FRANCHISE DISCLOSURE DOCUMENT

Transcription

FRANCHISE DISCLOSURE DOCUMENT
TCBY Systems, LLC
A Delaware Limited Liability Company
8001 Arista Place, Suite 600
Broomfield, CO 80021
(720) 599-3350
www.tcby.com
www.tcbyfranchise.com
[email protected]
If you qualify to purchase or renew a franchise, complete our application process and enter into a franchise agreement
with us, you will offer for sale TCBY brand premium soft-serve frozen yogurt, hand-dipped frozen yogurt, fresh
yogurt, yogurt-based smoothies, sorbet and other approved food and drinks from a retail location.
The total investment necessary to begin operation of a TCBY store franchise ranges from $126,500 to $193,000 for
Other Concepts Stores and $209,280 to $492,152 for Traditional Stores. This includes $15,000 for Other Concepts
Stores and $20,000 to $35,000 for Traditional Stores that must be paid to us or our affiliates. These ranges do not
include real property acquisition or leasing costs, a salary or management fee for the owner, or any franchise fees that
would be payable to our Affiliates if you are simultaneously developing an affiliated co-brand in conjunction with your
Other Concepts Store.
We also offer area director franchises within certain limited territories. If you qualify for an area director franchise and
enter into an area director agreement with us, you will provide certain sales services to us and certain site and support
services to TCBY franchisees, within a specific territory, in exchange for a share of various franchise fees. The total
investment necessary to begin operation of an area director franchise is $101,000 to $1,037,000. This includes
approximately $100,000 to $1,000,000 that must be paid to us or our Affiliates. This range reflects that the initial area
director fee varies widely depending on variables such as the size and population of the territory that you are granted.
These ranges do not include any franchise fees that would be payable to our Affiliates if you are simultaneously
purchasing an area director franchise from our affiliate, Mrs. Fields Franchising, LLC.
This disclosure document summarizes certain provisions of your franchise 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.
You may wish to receive your disclosure document in another format that is more convenient for you. To discuss the
availability of disclosures in different formats, contact our Development Department, at 8001 Arista Place, Suite 600,
Broomfield, CO 80021, (888) 728-6999 or [email protected].
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 an 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, D.C. 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.
Issuance Date: March 26, 2014, as amended July 16, 2014
TCBY FDD 03/2014
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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 Exhibit A 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 REQUIRES YOU TO RESOLVE DISPUTES WITH US BY
LITIGATION ONLY IN BROOMFIELD, COLORADO. OUT-OF-STATE LITIGATION MAY FORCE
YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU
MORE TO LITIGATE WITH US IN COLORADO THAN IN YOUR OWN STATE.
2.
THE FRANCHISE AGREEMENT AND AREA DIRECTOR AGREEMENT EACH STATE THAT
COLORADO LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME
PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.
3.
THE AREA DIRECTOR AGREEMENT REQUIRES YOU TO RESOLVE DISPUTES WITH US FIRST BY
NON-BINDING MEDIATION, AND THEN BY LITIGATION, ONLY IN BROOMFIELD, COLORADO.
OUT-OF-STATE MEDIATION AND LITIGATION MAY FORCE YOU TO ACCEPT A LESS
FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST MORE FOR YOU TO MEDIATE
OR LITIGATE WITH US IN COLORADO THAN IN YOUR OWN STATE.
4.
THE AUDITED AND UNAUDITED FINANCIAL STATEMENTS PROVIDED AT EXHIBIT LTO THIS
DISCLOSURE DOCUMENT ARE THOSE OF OUR AFFILIATE AND ULTIMATE PARENT, MRS.
FIELDS’ ORIGINAL COOKIES, INC. (“MFOC”). ALTHOUGH OUR FINANCIAL STATEMENTS ARE
NOT INCLUDED IN THIS DISCLOSURE DOCUMENT, MFOC HAS AGREED TO GUARANTY OUR
OBLIGATIONS (SEE GUARANTEE OF PERFORMANCE INCLUDED AS EXHIBIT M TO THIS
DISCLOSURE DOCUMENT).
5.
PER THE AUDITED BALANCE SHEET DATED DECEMBER 28, 2013, SINCE ITS INCEPTION, MFOC
HAS LOST $73,662,000 CAUSING IT TO HAVE A DEFICIT NET WORTH OF $27,936,000.
6.
AREA DIRECTORS ARE NOT A PARTY TO YOUR CONTRACT. FRANCHISOR IS RESPONSIBLE
FOR ALL OBLIGATIONS UNDER YOUR CONTRACT AND IN CERTAIN CIRCUMSTANCES MAY BE
LIABLE FOR MISREPRESENTATIONS OR ACTIONS OF THE AREA DIRECTOR.
THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
We use the services of one or more FRANCHISE BROKERS or referral sources to assist us in selling our
franchise. A franchise broker or referral source represents us, not you. We pay this person a fee for selling
our franchise or referring you to us. You should be sure to do your own investigation of this franchise.
Effective Date: See the next page for state effective dates
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STATE EFFECTIVE DATES
The following states require that the 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 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:
State
Effective Date
State
Effective Date
California
July 28, 2014
New York
PENDING
Hawaii
Effective
North Dakota
July 25, 2014
Illinois
July 17, 2014
Rhode Island
July 17, 2014
Indiana
April 15, 2014
South Dakota
March 27, 2014
Maryland
July 30, 2014
Virginia
July 25, 2014
Michigan
April 14, 2014
Washington
July 17, 2014
Minnesota
July 23, 2014
Wisconsin
July 17, 2014
In all other states, the effective date of this disclosure document is the issuance date of March 26, 2014, as
amended July 16, 2014.
TCBY FDD 03/2014
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NOTICE REQUIRED
BY
STATE OF MICHIGAN
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE
SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN
THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED
AGAINST YOU.
Each of the following provisions is void and unenforceable if contained in any documents relating to a
franchise:
(a)
A prohibition on the right of a franchisee to join an association of franchisees.
(b)
A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which
deprives a franchisee of rights and protections provided in this act. This shall not preclude 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 with any lawful provision of the
franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity,
which in no event need be more than 30 days, to cure such failure.
(d)
A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the
franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee’s
inventory, supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to the
franchisor and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of
the franchise business are not subject to compensation. This subsection applies only if: (i) the term of the
franchise is less than 5 years and (ii) the franchisee is prohibited by the franchise or other agreement from
continuing to conduct substantially the same business under another trademark, service mark, trade name,
logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise
or the franchisee does not receive at least 6 months’ advance notice of franchisor’s intent not to renew the
franchise.
(e)
A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other
franchisees of the same class or type under similar circumstances. This section does not require a renewal
provision.
THIS MICHIGAN NOTICE APPLIES ONLY TO FRANCHISEES WHO ARE RESIDENTS OF
MICHIGAN OR LOCATE THEIR FRANCHISES IN MICHIGAN.
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(f)
A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude
the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location
outside this state.
(g)
A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for
good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the
franchise. Good cause shall include, but is not limited to:
(i)
The failure of the proposed transferee to meet the franchisor’s then current reasonable
qualifications or standards.
(ii)
(iii)
obligations.
The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
The unwillingness of the proposed transferee to agree in writing to comply with all lawful
(iv)
The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to
cure any default in the franchise agreement existing at the time of the proposed transfer.
(h)
A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with
the franchisor. This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to
purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to
purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire
the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful
provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).
(i)
A provision which permits the franchisor to directly or indirectly convey, assign, or otherwise transfer its
obligations to fulfill contractual obligations to the franchisee unless provision has been made for providing the
required contractual services.
The fact that there is a notice of this offering on file with the attorney general does not constitute approval,
recommendation, or endorsement by the attorney general.
Any questions regarding this notice should be directed to the Department of Attorney General, State of Michigan,
670 Law Building, Lansing, Michigan 48913, telephone (517) 373-7117.
THIS MICHIGAN NOTICE APPLIES ONLY TO FRANCHISEES WHO ARE RESIDENTS OF
MICHIGAN OR LOCATE THEIR FRANCHISES IN MICHIGAN.
vTCBY FDD 03/2014
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TABLE OF CONTENTS
Item
Page
ITEM 1.
THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES .. 1
ITEM 2.
BUSINESS EXPERIENCE .................................................................................................... 7
ITEM 3.
LITIGATION .......................................................................................................................... 7
ITEM 4.
BANKRUPTCY ...................................................................................................................... 9
ITEM 5.
INITIAL FEES ...................................................................................................................... 10
ITEM 6.
OTHER FEES ....................................................................................................................... 12
ITEM 7.
ESTIMATED INITIAL INVESTMENT ............................................................................ 18
ITEM 8.
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES ........................... 24
ITEM 9.
FRANCHISEE’S OBLIGATIONS ..................................................................................... 28
ITEM 10. FINANCING ......................................................................................................................... 31
ITEM 11. FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND
TRAINING ............................................................................................................................ 32
ITEM 12. TERRITORY ........................................................................................................................ 42
ITEM 13. TRADEMARKS.................................................................................................................... 45
ITEM 14. PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION .......................... 46
ITEM 15. OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE
FRANCHISE BUSINESS..................................................................................................... 47
ITEM 16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL ................................... 47
ITEM 17. RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION ............ 48
ITEM 18. PUBLIC FIGURES............................................................................................................... 55
ITEM 19. FINANCIAL PERFORMANCE REPRESENTATIONS ................................................. 55
ITEM 20. OUTLETS AND FRANCHISEE INFORMATION .......................................................... 57
ITEM 21. FINANCIAL STATEMENTS.............................................................................................. 67
ITEM 22. CONTRACTS ....................................................................................................................... 67
ITEM 23. RECEIPTS ............................................................................................................................ 67
EXHIBITS
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F
EXHIBIT G
EXHIBIT H
EXHIBIT I
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STATE ADMINISTRATORS AND AGENTS FOR SERVICE OF PROCESS
FRANCHISE AGREEMENT (WITH SCHEDULES AND EXHIBITS)
OTHER CONCEPTS STORE ADDENDUM TO FRANCHISE AGREEMENT
AREA DIRECTOR DISCLOSURE ADDENDUM TO FRANCHISE DISCLOSURE
DOCUMENT
AREA DIRECTOR AGREEMENT (WITH EXHIBITS)
TERM PURCHASE ADDENDUM
SUBLEASE AGREEMENT; ASSIGNMENT AND ASSUMPTION OF SUBLEASE
LEASE ADDENDUM
OPERATING PROCEDURES MANUAL TABLE OF CONTENTS
vi
EXHIBIT J
EXHIBIT K
EXHIBIT L
EXHIBIT M
EXHIBIT N
EXHIBIT O
EXHIBIT P
viiTCBY FDD 03/2014
CONFIDENTIALITY AGREEMENT
FRANCHISEE INFORMATION
FINANCIAL STATEMENTS
GUARANTEE OF PERFORMANCE
ASSIGNMENT, ASSUMPTION AND CONSENT
RENEWAL ADDENDUM TO FRANCHISE AGREEMENT; OTHER CONCEPTS
RENEWAL ADDENDUM TO FRANCHISE AGREEMENT
STATE SPECIFIC ADDENDA TO DISCLOSURE DOCUMENT, FRANCHISE
AGREEMENTS AND AREA DIRECTOR AGREEMENT
vii
ITEM 1. THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES
Us; Our Parents and affiliates; Certain Definitions.
