(a.
(a.
[Keep this page for your records]
FDD-2015
783265-v3\DALDMS
corporation)
partnership)
ITEM 23
RECEIPT
This disclosure document summarizes certain provisions of the franchise agreement and other
information in plain language. Read this disclosure document and all agreements carefully.
If Brinker International Payroll Company, L.P. offers you a franchise, it must provide this disclosure
document to you 14 calendar days before you sign a binding agreement with, or make a payment to, the
franchisor or an affiliate in connection with the proposed franchise sale, or sooner if required by
applicable state law. Applicable state laws in (a) Connecticut and Michigan require us to provide you the
disclosure document at least 10 business days before you sign a binding agreement with, or make a
payment to, the franchisor or an affiliate in connection with the proposed franchise sale, (b) Maine, New
York and Rhode Island require us to provide you the disclosure document at the earlier of the first
personal meeting or 10 business days before you sign a binding agreement with, or make a payment to,
the franchisor or an affiliate in connection with the proposed franchise sale, and (c) Iowa requires us to
provide you the disclosure document at the earlier of the first personal meeting or 14 days before you
sign a binding agreement with, or make a payment to, the franchisor or an affiliate in connection with the
proposed franchise sale.
If Brinker International Payroll Company, L.P. does not deliver this disclosure document on time or if it
contains a false or misleading statement, or a material omission, a violation of federal law and state law
may have occurred and should be reported to the Federal Trade Commission, Washington, D.C. 20580
and any applicable state agency. (Please see Exhibit F for a list of state agencies.)
Exhibit E contains a list of our agents for service of process.
The name, principal business address, and telephone number of the franchise seller offering'the franchise
is:
Name
Principal Business
Address
Telephone
Number
Don Reybum
6820 LBJ Freewav. Dallas. TX 75240
972-770-4937
LarrvLvsek
6820 LBJ Freewav. Dallas. TX 75240
972-770-5989
Issuance Date: September 20, 2013, ns amended May SJJL 2014
I received a disclosure document dated September 20, 2013, as amended May 8,12,2014. The disclosure
document included the following Exhibits and Attachments:
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I
Financial Statements
Franchise Agreement (including state amendments)
Table of Contents of Chili's Franchise Manual
Agents for Service of Process
List of State Administrators
List of Current U.S. Franchisees
List of Franchisees Who Have Left the System
State Specific Addenda to Franchise Disclosure Document
Dated:
Individually or as an Officer
of
(a.
(a.
[Sign and return this page]
FDD-2015
783265-v3\DALDMS
corporation)
partnership)

Chili`s - Altervista

Transcription

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