To simplify the language in this disclosure document, the following terms and definitions will apply
throughout this disclosure document:
Term
Definition
“we,” and similar words
TCBY Systems, LLC, the franchisor
“MFFB”
Our parent, Mrs. Fields Famous Brands, LLC
“MFOC”
MFFB’s parent and our affiliate, Mrs. Fields’ Original Cookies, Inc.
“Holdco”
MFOC’s parent, MFOC Holdco, Inc.
“Z Capital”
Holdco’s parent and our ultimate parent, Z Capital Partners, L.L.C.
“MFF”
Our affiliate, Mrs. Fields Franchising, LLC
“You,” and similar words
The person or persons, including a corporate or other legal entity,
individually and collectively, buying a franchise from us
“affiliate”
An entity controlled by, controlling, or under common control with,
another entity
“parent”
An entity that controls another entity directly, or indirectly through one
or more subsidiaries
“Effective Period”
The period of time that this disclosure document is effective and can be
delivered by us to prospective franchisees
“TCBY Products”
Products approved or required by us periodically for sale at or from
TCBY retail outlets, including fresh yogurt, soft-serve frozen yogurt,
hand-dipped frozen yogurt, sorbets, and other products approved by us or
our affiliates
“TCBY Store”
TCBY Store, whether a Traditional or Other Concepts Store, you
develop under the Franchise Agreement
“Premises”
Premises you have secured and we have approved for your Store
“Franchise Agreement”
The Franchise Agreement you sign for your TCBY Store
“Traditional Store”
Typical TCBY Store, either self-service or full-service
“Other Concepts Store”
TCBY Store established within a premises operated primarily under
another trade name that we have approved for co-branding
“Other Concepts Addendum” The addendum that, in conjunction with the Franchise Agreement, gives
you the right to operate an Other Concepts Store using the Marks
“Area Director”
The person authorized to offer sales services, site services and support
services to TCBY Stores within a defined territory
“Area Director Territory”
The defined territory in which you provide sales services, site services
and support services to TCBY Stores if you become an Area Director
“Area Director Agreement”
The Area Director Agreement you sign for your Area Director Territory
TCBY FDD 03/2014
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We, MFFB and each of our affiliates specifically listed above, with the exception of Z Capital, have a
principal address of 8001 Arista Place, Suite 600, Broomfield, CO 80021. Z Capital has a principal address of
Two Conway Park, 150 Field Drive, Suite 300, Lake Forest, Illinois 60045.
We are a Delaware limited liability company organized on May 30, 2000. We are a wholly-owned
subsidiary of MFFB. MFFB is a wholly owned subsidiary of MFOC, which is a wholly owned subsidiary of
Holdco. We do business under the name TCBY (or variations of that name). In December 2011, as part of its
refinance, MFOC became a wholly-owned subsidiary of Holdco. Z Capital is the sole owner of Holdco. Though
they are our parent companies, neither Holdco nor Z Capital are involved in franchising activities.
Agents for Service of Process.
Our agent for service of process at our principal address is Joyce Hrinya. Please see Exhibit A to this
disclosure document for a list of the names and addresses of our agents for service of process in various other
states.
Our Predecessors.
TCBY Systems, Inc. and TCBM Co. are our predecessors. We were formed as part of a transaction where
an affiliate of MFOC purchased TCBY Systems, Inc., then the franchisor of the TCBY® franchise system, along
with certain of its parents and affiliates. TCBY Systems, Inc. offered franchises for TCBY stores from June 1982
until June 1, 2000, when it was merged into TCBM Co., which then immediately merged into us. TCBM Co.
never offered franchises or engaged in any business other than merging into us.
Description of the Franchises Offered.
We currently offer TCBY franchises for two different types or categories of new TCBY Stores: (i) TCBY
Traditional Stores; and (ii) TCBY Other Concepts Stores. These are described in more detail as follows:
TCBY Traditional Stores
TCBY Traditional Stores offer and sell TCBY brand products that we periodically approve, which may
include premium soft-serve frozen yogurt, hand-dipped frozen yogurt and other frozen dessert and treat items,
such as cakes and pies, sorbet, smoothies, fresh yogurt, mix-ins, toppings and drinks to retail customers. TCBY
Stores may be established in a variety of locations that we approve, including a strip shopping center, a freestanding building (with or without drive-up window) and a regional shopping mall, and usually will be located in
urban and suburban areas. TCBY Stores are open year-round, except under certain limited circumstances where
we have given our prior written permission.
A TCBY store typically has 1,000 to 1,500 square feet, seats 10 to 20 customers, and caters to both carryout and eat-in business. Sometimes a TCBY Store will have drive-thru facilities. A TCBY Store will generally
be developed in either a self-service format or a full-service format, as you and we agree as part of the store
approval process. A self-service format allows customers to serve themselves and choose among various types
and flavors of yogurt, toppings and beverages. A self-serve TCBY Store generally includes 5 or more self serve
yogurt machines, a self-serve beverage dispenser and a products and topping bar. Some self-serve and full–
service stores also sell the Yovana® fresh yogurt products described below. Yogurt products and toppings are
priced by weight. A full-service TCBY Store typically offers a more extensive menu of items made to order by
Store employees and may include yogurt cakes, pies, prepacked quarts and other products that consumers can
purchase and take home.
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If you qualify and desire to develop and operate a Traditional Store, you will sign our Franchise
Agreement, which is attached to this disclosure document as Exhibit B. The Franchise Agreement gives you the
right to operate a Traditional Store using the Marks.
Other Concepts Store Franchises
The second type of TCBY store is an Other Concepts Store, which is a smaller TCBY Store established
within a premises operated primarily under trade names or trademarks belonging to another concept that we have
approved for co-branding with a TCBY Store, which may include one of the MFFB Franchised Concepts. Other
Concepts Stores usually offer a limited menu of TCBY products.
If you qualify and desire to develop and operate an Other Concepts Store, you will sign our Franchise
Agreement, attached as Exhibit B, together with our Other Concepts Addendum, attached as Exhibit C. The
Franchise Agreement and Other Concepts Addendum give you the right to operate an Other Concepts Store using
the Marks. Your Other Concepts Store may operate in conjunction with another MFFB Franchised Concept.
Area Director Franchises.
We have developed an area director program (“Area Director Program”) for the TCBY franchise
system. We currently offer area director franchises within certain territories.
We grant each Area Director the right within an Area Director Territory to: (i) solicit prospective TCBY
franchisees and, as we request, assist in the franchise sales process (“sales services”); (ii) perform certain site
acquisition and development services (“site services”); and (iii) render compliance and enforcement services for
and on behalf of us, and provide additional marketing, operational, training and field support services to TCBY
franchisees (“support services”). In some circumstances, an Area Director also may have a right of first refusal
to develop or find another franchisee to develop new TCBY Stores at approved locations within its Area Director
Territory. Area Directors are not authorized, and Area Director sales services do not include the right, to approve
prospects as TCBY franchisees, offer or sell franchises, or negotiate or sign franchise agreements on our behalf.
Area Directors are not party to contracts between us and franchisees.
If you qualify and desire to act as an Area Director in a territory where we are offering the Area Director
Program, you will sign an Area Director Agreement with us. A copy of the Area Director Agreement, which will
control the relationship between you and us, if you and we sign it, is attached to this disclosure document as
Exhibit D. The Area Director Agreement grants you the right to operate an “AD Business” (as defined in the
Area Director Agreement) and offer the sales services, site services and support services described above. The
Area Director Agreement, however, does not grant you the right to operate an individual TCBY Store, and you
must sign the applicable TCBY Franchise Agreement with us if you desire to own and operate a TCBY Store
within or outside of your Area Director Territory.
In exchange for Area Director services described above, we will pay you several different fees. These
fees include percentages of initial franchise fees, royalty and service fees, and may include percentages of transfer
fees and other fees that franchisees pay in connection with the purchase or operation of a TCBY Store within your
Area Director Territory, provided certain conditions are met regarding the sale of the franchises and provided that
you meet your obligations, all as further described in your Area Director Agreement.
As a condition of maintaining your Area Director franchise, you must satisfy certain Development Quota,
which we and you will mutually agree upon, for each Development Period (as these terms are defined in Item 12)
during the term of the Area Director Agreement. Renewal of the Area Director Agreement is contingent upon we
and you agreeing on a new Development Quota for the renewal term. Further, at all times from and after the
second Development Period, you must continuously own and operate at least the number of TCBY Stores to be
3TCBY FDD 03/2014
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designated in your Area Director Agreement located within your Area Director Territory. See Item 12 for further
information regarding these development obligations.
The Market.
The market for a Store’s business is the general public. Sales are generally seasonal, tending to increase
in warmer months and decrease in cooler months. We offer several fat-free and/or no sugar added products
targeted toward customers who are looking for a low fat satisfying treat. We also offer gluten-free and vegan
products.
Laws and Regulations.
In addition to laws and regulations that apply to business generally, the Store’s business is subject to
federal, state, and local laws and regulations pertaining to food labeling, sanitation, and weights and
measurement. You should also be aware of federal, state, and local employment laws and regulations, specifically
including minimum age and wage requirements. Local law requirements vary by location.
Some states may require franchisees to obtain restaurant, business, occupational, food products, and
miscellaneous licenses. Some states also have laws regarding who may secure these licenses. You may also have
to obtain health licenses and to comply with health laws and regulations that apply to restaurant and food product
sales establishments. You should inquire about these laws and regulations.
Area Directors should be aware of Federal Trade Commission regulations and various state laws that
impact the sale of franchises and the relationship between franchisors and franchisees that may apply when acting
as our agent in soliciting prospective franchisees and in providing initial and ongoing sales services, site services
and support services. You may not solicit prospective TCBY franchisees in any state that requires the registration
of disclosure documents, unless we have a currently effective registration in that state. You must comply with all
local, state and federal laws that affect your AD Business, including employment, workers’ compensation,
corporate, tax, licensing and similar laws and regulations.
Several state franchise disclosure and registration laws regard you to be our franchise broker in the Area
Director Territory to which you are appointed. Therefore, in accordance with applicable law, you must, at your
expense, and if required, register as our franchise broker and provide us with proof of that registration. You are
responsible for notifying us immediately of any material changes in the information that you give to us for
purposes of complying with franchise disclosure laws.
If your activities as our Area Director require you separately to register in your Area Director Territory,
you must prepare the necessary documents and submit the relevant filings at your expense. We will provide you
with information relating to us, which is necessary for your registration. As an alternative, we may, at our option,
agree to prepare and register in certain states joint disclosure documents that include information not only about
us, but also about you as our Area Director. In that case, you agree to cooperate in providing us with information
relating to you and your AD Business and, upon demand, to pay to us or our designee the costs of preparing and
registering those portions of disclosure documents and ancillary documents which are applicable only to you and
your AD Business.
Competition.
If you open a Store, your competition may include other yogurt stores, soft-serve frozen dessert stores, ice
cream parlors or stores, and smoothie and other specialty beverage shops; fast-service and full-service restaurants
offering yogurt products, soft-serve frozen desserts, smoothies and other products that may be similar to products
offered by Stores; and stores offering other dessert and snack items such as cookies, baked goods, coffee and
coffee-based drinks. Some of these competitive stores are or may be owned or licensed by us or one of our
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affiliates. Your competition includes other, existing TCBY franchisees who may operate TCBY Stores under
different formats or who have entered into franchise agreements with us that contain terms significantly different
than those in the Franchise Agreement.
Prior Business Experience: Us and Our Affiliates.
Since July 2000, we have granted licenses and franchises for the operation of TCBY Stores using the
name and service mark “TCBY” and other marks we designate for use by TCBY Stores (all referred to as the
“Marks”). In addition, since January 2010, we have been in the business of granting area director franchises in
certain limited territories to certain franchisees.
In addition to offering TCBY franchises since July 2000, we have been engaged in other businesses as
described in this Item 1. Although we are the franchisor of the TCBY franchise system, MFFB employees
perform the day-to-day operations of our franchise systems, and provide services to our franchisees at our
direction. MFFB does not offer and has never offered franchises of any kind.
From January 2006 to December 2008, we offered multiple unit franchises for the operation of TCBY
Stores under a Development Agreement and Franchise Agreement. We no longer offer this program, although we
may agree to sell more than one TCBY franchise to the same franchisee.
From December 2005 to December 2007, we offered single and multiple unit franchises for the operation
of Yovana® stores (“Yovana® Stores”), in certain limited markets. During that period we sold three such stores.
These stores operated under the Yovana® trademarks and other TCBY Marks. As of the issuance date of this
disclosure document, there were no franchised or company-owned Yovana® Stores, and we do not anticipate
franchising, owning or operating additional Yovana® Stores during the Effective Period, but are testing the
Yovana® product in some TCBY Stores and the concept in a few captive, licensed locations operated in airports
by HMS Host.
We or one of our affiliates or predecessors, have entered into transactions for development of TCBY
locations. The terms of these transactions are substantially different than those on which you would operate a
Store. These different locations include, but are not limited to (a) locations in countries other than the United
States of America, (b) certain airport, toll road plaza, and other unique locations which in certain cases are
operated under a joint venture agreement between us and either Sodexho Marriott, Inc., or HMS Host (or their
affiliates or successors), (c) certain sports arena or stadium locations controlled by the operator of the facilities,
(d) certain theme park locations controlled by the operator or owner of the facilities, and (e) certain private sector
food service locations (such as large plants and offices) controlled by an operator or owner. We or one of our
affiliates may enter into co-branding arrangements with other snack food companies, establish a new business or
franchise system, or acquire an existing business or franchise system. We may also sell refrigerated, frozen
novelty, and hard pack TCBY brand yogurt to various distributors throughout the United States for resale
primarily to grocery stores and similar venues.
Our affiliate MFF also offers franchises. MFF is a wholly-owned subsidiary of MFFB. MFF or its
predecessors, including MFOC, have granted licenses and franchises for the operation of Mrs. Fields Cookie
Stores in the United States and abroad, to franchisees or licensees since 1977 and MFF continues to offer them.
From 2010 to 2012, MFF, sometimes in conjunction with us, also granted area director franchises in certain
limited territories. In certain cases, MFF may offer franchises to our franchisees to operate locations that are cobranded with TCBY Stores. Other of our affiliates have offered co-branding in the past, and may do so in the
future, but currently MFF is our only affiliate that does so.
On March 16, 2004, MFOC contributed all of its franchise-related assets, including its Mrs. Fields
trademarks and all other existing Mrs. Fields franchise agreements, to MFFB. Immediately after, MFFB
contributed these franchise-related assets to MFF or other of its subsidiaries. At the same time, both we and MFF
5TCBY FDD 03/2014
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entered into franchise agreements with MFOC to license it to continue to operate Mrs. Fields Cookie Stores and
TCBY Stores, although as of the issuance date of this disclosure document, MFOC operates no TCBY or Mrs.
Fields Cookie Stores. Before the March 2004 contributions, MFOC and its predecessors operated the Mrs. Fields
franchise system in the United States and abroad.
Our former affiliates, PTF LLC and PMF LLC, formerly operated the Pretzel Time and Pretzelmaker
franchise systems and our former affiliates, GACCF LLC and GAMAN LLC formerly operated the Great
American Cookie Company franchise system. These former affiliates and various predecessors of each were the
franchisors or suppliers of their respective franchises for more than 10 years. These franchise systems were
purchased by NexCen Asset Acquisition, LLC (“NexCen”) on August 7, 2007 (Pretzel Time and Pretzelmaker)
and on January 29, 2008 (Great American Cookie Company). We are not affiliated with the current franchisors of
these brands. PTF LLC, PMF LLC, GACCF LLC and GAMAN LLC were dissolved on June 19, 2012. However,
some of these brands formerly franchised by our affiliates are operated by the franchisees of us or MFF,
sometimes as co-branded locations.
For more than 20 years, we or our predecessors and our affiliates have offered international master
franchise agreements, franchise agreements and other licensing agreements for TCBY Stores and the other MFFB
franchised concepts in foreign countries. As of December 28, 2013, we and our affiliates have developed 143
Mrs. Fields locations in 18 foreign countries, and 126 TCBY locations in 17 foreign countries. Going forward,
we and our affiliates may offer international master franchise agreements, franchise agreements and other
licensing agreements in foreign countries. Licenses and franchises for TCBY Stores in other countries may be
under different terms and conditions than are described in this disclosure document.
Although some of our affiliates have periodically operated company-owned stores and engaged in similar
businesses as described elsewhere in this Item 1, and reserve the right to do so in the future, we are engaged in
the business of franchising and licensing systems and trademarks for the delivery of goods and services.
Although we currently own, and may own in the future, a few TCBY Stores, our primary business activities are
franchising and licensing. Our franchisees are not our employees.
Except as qualified in Note 1, the table below indicates the number of franchises sold by us and our
respective affiliates or their predecessors which were in operation as of December 28, 2013. All of these locations
may compete with you.
Except as described in the table below and elsewhere in this Item 1, as of December 28, 2013, neither we
nor our affiliates have offered franchises in any other lines of business or operated any company-owned stores for
the concepts listed in the table below.
Franchisor
Concept
Number of
Franchises(1)
Number of
Company-Owned
Stores (Operated
by us or MFOC)
Us
TCBY Stores
345
1
MFF
Mrs. Fields Cookies Stores (including
Mrs. Fields Bakery Cafés)
195
5
(1) This column lists the number of franchises open and operating as of December 28, 2013. These
numbers include co-branded and Other Concept units so that the same location may be included in the
total for more than one concept.
Except as described above, no other parents, predecessors or affiliates are required to be disclosed in this
Item 1.
6TCBY FDD 03/2014
6
ITEM 2. BUSINESS EXPERIENCE
Interim Chief Executive Officer: Joyce Hrinya
Ms. Hrinya has been the Interim Chief Executive Officer for MFFB since July 2014. Ms. Hrinya has also served
on the board of directors of MFFB since March 2014. Ms. Hrinya has also served as the Managing Director and
Operating Partner of Z Capital, located in Chicago, Illinois, since May 2014. Ms. Hrinya has also served on the
board of directors of Great Plains Communications, located in Blair, Nebraska, since September 2009. Prior to
that, Ms. Hrinya served as the Managing Partner of A&R Strategy Partners, LLC, located in Kansas City,
Missouri, from March 2010 to April 2014. Prior to that, Ms. Hrinya served as the Senior Vice President,
Marketing and Customer Satisfaction for Helzberg Diamonds, located in North Kansas City, Missouri, from
December 2004 to March 2010.
Chief Financial Officer: Michael Chao
Mr. Chao has been the Chief Financial Officer for MFFB since August of 2013. Mr. Chao served as Vice
President of Finance, Investor Relations and Treasury for Vail Resorts from October of 2009 to August of 2013.
From August 2006 to October 2009, Mr. Chao was Director of Finance, Investor Relations and Treasury for Vail
Resorts.
Chief Operating Officer: David Bloom
Mr. Bloom has been the Chief Operating Officer for MFFB since March of 2014. Prior to that, he was MFFB’s
Senior Vice President of Strategic Development from October 2013 to March 2014. He served as Senior Vice
President of Brand Expansion for Hurricane Grill & Wings from May 2012 until October of 2013. From October
2011 to May 2012 Mr. Bloom was Chief Operating Officer of Bridge International Academies in Nairobi, Kenya.
From June 2009 to September 2011, Mr. Bloom served as Senior Vice President of Brand Expansion for Quiznos
Subs in Denver, Colorado. From June 2008 to June 2009 Mr. Bloom was President of Capital Idea Group in
Sarasota, Florida. From January 2006 to May 2008 Mr. Bloom was Vice President Franchise Sales for Clockwork
Home Services in Sarasota, Florida. From 1992 until 2006, Mr. Bloom served in various capacities for Quiznos
Subs, including roles as Senior Vice President of Brand Expansion in both the US and Canada. He was also a
partner in Falcon Ventures Ltd., a multi-unit owner and area developer of Quiznos Subs, as well as the owner of
Rice Boxx Restaurants.
Please see Exhibit D for disclosures related to our Area Director(s), including their names, addresses and
their Area Director Territories.
ITEM 3. LITIGATION
Advanced Food Concepts, Ltd., et al. v. William P. Creasman, et al., (U.S. District Court for the Eastern
District of Arkansas, Case No. 401-CV-00-117JMM, filed June 21, 2001). Two of the plaintiffs that filed this
Complaint were former franchisees of us, and the other purported to be a former franchisee (collectively referred
to as “Advanced Food”). The lawsuit originally included numerous corporate and individual defendants related
to us, but all defendants were dismissed except TCBY of Ireland, Inc., an indirect subsidiary of us and the
franchisor party under a Transnational Master License Agreement entered into with certain of the Advanced Food
and others. This case stems from TCBY of Ireland’s performance under and termination of the Transnational
Master License Agreement. Advanced Food sought damages in excess of $70 million in connection with TCBY
of Ireland’s performance under and termination of the Transnational Master License Agreement. On August 4,
2004, the court granted TCBY of Ireland’s Motion for Summary Judgment on all remaining counts of the
complaint. Advanced Food filed various motions, including a motion for reconsideration, which the court denied.
On February 7, 2005, the parties entered into a settlement agreement in which Advanced Food agreed to pay
TCBY of Ireland a negotiated sum for its attorneys’ fees, and the parties agreed not to appeal the Court’s rulings.
7TCBY FDD 03/2014
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On February 14, 2005, the court entered its order dismissing the case with prejudice in accordance with the
settlement agreement.
Anthony H. Coombs, Scott Haslam and Judith Haslam, and Hasco, LLC, v. Juice Works Development,
Inc., TCBY Systems, Inc., Mrs. Fields Original Cookies, Inc., Mrs. Fields, Inc., Mrs. Fields Brand, Inc.,
Mrs. Fields Holding Company, Inc., and Mrs. Fields Famous Brands (Third Judicial District Court of Salt Lake
County, State of Utah, Case No. 010902619, filed March 27, 2001). Plaintiffs (collectively referred to as
“Coombs”) were former franchisees of Juice Works Development, Inc. Their Complaint, filed March 27, 2001,
alleged that Juice Works breached the provisions of their Franchise Agreement by failing to provide meaningful
support, sales promotions, marketing support or assistance in operating Coombs’ Juice Works location. Coombs
further alleged that Juice Works made representations during the sale of the franchise to Coombs with the intent
to defraud and deceive Coombs and failed to disclose certain material facts related to the sale. The Complaint
also alleged breach of fiduciary duty, and negligence on the part of the defendants (collectively referred to as
“Mrs. Fields”), and asked for general and punitive damages of $3,000,000. Mrs. Fields denied the allegations
and filed a Motion to Dismiss the Complaint on jurisdictional grounds. In October 2002, the court granted our
Motion to Dismiss, and Coombs appealed. In November 2003, the Utah Court of Appeals held that the trial court
properly granted our Motion to Dismiss on jurisdictional grounds. As of the issuance date of this disclosure
document, Coombs has not refiled the action in the venue required by the choice of venue clause of the Franchise
Agreement.
TCBY Systems, LLC vs. S.E.L. Yogurt, L.C. and Esther Malca (Circuit Court of the Fifteenth Judicial
Circuit, Palm Beach County, Florida, Case No. 2004-008624 AG, filed September 14, 2004). We filed an action
against Malca, a former franchisee, to collect on an outstanding promissory note in the amount of $90,295.75.
After attempts to settle the case were unsuccessful, Malca filed an answer and counterclaim against us toward the
end of 2005. The counterclaim alleges breach of contract, breach of an implied covenant of good faith and fair
dealing, and tortious interference with a business relationship. Malca’s allegations arise from some of our actions
related to her attempt to sell her business to a third party. We filed an answer with affirmative defenses to
Malca’s counterclaim, together with a motion to dismiss or abate Malca’s entity, S.E.L. Yogurt, L.C., on the
grounds that the Florida Secretary of State had administratively dissolved it for failure to file its 2003 annual
report. The case was dismissed without prejudice on December 8, 2006.
Mayfare Enterprises, Inc. v. Mrs. Fields Famous Brands, LLC, TCBY Systems, LLC, et al. (American
Arbitration Association Case No. 77-1140046404-VSS, filed December 29, 2004). On December 29, 2004,
Mayfare Enterprises, Inc. (“Mayfare”), one of our former franchisees, brought this claim for damages in excess
of $50,000, alleging incomplete disclosures and breach of the covenant of good faith and fair dealing with its
purchase of franchises from us and from our affiliates, PMF and MFF, for the development of a triple concept
location in Geneva, Illinois. On July 16, 2007, the parties reached a settlement of the arbitration where the claims
against MFFB and its affiliates were dismissed with prejudice, and MFFB and its affiliates paid a $150,000
settlement to Mayfare. Mayfare also agreed to pay any outstanding fees associated with the arbitration to the
American Arbitration Association, and the parties agreed to pay their own costs, expenses and attorneys’ fees
incurred in or as a result of the arbitration.
Osman Kashlan v. TCBY Systems, LLC, TCBY of Jordan, Inc. (United States District Court Case No. 406 CV 000497 GTE, filed April 29, 2006). This lawsuit stems from a termination of a TCBY Transnational
Master Franchise Agreement entered into for the exclusive territories of the Kingdom of Jordan and the Republic
of Syria. Kashlan, the Master Franchisee, sought a declaratory judgment from the court regarding the separate
entities of TCBY Systems, LLC and TCBY of Jordan, Inc., and alleged breach of contract and breach of the
implied covenant of good faith and fair dealing. We filed an answer and counterclaim for breach of contract and
trademark infringement. Kashlan filed a motion to dismiss the counterclaim and we filed an opposition. On
October 8, 2009, the parties reached a settlement where Kashlan dismissed their claim with prejudice and TCBY
of Jordan, Inc. paid a $1,000,000 settlement to Kashlan.
8TCBY FDD 03/2014
8
SAI Food Sensations v. TCBY Systems, LLC (American Arbitration Association Case No. 13 459 01726
06, filed July 26, 2006). A demand for Arbitration was filed with the American Arbitration Association by SAI
Food Sensations, a TCBY Master Franchisee for the exclusive territory of India. The demand for arbitration
alleged breach of contract and breach of the implied covenant of good faith and fair dealing, requesting damages
of no less than $1.1 million. The contract provided for arbitration with the International Chamber of Commerce
as the administering agency. The AAA requested, and the parties provided, their written consent to arbitrate
before the AAA in New York. On September 16, 2009, the parties reached a settlement where SAI dismissed
their claim with prejudice and TCBY Systems, LLC paid a $500,000 settlement to SAI.
TCBY Systems, LLC v. Herd, Case No. 252519, Superior Court of Sonoma County, State of California.
We filed suit against former franchisee, Robert Herd, seeking a preliminary injunction order directing him to
cease and desist from using TCBY’s trademarks and to comply with other post-termination obligations in the
Franchise Agreement. We also sent form interrogatories and requests for admission to Mr. Herd. Mr. Herd filed
his answer to the complaint and served responses to some of our written discovery. In a telephone call with him
on February 8, 2013, he stated that he had ceased using all trademark and other insignia of TCBY and was on the
verge of bankruptcy, with tax liens assessed against him for failure to pay payroll taxes and others. We asked him
to send us photographs of the inside and outside of his store and evidence of his impecuniosity, including any tax
liens.
Other than the actions described above, no litigation is required to be disclosed in this Item.
ITEM 4. BANKRUPTCY
As summarized in the chart below, we, MFFB, MFOC and 11 of our other affiliates each filed a voluntary
Chapter 11 bankruptcy case in the United States Bankruptcy Court for the District of Delaware on August 24,
2008. All of the active entities below have a principal address of 8001 Arista Place, Suite 600, Broomfield, CO
80021, except for Mrs. Fields Gifts, Inc., which has a principal address of 1717 South 4800 West, Salt lake City,
Utah 84104.
Filing Entity
Us
Relationship to
Franchisor
Franchisor
MFOC
Predecessor and
affiliate
MFFB
Parent
Mrs. Fields Financing Company,
Inc.
PTF, LLC (Note 1)
affiliate
PMF, LLC (Note 1)
affiliate
GACCF, LLC (Note 1)
affiliate
GAMAN, LLC (Note 1)
affiliate
The Mrs. Fields’ Brand, Inc.
affiliate
MFF
affiliate
9TCBY FDD 03/2014
affiliate
Bankruptcy Case Name and Number
In re TCBY Systems, LLC
Case Number 08-11962 (PJW)
In re Mrs. Fields Original Cookies, Inc.
(Jointly Administered Under this Case)
In re Mrs. Fields Famous Brands, LLC
In re Mrs. Fields Financing Company, Inc.
In re PTF, LLC
In re PMF, LLC
In re GACCF, LLC
In re GAMAN, LLC
In re Mrs. Fields’ Brand, Inc.
In re Mrs. Fields Franchising, LLC
9
Mrs. Fields Gifts, Inc.
affiliate
Mrs. Fields Cookies Australia
affiliate
TCBY International, Inc.
affiliate
TCBY of Texas, Inc. (Note 1)
affiliate
In re Mrs. Fields Gifts, Inc.
In re Mrs. Fields Cookies Australia
In re TCBY International, Inc.
In re TCBY of Texas, Inc.
Note 1: PTF, LLC, PMF, LLC, GACCF, LLC, and GAMAN, LLC were dissolved as of June 19, 2012. TCBY of
Texas was dissolved as of June 20, 2012.
We, MFFB, MFOC and our other affiliates listed in the chart above filed a Joint Prepackaged Plan of
Reorganization with the United States Bankruptcy Court for the District of Delaware on the day we each filed our
Chapter 11 bankruptcy cases. The Joint Prepackaged Plan of Reorganization, as modified, was confirmed by the
United States Bankruptcy Court for the District of Delaware on October 2, 2008, and we, MFFB, MFOC and our
other affiliates all received discharges. Under the Joint Prepackaged Plan of Reorganization, the holders of
approximately $200 million in senior secured notes exchanged those notes for a pro-rata share of the following:
(i) $52,149,000 in new senior secured notes, (ii) 87,851,000 in cash, and (iii) 87.5% of the new common stock of
MFOC, issued after the cancellation its old common stock. The new senior secured notes contain payment terms
more favorable to MFFB, including the option for the first 2 years of issuing additional notes as payment in kind
of interest due under the notes. The Joint Prepackaged Plan of Reorganization also established a new $10 million
dollar senior secured, 3-year term loan for MFFB.
Other than as described above, no bankruptcy is required to be disclosed in this Item.
ITEM 5. INITIAL FEES
Store Franchise.
Initial Franchise Fee:
The initial franchise fee for a Traditional TCBY Store is $35,000. We will reduce the initial franchise fee
during the Effective Period to $20,000 for an additional TCBY Store franchise. The initial franchise fee for Other
Concepts Stores is $15,000. If you purchase an Other Concepts Store in conjunction with a Mrs. Fields Cookie
Store, we may choose to waive the initial franchise fee for the TCBY Other Concepts Store.
We have the right to reduce or waive the initial franchisee fee in certain cases.
If you have obtained our approval of and secured the Premises for your Store at the time of signing the
Franchise Agreement, the entire initial franchise fee is payable to us when you sign the Franchise Agreement. If
you have not obtained our approval of and secured the Premises for your Store at the time of signing the
Franchise Agreement, you will pay us an initial franchise fee deposit of $5,000 when you sign the Franchise
Agreement and the remaining balance when you obtain our written approval of and secure the Premises for your
Store. The $5,000 deposit is refundable until your lease is signed. Once you sign your lease, the deposit and the
remainder of the initial franchise fee are fully earned by us and are due and fully payable. If you are unable locate
and lease a space for your Store within 6 months from the date of the Franchise Agreement, you or we have the
right to terminate the Franchise Agreement and refund your fee deposit. (See Item 11 for further information
regarding our approval of the Premises of your Store.)
If you or your initial store manager do not satisfactorily complete the initial training program, we will
refund the initial franchise fee less all reasonable expenses incurred by us for any services performed by us in
establishing and developing your Store, up to 50% of the initial franchise fee. If you have paid less than 50% of
10TCBY FDD 03/2014
10
the full initial franchise fee at the time of the refund, no portion of that payment will be refundable under any
circumstances. If we terminate for failure to satisfactorily complete training after you have secured your
premises, we will keep the $5,000 deposit, although you will not be required to pay to us the remaining balance of
the initial franchise fee. You must sign all releases, waivers and other agreements necessary to terminate the
relationship between you and us before receiving your refund.
If you acquire an existing Store from another franchisee of ours, you will not pay an initial franchise fee
to us, but will pay us a transfer fee (currently $5,000).
Except as described in this Item 5, we do not offer refunds of the initial franchise fee under any
circumstances.
Other Initial Fees:
If you are developing a new TCBY Traditional Store, you must conduct a grand opening advertising and
promotion program and must spend for the grand opening program for your Store an amount we determine that is
at least $5,000 but does not exceed $10,000. You agree to spend at least $1,000 for the grand opening of your
new Other Concepts Store. We have the right to require you to purchase grand opening advertising and
promotional materials from us, our affiliates or our designees. Neither we nor an affiliate refund any payments
for these materials. You may also incur expenses from other vendors and suppliers in your grand opening
promotion.
From December 30, 2012 to December 28, 2013, our franchisees paid us or an affiliate initial fees ranging
from $0 to approximately $35,000.
Area Director Franchise.
Initial Area Director Fee.
If you and we sign an Area Director Agreement, you will pay us an initial Area Director fee negotiated
between you and us. We estimate the initial Area Director fee will range from $100,000 to $1 million or more,
but will vary widely and will be calculated based on a number of factors. These factors will primarily consider
the size and population of the Area Director Territory, but may also include the number of TCBY Stores to be
developed, the number of existing TCBY Stores (if any) in the Territory, and the market for the products. The
initial Area Director fee is fully earned when you sign the Area Director Agreement and is non-refundable once
paid. Typically the initial Area Director fee is paid in full when you sign the Area Director Agreement. In some
instances that we approve in advance, however, you will pay us the initial Area Director fee on an installment
basis. In that case, we will retain the sales commissions you earn (as described in Item 11 and Section 6.1 of the
Area Director Agreement) and apply the sales commissions towards the initial Area Director fee until the fee is
paid in full; provided that if, at any time before you have completed paying us the initial Area Director fee, you
fail to satisfy your Development Quota or the Area Director Agreement is terminated, the unpaid balance of the
initial Area Director fee is immediately due and payable in cash or immediately available funds.
11TCBY FDD 03/2014
11
ITEM 6. OTHER FEES
STORE FRANCHISES
OTHER FEES
Type of Fee
Amount
Due Date
Remarks
Royalty
6% of monthly Gross
Revenues
Weekly on or before the
close of business on
Wednesday for the
immediately preceding
week
See the General Comments below for
a definition of Gross Revenues. See
Note 1.
Marketing fees
3% of Gross Revenues
Same as continuing fee
See Note 2
Local Advertising;
Cooperative advertising
Will vary
Will vary
See Note 3
Training fee
None currently, but
may be charged in the
future
When incurred
We may charge a fee for certain
training programs, as described in
Item 11.
Refresher training
Then-current fees –
currently estimated at
$500 per day per
person plus travel
expenses
When incurred
We have the right to require you
and/or previously trained and
experienced managers and employees
to attend periodic refresher courses at
the times and locations we designate.
Special assistance
Daily fees and charges
we establish – currently
estimated at $500 per
day per person plus
travel costs
When incurred
We do not charge for the operating
assistance and guidance we provide
to all of our franchisees. However,
we have the right to make special
assistance programs available to you
for which you must pay fees and
charges that we establish.
Late payment fee
$100 for each
delinquent payment.
When the delinquent
payment is due
Late reporting fee
$100 for each
delinquent report
When the delinquent report
is due and continuing to be
due for each period that the
report remains delinquent
Interest expenses
Will vary under
circumstances
When due
12TCBY FDD 03/2014
You must pay all business debts,
liens and taxes when due. If you fail
to do so, we have the right, to pay the
same and then be entitled to
immediate reimbursement from you.
Unpaid debts owed to us bear interest
from the due date until paid at the
lesser of 1.5% per month or the
maximum contract rate permitted by
12
OTHER FEES
Type of Fee
Amount
Due Date
Remarks
state law.
Audit
Cost of financial audit
plus interest at 1.5%
per month or the
highest legal rate on
any underpayment currently the cost of the
audit is estimated to be
$5,000
15 days after receipt of
audit or inspection report
You must pay the costs of the audit or
inspection only if you fail to furnish
us with reports, financial statements,
tax returns or schedules, or if the
audit results show an understatement
of Gross Revenues of more than 2%
or if the need for an audit was a result
of your default under the Franchise
Agreement in failing to provide
records and reports in a timely
manner.
Transfer Fee
$5,000 or the current
transfer fee, whichever
is greater; $7,500 or the
current transfer fee,
whichever is greater, to
transfer a Store cobranded with an
Affiliate’s concept
Before or upon final
closing of transfer
See Note 4 and Item 17
Additional Term
1/20th of then-current
initial franchise fee, or
the current fee charged,
whichever is greater,
for each year of
additional term ($1,750
per year during
Effective Period for
Traditional Store)
Payable before transfer or
relocation
See Note 5
When the materials are
ordered and/or delivered
See Note 6
1/10th of then-current
initial franchise fee, or
the current fee charged,
whichever is greater,
for each year of
additional term ($1,500
per year during
Effective Period for
Other Concepts Store)
Advertising, Marketing
and Promotional
Materials
13TCBY FDD 03/2014
Will vary under
circumstances
13
OTHER FEES
Type of Fee
Amount
Due Date
Remarks
Maintenance, Repair,
Replacement and
Refurbishment
Expenses
Actual costs incurred
When incurred by us, on
demand
If your Store, or any part of your
Store, does not meet our then-current
System Standards, we will notify
you. You must update your Store as
directed. We will not require a full
refresh or remodel if: (a) your Store
met prior System Standards at
construction or the last update; and
(b) the refresh or remodel is
requested during the first two years or
last three years of your Initial Term.
If you fail or refuse to initiate
promptly and timely complete the
necessary actions as set forth in the
notice, after notice of default and 30day opportunity to cure, we have the
option to perform the necessary
repairs, replacements, maintenance or
refurbishment and charge you for our
costs.
Interim management
fees
10% of Gross
Revenues during the
period of management
As incurred
Incurred if we elect to manage your
Store pending our purchase of that
Store, or we assume management of
your Store in the case of your
voluntary abandonment.
UCC filing fees
As set by state law;
varies from state to
state
Upon signing of the
Franchise Agreement and
at the times UCC
continuation statements are
filed
We have a security interest in the
collateral required by the Franchise
Agreement. You must sign the
necessary UCC financing statements
and continuation statement, and
reimburse us for the costs of filing
those statements with the appropriate
governmental agencies.
Costs and attorneys
fees, and
indemnification
Will vary under
circumstances
Upon occurrence
If we or an affiliate prevail in any
proceeding or litigation against you,
you must pay the costs and attorneys’
fees incurred. You and each of your
Entity Owners also have
indemnification obligations to us and
our affiliates. Depending on the
circumstances, you may pay these
costs and fees to attorneys and other
third parties, or reimburse us or our
affiliates.
Sublease
See Note 7
Monthly
See Note 7
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14
General Comments:
Except as noted above or in Note 3, all fees are payable to us or an affiliate. These fees are nonrefundable except as explained in Note 5 below. Unless noted, all fees payable to us or an affiliate are uniformly
imposed. If we or an affiliate do not actually receive your payments on the due date, they will be deemed
delinquent. These fees do not include any initial fees that may be payable to an affiliate if you are developing
your TCBY Store as a co-brand with an MFFB Franchised Concept.
You must pay all continuing fees, marketing fees and other amounts owed to us or an affiliate by preauthorized electronic bank transfer from your general account. You must sign and complete the form
Authorization Agreement attached to the Franchise Agreement as Appendix B or any other documentation we
require periodically to permit the electronic transfer. The pre-authorized electronic bank transfer requirements are
described in Section 6.5 of the Franchise Agreement and Appendix B to the Franchise Agreement.
“Gross Revenues” means the aggregate amount of all sales of TCBY Products, other items, and services
made and rendered with the operation of the TCBY Store, including sales made at or away from the Premises of
your Store, whether for cash or credit, but excluding all federal, state or municipal sales, use, or service taxe1
collected from customers and paid to the appropriate taxing authority.
Specific Notes:
1.
During the Effective Period, we may require certain franchisees of Other Concepts Stores to pay
royalties and marketing fees by way of a surcharge on purchases of frozen yogurt mix, hard pack yogurt, and
other products. This surcharge is calculated so that it will not exceed the royalty and marketing fees rate set forth
in the Franchise Agreement; however, if you are required to pay a surcharge for your Other Concepts Store, and
the surcharge does result in an overpayment for your Store, you may request a credit due to any overpayment in
accordance with our policies, and we will grant your request upon your presentation of proof, satisfactory to us,
that a credit is due. The designated distributor from whom you purchase frozen yogurt mix, hard pack yogurt or
other dessert products will report your purchases to us, and we will bill you directly for the surcharge. We have
the right to reasonably direct payment method and time in alternative manners, including payment to a distributor
or supplier, or by automatic debit (ACH) with weekly reports of Gross Revenues.
2.
Not all TCBY Stores pay the same weekly continuing fee and marketing fee percentage. See
Item 11 of this disclosure document for more information on marketing.
3.
Although we do not currently establish a required minimum amount, we encourage you to spend
at least 3% of your Gross Revenues each year on local store advertising.
4.
We will not charge a transfer fee if the transfer is of ownership interests among your existing
owners and the names and identity of all owners remains the same following the transfer. Also during the
Effective Period, we may allow certain existing franchisees to transfer their franchise agreements for a lower
transfer fee with or without the payment of a corresponding documentation or other administrative fee.
5.
We have the right to require, as a condition of our approval of a proposed transfer, that your
transferee purchase additional term under the Franchise Agreement. Similarly, we have the right to require, as a
condition of our approval of a proposed relocation of your Store, that you purchase additional term under the
Franchise Agreement. Currently, we will not require your transferee or you to purchase additional term if there
are 4 or more years of term remaining under the Franchise Agreement at the time of a proposed transfer or
relocation. We will not require your transferee or you to purchase more additional term than necessary to make
the term remaining under the Franchise Agreement equal 10 years for Traditional Stores or 5 years for Other
Concepts Stores. For the purposes of this disclosure document, “term remaining under the Franchise Agreement”
means the remainder of any initial term plus the remainder of any renewal term under the Franchise Agreement.
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15
Upon the purchase of additional term, your transferee or you will enter into our then current form of Term
Purchase Addendum to the Franchise Agreement (“Term Purchase Addendum”). A copy of our current Term
Purchase Addendum is attached as Exhibit F to this disclosure document.
We have the right to change the fees we charge for additional term and our requirements for when and
how much additional term must be purchased upon a proposed transfer or relocation. In addition, although the
current requirements for when additional term must be purchased are the same for transfers and relocations, we
have the right to have different requirements in the future for these situations. We also have the right to require
you or your transferee to sign a new form of franchise agreement for a term equal to the term remaining under the
Franchise Agreement, plus any prepurchased term, in lieu of having you or your transferee sign the Term
Purchase Addendum.
6.
We may provide you with copies of advertising, marketing and promotional formats and
materials for use in your Store, which we have prepared using the marketing fees we collect. You only must pay
shipping and handling costs for these items or, if you want additional or replacement copies, our direct cost of
producing those items together with any related shipping, handling and storage charges. In addition to these
items, we may offer you the option of purchasing other advertising, marketing and promotional formats and
materials that we have prepared and that are suitable for use at local TCBY Stores. We may provide samples,
copies or information explaining these items to you periodically. If you elect to purchase any of those items from
us, we will provide them to you at our direct cost of producing them plus any related shipping, handling and
storage charges. In addition, we have the right to develop and market special mandatory promotional items for
TCBY Stores and require you to maintain a representative inventory of these promotional items to meet public
demand. In that case, we will make these items available to you at our cost plus a reasonable mark-up and any
shipping, handling and storage charges.
7.
Currently, neither we nor any affiliate generally enters into any leases for new franchised store
locations; however, our affiliates, MFOC and MFFB, are currently on the lease for a number of existing
franchised store locations, including some for TCBY Stores. If you acquire a franchise for one of these locations,
you will sublease the Premises to be used as your Store from MFOC or MFFB (sometimes referred to in this
disclosure document as the “Sublessor”). In those situations, you must sign a standard Sublease Agreement in
the form included in Exhibit G of this disclosure document. If you are an Entity, the Sublessor has the right to
require that each of your Active Entity Owners (as defined in the Franchise Agreement) sign a Guaranty in the
form attached to the Sublease Agreement. The rent and other amounts due under the Sublease Agreement will be
the same as the rent and other amounts due from the tenant under the Sublessor’s lease (the “Master Lease”) of
the Premises from the landlord. The rent due will vary with the location of the Premises. Typically, monthly
rental payments will be based on factors such as the current market value of similar properties and the perceived
market value of your Store based on its location and traffic patterns, sales volumes, and so forth. You must pay
the monthly rent under the Sublease Agreement directly to us or the Sublessor, as designated by the Sublessor,
and we or the Sublessor will then pay the rent to the landlord under the Master Lease. However, we may require
you to make the payments to us or the Sublessor at least 30 days in advance of the date the payments are due
under the Master Lease (10 days in advance, for percentage rental payments). As described in the General
Comments above, rental payments must be paid to us or the Sublessor by electronic bank transfer from your
general account. Rental payments are typically non-refundable. Depending on our and the Sublessor’s evaluation
of your credit-worthiness, the Sublessor has the right to require you to pay a security deposit (typically, the
equivalent of one month’s rent) under the Sublease Agreement. Upon termination of the Sublease Agreement, the
Sublessor will refund the security deposit to you if you have fulfilled all of your obligations under the Sublease
Agreement.
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16
OTHER FEES
AREA DIRECTOR FRANCHISES
Type of Fee
Amount
Due Date
Remarks
Advertising and
Recruiting Costs
$0 to $5,000 each calendar
quarter
Each calendar quarter
during the term of your
Area Director Agreement
See Note 1 for more
information
Transfer Fee
An amount to cover our
administrative costs (not
to exceed then-current
Assignment Fee for an
individual Store) plus
reasonable training fee
Upon application for
consent to transfer
Renewal Fee
Our then-current initial
Area Director fee, not to
exceed the initial Area
Director fee paid for the
initial term
At renewal
Insurance
$5,000-$30,000 for annual
premiums
When premiums are due
See Items 7 and 9 for
more information on
insurance. See Note 2
Seminars and Conferences
Will vary under
circumstances – currently
estimated at $1,500 per
person
When offered
See Note 3
General Comments:
Except as noted above, all fees are payable to us and all fees are non-refundable and uniformly imposed.
Specific Notes:
1.
Advertising and Recruiting Costs. As an Area Director, you must spend an amount to advertise
for prospective TCBY franchisees within your Area Director Territory that will allow you, in your reasonable
opinion, to meet your Development Quota. We estimate that this amount will typically range between $0 to
$5,000 per calendar quarter, although you may determine that you need to spend more than this estimated amount
to meet your Development Quota. See Item 11.
2.
Insurance. The estimate includes comprehensive general liability insurance with minimum
limits of 1,000,000 per occurrence and $2,000,000 in the aggregate. You pay insurance premiums directly to
third party insurers.
3.
Seminars and Conferences. You or your Managing Owner and your Operations Manager must
attend any seminars, industry conventions or programs that we designate as mandatory. We will designate the
locations for these meetings and you must pay the cost of attendance, including all travel and living expenses, for
each of your attendees. If you fail to attend, we have the right to charge you a reasonable fee, not to exceed
$1,000 for each mandatory program missed.
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ITEM 7. ESTIMATED INITIAL INVESTMENT
YOUR ESTIMATED INITIAL INVESTMENT FOR A TCBY STORE
Type of Expenditure
Amount
Initial franchise fee—
Traditional Store
$20,000 - $35,000
Initial franchise fee—
Other Concepts Store
$15,000
(Note 1)
Travel and living
expenses while
training
(Note 2)
Method of Payment
When Due
To Whom Payment
Is to Be Made
Lump Sum; Deposit
Paid If Premises Not
Approved Upon
Signing of Franchise
Agreement
Upon signing
Franchise Agreement;
if Deposit Paid,
Remainder Due Upon
Approval of Premises.
Us
$2,000 - $3,000
Lump sum, as
incurred
As incurred during
training
Airlines, hotels, and
restaurants
Real estate lease
Note 3
Note 3
Note 3
Note 3
Improvements and
Equipment, if
constructing a new
Traditional Store
(Note 4)
$152,380 - $399,152
As agreed with the
contractors and
suppliers providing
labor, materials, or
equipment
As incurred
Various independent
contractors and
suppliers (Note 4)
As agreed with
suppliers
As incurred
Suppliers
Lump sum
As incurred
Us, and various
vendors and suppliers
Improvements and
Equipment, if
constructing an Other
Concepts Store (Note
4)
$80,000 - $135,000
Opening Product and
Soft Goods Inventory
– Traditional Store
(Note 5)
$2,900 - $10,000
Opening Product and
Soft Goods Inventory
– Other Concepts
Store (Note 5)
$1,500 - $3,000
Grand opening
promotion, if opening
a new Traditional
Store (Note 6)
$5,000 - $10,000
Grand opening
promotion, if opening
a new Other Concepts
Store (Note 6)
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$1,000 - $2,000
18
Amount
Security deposits,
utility deposits,
business licenses, and
other deposits and
prepaid expenses
(Note 7)
$4,000 - $5,000
Lump sum
Before opening
Landlord, utility
companies, suppliers,
and government
agencies
Professional fees
(Note 8)
$9,000 - $10,000
Lump sum or as
arranged by providers
As incurred
Attorneys,
accountants, and other
consultants
Insurance (3 months)
(Note 9)
$2,500 - $3,500
Lump sum or
installments, as
determined by
insurance carriers
Before or upon
signing of Franchise
Agreement
Insurance carriers
Computer hardware
and software
(Note 10)
$3,500 - $4,500
Lump sum
As incurred
Various vendors or
suppliers
Additional funds
(3 months)
(Note 11)
$8,000 - $12,000
Lump sum, as
incurred
As incurred
Employees, suppliers,
utilities and other
vendors
Totals
Method of Payment
When Due
To Whom Payment
Is to Be Made
Type of Expenditure
$209,280 - $492,152,
if constructing a new
Traditional Store (not
including real estate
lease costs); $126,500
- $193,000 if
constructing a new
Other Concepts Store
(not including real
estate costs)
General Comments:
We have based the estimates provided in the tables above upon our experience and the experience of our
predecessors in establishing and operating numerous TCBY Stores; however, we do not guarantee that your costs
will not be higher than described above. You should review these figures carefully with a business adviser before
making any decision to enter into a Franchise Agreement.
This table estimates the initial investment required to develop a Traditional or an Other Concepts Store.
Where the estimated range of an item for an Other Concepts Store is different than the estimated range of the
same item for a Traditional Store, we have included on the table a separate estimated range of the item for the
Other Concepts Store. The estimates in the table above assume you are developing a single TCBY Store that will
operate independently of any co-branded concept. Therefore, the estimates do not include any initial franchise
fees, royalties, build outs, labor, equipment, or any other costs or expenses associated with any co-branded
concept that you might seek to develop at your TCBY Store.
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19
All payments you make to us or an affiliate are non-refundable unless otherwise stated. Payments you
make to parties other than us or an affiliate may be refundable at the option of the other party.
Except where otherwise noted on this table, the table below, or as described in Item 10, neither we nor an
affiliate offer any financing, directly or indirectly, to franchisees.
The estimates in the tables above do not include continuing fees or marketing fees payable to us during
the operation of your Franchise since these fees are payable out of the Gross Revenues of your Store.
Specific Notes:
1.
$35,000 is the standard initial franchise fee for a new TCBY Traditional Store franchise while
$15,000 is the standard initial franchise fee for a new Other Concepts Store. See Item 5 of this disclosure
document for a more detailed explanation of the initial franchise fee, the transfer fee, and the conditions when it
may be reduced or when a portion of the initial franchise fee may be refundable.
2.
You must pay any incidental expenses that you and your manager and any other trainees incur
while attending our initial training program, including car rental, gas, airline tickets, meals, hotel room,
entertainment, and salaries.
3.
If you do not own a retail location we approve, you will have to lease or purchase one that meets
our site approval standards. Real estate costs vary from place to place, and you will have a wide range of choices
in selecting premises for your Store. Most Store premises are leased. On average, franchisees pay their area’s
going rate for first class retail space, but we are unable to give you an estimate for your area. Generally,
Traditional Stores require 1,000 to 1,500 square feet of space. Typical locations are strip malls or freestanding
buildings, but they may also be located in malls and lifestyle centers. The size of Other Concepts Stores vary
widely. We recommend that you consult with your real estate broker to develop an estimate of your costs in
buying or leasing a location; be sure to add all closing costs in your estimate, such as prepaid security deposit;
first month’s rent; common area maintenance (CAM) fees; heating, ventilation, and cooling (HVAC) fees; or
other costs. Your lease may also require you to spend a certain amount on advertising and promotion for your
particular store. Again, because these payments vary widely from lease to lease, we cannot estimate the amount
you may be required to pay for these or other similar items. You will make rental payments to the landlord.
4.
These estimates include construction costs (labor and material) for typical tenant improvements
and remodeling to prepare a site for operation of a TCBY Store, as the estimated costs for necessary trade
fixtures, such as display cases, topping bars, signage, counters and work tables, and equipment, such as freezers
and Stoelting brand soft-serve dispensing machines. The low end of the range reflects the cost of purchasing 2
Stoelting brand machines, and the high end of the range reflects the cost of purchasing 5 Stoelting machines and
additional fixtures and furniture for a larger Traditional Store. Sometimes, landlords may provide you a build out
allowance that will defray some of the direct costs of building out your Premises. The estimates also include
construction management costs, general conditions, builders risk/liability insurance and financing costs. If you
develop a new store, we will provide you with prototypical plans and specifications at no additional cost to you,
but you must also employ and pay an architect or engineer to prepare a site plan and other construction documents
to adapt these plans and specifications to city, state and local building codes and to the specific site chosen for
your Store. You must use a commercial contractor and architect that we designate or approve. These estimates
do not include lease costs. Your actual construction costs will depend on numerous factors, such as the condition
of the Premises, duration of the building process (delays), union labor requirements, contractors’ fees, signage,
availability of materials and equipment, interest rates, and the insurance coverage you choose.
5.
This estimate includes supplies, opening inventory, accounting forms and systems, soft goods,
such as napkins, cups, and other paper goods, utensils, packaging materials and other items required to operate
under the TCBY Franchise System. The costs will vary depending upon your inventory levels and storage space.
20TCBY FDD 03/2014
20
6.
This item covers the grand opening promotional expenses which we require that you incur for the
opening of the Store. Advertising and promotional materials must be approved by us, and we have the right to
require you to purchase some of these materials from us, our affiliates or our designees (see Item 5 of this
disclosure document). These expenses are typically not refundable and generally are paid contemporaneously
with the opening of the Store. We will require that you spend at least $5,000, but not more than $10,000, for the
grand opening of your Traditional Store. We will require that you spend at least $1,000 for the grand opening of a
new Other Concepts Store. We may require you to submit a grand opening plan containing details about your
planned grand opening promotion, and obtain our approval of the plan before the event.
7.
You may be required to pay a security deposit under your real estate lease and other deposits for
utilities and insurance premiums. Lease security deposits are typically due upon signing and can potentially be
refundable if you do not default on your lease. Your lease may also require you to pay the last month’s rent in
advance. Deposits for utility services are typically required at the time the service is applied for, and may or may
not be refundable. You must confirm all of the specific deposits required. The amount for licenses and permits
can vary significantly, and you should verify specific amounts with local authorities.
8.
You may find it necessary to retain an attorney to review the real estate lease or sublease, the
franchise documents, or to assist in forming a corporation, partnership, or limited liability company. You may
also retain an accountant for advice in establishing and operating your franchise business and filing necessary tax
forms and returns.
9.
We require you to obtain and keep in force the following insurance coverages on a primary noncontributory basis, with us and our affiliates named as an additional insured on each policy:
(a)
Property Insurance. Property insurance for all of your goods, fixtures, furniture,
equipment, and other personal property located on your Store Premises insuring 100% of the full
replacement cost against loss or damage from fire and other risks normally insured against in special
cause of loss coverage. You will also maintain business income and extra expense coverage to cover loss
of income and extra expenses for at least one year.
(b)
Liability Insurance. Liability insurance on an occurrence basis, insuring against all
liability resulting from damage, injury, or death occurring to persons or property in or about your Store
Premises (including products liability insurance and broad form contractual liability coverage), the
liability under this insurance to be at least $1,000,000 for one person injured, $1,000,000 for any one
accident, and $1,000,000 for property damage.
(c)
Workers’ Compensation and Employers’ Liability Insurance. You must maintain and
keep in force all workers’ compensation insurance on your employees that is required under applicable
laws of the state where your Store is located. You must also maintain and keep in force employers’
liability insurance on your employees, with liability limits of no less than $100,000 per accident for
bodily injury by accident, and $100,000 per employee for bodily injury by disease, with no less than a
$500,000 policy limit for bodily injury by disease.
(d)
Other Insurance Policies. You must maintain any additional insurance policies that a
prudent franchisee in your position would maintain or as we reasonably require.
Your real estate lease may also impose additional requirements for insurance coverage. The first table above
contains the estimated cost of required insurance coverage for a 3 month start-up period; however, the cost of
insurance varies, depending upon the insurance company you select, lease requirements, variances in the cost of
insurance by location, and other factors. Whether insurance premiums are refundable depends on individual
insurance carriers and the terms of the insurance policies.
21TCBY FDD 03/2014
21
10.
In addition to this initial cost, you must pay to our designated supplier a monthly maintenance
and subscriber fee ranging from $100 to $125. We also currently require that you have Internet access in your
Store Premises, which will cost approximately $150 for installation and $600 per year or more for a subscription.
These fees are not included in the $3,500 to $4,500 initial costs described above in this Note 10, though they are
included in the ranges in the table.
11.
This amount represents the range of your initial start-up expenses over the first 3 months. These
figures include estimated payroll costs. However, they do not include the salary for the store manager, on the
assumption that you will manage the store. The initial start-up expenses also do not include costs of inventory to
replace the initial inventory provided in the table. These figures are estimates and we cannot guarantee that you
will not have additional expenses starting your business. Your costs will depend upon factors such as how well
you follow our methods and procedures; your management skill, experience, and business acumen; local
economic conditions; the time of the year your Store is opened; the demand for specialty food and snack goods
and services in your area; the prevailing wage rates; competition; and the sales level reached during the initial
period.
YOUR ESTIMATED INITIAL INVESTMENT
FOR AN AREA DIRECTOR FRANCHISE
Type of
Expenditure
Initial Fee (1)
Amount
$100,000 to $1 million or
more, calculated based on
several factors, primarily
the size and population of
the Area Director
Territory you are granted
Method of
Payment
Credited towards
amounts we owe
you for sales
commission (5)
When Due
As we owe sales
commissions to
you, unless you
fail to meet your
Development
Quota or your Area
Director
Agreement
terminates, then
the balance is due
immediately
To Whom Payment is
to be Made
Us
Vehicle
Lease/Purchase (2)
$0 to $3,000
As Arranged
As Arranged
Third Party Supplier
Computer Hardware
and Software (3)
$0 to $3,000
As Arranged
As Arranged
$0 to $5,000
As Arranged
As Arranged
Area Director
Registration Costs (5)
$0 to $21,000
As Arranged
As Arranged
Your Attorneys,
Accountants and
Franchise Registration
States
Additional Funds
(covers first 3
months) (6)
$1,000 to $5,000
As Arranged
As Arranged
Miscellaneous Third
Parties.
TOTAL (7)
$101,000 to $1,037,000
Advertising
(4)
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22
Specific Notes:
1.
The initial Area Director fee will vary widely because it will be calculated based on a number of
factors unique to each Area Director Territory granted, primarily its size and population. See Item 5 for more
information.
2.
You will need the use of a vehicle in the operation of your AD Business, which you may own or
lease. We do not require that the vehicle you use meet any specific criteria, except that it must run reliably
enough to enable you to perform your obligations under the Area Director Agreement, such as visiting TCBY
Stores, and performing site services and support services. The lower end of the estimate assumes you will use a
vehicle that you already own and the higher end of the estimate assumes you will lease a vehicle. The cost of
your investment in a vehicle will vary depending on your current assets, the cost of leasing and purchasing
vehicles in your area, and the vehicle you choose.
3.
You will need a laptop computer for the operation of your AD Business, as further described in
Item 11. If you already own a laptop computer, you may use it in the operation of your AD Business. The cost
of your investment in computer hardware will vary depending on your current assets, the cost of computer
hardware in your area, and the specific equipment you choose.
4.
See Items 6 and 11 for further information regarding your obligations to advertise for prospective
TCBY franchisees within your Area Director Territory.
5.
You must, at your expense, register as our franchise broker and provide us with proof of that
registration if the laws in your Area Director Territory require broker registration, even though the sales services
you perform do not give you the right or authority to offer or sell franchises, or negotiate or execute franchise
agreements on our behalf. We estimate the cost of this registration to be up to $1,000. In addition, if your
activities as our Area Director require you separately to register in your Area Director Territory, you must prepare
the necessary documents and submit the relevant filings at your expense. As an alternative, we may, at our
option, agree to prepare and register in certain states joint disclosure documents that include information not only
about us, but also about you as our Area Director. Regardless of whether you rely on your own FDD or a joint
FDD, we estimate that the disclosure and registration costs you will incur as an Area Director will be up to
$20,000. These costs may include your preparation of audited financial statements.
6.
We do not require that you rent commercial office space, nor do we impose specifications for
office decoration, fixtures, business equipment, insurance, minimum number of employees or otherwise. You
may locate the administrative office for your AD Business in your home. However, we expect you will incur
miscellaneous expenses to establish your AD Business. The table assumes you do not incur any real estate
leasing costs, but allows for the lease or purchase of home office furniture; required expenditures such as a
facsimile machine, telephone line, business cards and stationery; insurance; travel costs for initial training and site
development work in your Area Director Territory; and legal and professional expenses to acquire the franchise
and form a business entity to own the Area Director franchise.
7.
This total is an estimate of your initial investment for the development of an AD Business under
the Area Director Agreement, not including the initial Area Director fee payable to us or our Affiliates as more
fully explained in Item 5 and Note 2 above. The estimated initial investment is based on our prior experience in
the development and support of TCBY Stores. You should review these figures carefully with a business advisor
before making any decision to enter into the Area Director Agreement. Please note that the estimates do not
include the estimated initial investment to develop individual TCBY Stores. The estimated initial investment to
develop a TCBY Store is described in the first table of this Item 7.
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23
ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Purchases of TCBY Products and Other Items
TCBY brand fresh yogurt, soft-serve frozen yogurt, hand-dipped frozen yogurt, sorbets, and other TCBY
branded products are distinctive as a result of being specially produced using secret formulas and processes.
These products are, in the mind of the public, inextricably interrelated with the Marks, and the reputation and
goodwill of TCBY Stores is based upon, and can be maintained only by, the sale of these products. Therefore,
your Store will only prepare and offer for sale menu items using TCBY brand frozen desserts or other products,
test products under the Marks, or frozen desserts or other products which, in our opinion, meet our high standards
and specifications. These TCBY brand products are currently only produced by Scott Brothers Dairy and
Hudsonville Creamery & Ice Cream Company, LLC and Rich’s is our designated manufacturer of our frozen
yogurt cake and pie products (“Manufacturers”). We have the right to appoint substitute or additional
manufacturers, but are not required to do so. Manufacturers then sell TCBY brand products to our authorized
distributors (“Distributors”).
We have established a regional system of Distributors to supply TCBY brand products to TCBY
franchisees. You must purchase TCBY brand products from the Distributor we designate for your region.
Distribution costs and terms, including minimum drop sizes, minimum case charges and delivery schedules, vary
by Distributor. We have the right to appoint substitute or additional Distributors, but are not required to do so.
Although we and our affiliates pay the same prices as franchisees do to purchase TCBY brand products from a
particular distributor, we or our affiliates may receive rebates or payments on our and franchisees’ purchases of
those products as described below.
We have currently designated Venture Projects, Inc. dba Concept Services (“Concept Services”), Tundra
Services (“Tundra”), Regency Lighting, Inc. (“Regency”) and Wisconsin Built (“WB”) as approved suppliers of
Store build out services, certain soft goods, furnishings, equipment and supplies.
Except for certain items that Concept Services and Tundra make available to you for purchase, such as
small wares, small equipment and promotional materials (as described below in this Item 8), Master Brands
(“Master Brands”) and Halo (“Halo”) are the only suppliers licensed to distribute soft goods supplies displaying
the TCBY Marks and you must purchase these items from them. We have the right to appoint substitute or add
additional suppliers, but are not required to do so.
You must use only the soft goods, small wares, utensils, cleaning supplies, novelty items and other
miscellaneous items that we require and have been approved for TCBY Stores, as meeting our specifications and
standards for quality, appearance, function and performance. Except as stated in this Item 8 and in our
Management Operations Manual and Daily Operations Manual (collectively, “Operating Procedures Manual”),
you may purchase these items from any supplier who satisfies our standards and specifications, as contained in
the Operating Procedures Manual and other written or electronically transmitted materials that we or an affiliate
furnish to you.
We and our affiliates participate in a nationwide marketing program sponsored by Coca-Cola Fountain
and its affiliates. To sell certain of our products, you must participate in the program and purchase Coca-Cola soft
drink mixes, beverages, and other products required under the program from any authorized Coca-Cola
distributor. Coca-Cola currently pays us or our affiliates amounts based upon purchases by our franchisees. The
amounts that Coca-Cola pays to us or our affiliates under this program is included in the total revenue amount
received from suppliers and vendors disclosed below. Amounts paid by Coca-Cola to us or our affiliates may be
used to develop and implement marketing and promotional activities designed to benefit the TCBY system, the
other MFFB Franchised Concept systems, and to increase the sale of Coca-Cola products at all stores within those
systems. These funds will not reduce any payments you must make to us or others as advertising fees under the
Franchise Agreement.
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24
If we grant you the right to develop and operate a TCBY Store within an Area Director Territory, or if we
appoint an Area Director for an Area Director Territory that encompasses your TCBY Store after you open it, we
have the right to require you to obtain or receive certain site services and support services from your Area
Director and its agents and employees. These services may include assisting you in finding a site for your TCBY
Store, advising you during the process of opening your TCBY Store for business, attending your grand opening
promotion, and making quality control and operations and enforcement visits to your TCBY Store, all as we
direct. Your Area Director may receive a portion of the initial franchise fee, royalty and service fees and other
fees you pay to us or our designee in consideration for providing services to you, although you will not be
required to pay any additional or greater initial franchise fee, royalty and service fees to your Area Director in
order to receive the services it provides.
We or one of our affiliates may enter into co-branding arrangements with other snack-food companies. In
those cases, we or our affiliates may or may not allow you to offer the co-branded products from your Store,
depending on factors like the terms of the co-branding arrangement, the terms of your Franchise Agreement,
applicable geographic restrictions and our and our affiliates’ other rights and obligations.
We estimate that the required purchases contained in this Item 8 will be approximately 75-85% of the cost
of establishing your business and approximately 75-85% of the cost of operating your business.
We do not currently require you to purchase or lease goods, services, or supplies from any specific
suppliers in the establishment or operation of your TCBY AD Business.
Development of your Store
You must construct and develop your Store in accordance with prototypical plans and specifications that
we will provide to you, including requirements for exterior and interior materials and finishes, dimensions,
design, image, interior layout, decor, fixtures, furnishings, equipment, color schemes and signs. You must
prepare all required construction plans and specifications based on the prototypical plans and specifications, to
suit the shape and dimensions of your site and to ensure that they comply with applicable ordinances, building
codes and permit requirements and with lease requirements and restrictions. You must submit construction plans
and specifications to us for our approval before you begin construction of your Store, and you must submit all
revised and “as built” plans and specifications to us during the course of construction. You must purchase certain
furniture, fixtures, and equipment (“FF&E”), as well as services related to the build out of the first two stores you
build from Concept Services. The items and services you are required to purchase are listed below. You must
use a professional contractor and architect in developing your Store. You must use a contractor and architect that
we designate or approve.
Required Purchases from Suppliers for Build Out of Next Two Stores
Required purchases may include the following:
FF&E
•
•
•
•
•
Exterior sign package
Interior signs and graphics
Lighting package
POS system
Walk-in cooler and/or freezer
•
•
•
•
•
Casework
Equipment
Indoor furniture
Yogurt machines
Small wares
•
Project management, supply chain
management, administration, architect
consultation, general contractor consultation
Services
•
Order, ship, deliver, receive on-site and
arrange for installation of FF&E
25TCBY FDD 03/2014
25
and coordination, vendor and supplier
management, and service agent coordination
•
•
Installation work—walk-in cooler/freezer,
casework, yogurt machines, equipment,
indoor furniture, outdoor furniture and
exterior sign package
Coordinate multiple deliveries and
installations to meet construction and
operational milestones
•
Job site visit during final installation
•
Start-up and training coordination of yogurt
machines
•
One year service program through in-house
service center
•
Continual sourcing on all elements of store
build-out (FF&E, small wares, millwork,
general contractors, etc.)
Fixtures, Furnishings, Equipment and Signs
You must use only the fixtures, furnishings, equipment (including computer hardware and software and
signs) that we require and have approved. You may only display at your Store the signs, emblems, lettering,
logos and display materials that we approve in writing. We have the right to install all required signs at the Store
Premises at your expense, although our current practice is to allow you to install the signs. You may purchase
these items from any supplier who can satisfy our standards and specifications. All standards and specifications
will be contained in the Operating Procedures Manual and other materials we furnish or make available to you.
Except for the first two Stores you develop, you are not obligated to purchase equipment or smallwares from or
through Concept Services. Smallwares, however, may only be purchased from Tundra and may be purchased
directly from Tundra after the initial order placed for your first two Stores through Concept Services. In some
instances, our approved suppliers may be the only source of supply for certain items of equipment that satisfy our
standards and specifications.
We have designated a Computer System (as described in Item 11) for use in your Store. While you may
obtain hardware from any dealer authorized to sell the equipment we approve, we may negotiate with one or more
vendors to provide discounts or incentives that may reduce your cost of purchasing the equipment. We will
provide you with details on any discount or preferred provider program as part of our process for approving plans
for constructing or remodeling your Store. You must purchase the software, and pay service and access fees, to
our designated supplier, currently Innovative Computer Systems (“ICS”). We have the right to designate a
different provider or providers in the future or to require you in the future to purchase additional or different
computer hardware and software from a supplier or suppliers we designate, which may be us or an affiliate.
Standards and Specifications; Suppliers
In developing and operating your Store, you will use many supplies (“General Supplies”) other than the
food items to be incorporated into TCBY Products and the trademark-bearing soft goods. The Operating
Procedures Manual contains standards and specifications for many of the supplies that you will use. We have the
right to modify our standards and specifications in the future. Standards and specifications for TCBY Products
and the food items to be incorporated into these products are not available to franchisees since these constitute our
trade secrets.
If you wish to use General Supplies in your Store that are different from those specified in the Operating
Procedures Manual, you may request from us a detailed breakdown of our required specifications. You may then
submit to us the details and specifications of any substitute item or supply you propose to use. We will advise
you within 90 days of your submission if the substitute item is acceptable to us. We do not charge any fee for
evaluating substitute suppliers proposed by franchisees.
We have the right to periodically review and revoke our approval of suppliers. If we revoke our approval
of certain products or services a supplier provides, or of a supplier generally, within 30 days after receiving notice
from us, you must stop purchasing and must discontinue using those products and services we designate, or all
products and services, purchased from that supplier.
TCBY FDD 03/2014
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As described above in this Item 8, we have approved Manufacturers, Distributors, Concept Services,
Tundra, Coca-Cola and ICS as the only approved suppliers of certain items. We have no procedures for
franchisees to propose alternative suppliers of these items, and we will not approve any other suppliers of these
items unless we terminate our relationship with one of the approved suppliers identified above. We will then
establish other supplier relationships and will advise you of the new suppliers. Except as disclosed in this Item 8,
neither we nor an affiliate receive payments from any approved supplier because of transactions between the
supplier and the franchisee.
We estimate that the cost of required purchases of products, supplies, fixtures, furnishings, equipment,
signs and leases from approved suppliers or otherwise will represent 90% or more of your overall purchases of
those items in operating your Store.
We and our affiliates have the right to receive rebates or other payments from Manufacturers,
Distributors, Concept Services, Tundra, Coca-Cola and other suppliers and service providers (directly or
indirectly) on sales to franchisees and to us or our affiliates. These payments have ranged or may range from less
than 1% up to 40% or more of the amount of those purchases by franchisees.
During our 2013 fiscal year, we and our affiliates received approximately $3,499,576 from suppliers and
vendors, based on purchases by us, our affiliates, our and their respective domestic franchisees and licensees,
and/or referrals from us or our affiliates. This amount represents approximately 2.3% of MFFB’s combined total
revenues from all sources for fiscal year 2013. Of that amount, we paid a total of $2,484,796, or 5.7% of MFFB’s
combined total revenues, to TCBY franchisees as YFC Reimbursements (described below).
One of the rebates that we receive from Manufacturers or Distributors is a yogurt formulation charge
(“YFC”). The total amount of YFC we receive is based on the purchases of TCBY yogurt products by
franchisees and licensees from Distributors. As an incentive to all franchisees who enter into a Franchise
Agreement and develop a new Traditional Store during the Effective Period, we have agreed to reimburse all of
the YFC that the Manufacturer or Distributor pays us for the qualifying products purchased by each of these
franchisees (the “YFC Reimbursement”) during the term of the Franchise Agreement. If you are one of these
franchisees, your YFC Reimbursement will be set forth on Schedule 1 to the Franchise Agreement included in
Exhibit B of this disclosure document). You will receive any YFC Reimbursement to which you are entitled
subject to your compliance with your Franchise Agreement and payment of the YFC amount by Manufacturers.
YFC Reimbursement will be paid in a manner and frequency reasonably determined periodically by us. For
details about qualification, products and the method(s) of payment of this YFC Reimbursement, see Schedule 1 to
the Franchise Agreement. The YFC Reimbursement is intended to help reduce costs for Traditional Stores in
certain circumstances. This incentive does not apply to Other Concept Stores and will not affect or limit our
ability, or our Manufacturers’ or Distributors’ ability, to adjust product prices or affect or limit our ability to
collect YFC or other rebates from Manufacturers except as described in the Franchise Agreement or Schedule 1.
Without limiting these rights, we expressly reserve the ability for us and our Manufacturers or
Distributors to (a) change the cost of products as a result of documented commodity or other raw ingredients
pricing, packaging, manufacturing and distribution fees and similar fees and costs; (b) receive the full amount of
formulation charges, contributions, rebates or other payments, including YFC, for products other than those that
qualify for a YFC Reimbursement; and (c) to the extent permitted by the Franchise Agreement and Schedule 1,
charge different YFC, eliminate the YFC Reimbursement or terminate or discontinue the YFC Reimbursement.
We do not negotiate purchase arrangements from suppliers or service providers for the benefit of
franchisees or participate in any purchasing or distribution cooperatives. We do not provide material benefits to
franchisees based on their purchase of particular products or services. There are no suppliers in which one of our
officers owns a material interest.
TCBY FDD 03/2014
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ITEM 9. FRANCHISEE’S OBLIGATIONS
This table lists your principal obligations under the franchise and other agreements. It will help you find
more detailed information about your obligations in these agreements and in other items of this disclosure
document.
Obligation
Section in Agreement(1)
Disclosure Document Item
a.
Site selection and
acquisition/lease
Sections 4.1 and 4.2; also see Sublease
Agreement and Assignment and
Assumption of Sublease
Items 6, 7, 8, 11 and 12
b.
Pre-opening
purchases/leases
Sections 4.2, 4.3, 4.4, 4.6 and 7.1
Items 5, 6, 7, and 8
c.
Site development and
other pre-opening
requirements
Sections 4.3, 4.4, 4.5, 7.1 and 7.8;
Items 6, 7 and 11
d.
Initial and ongoing
training
Article 5
Items 6, 7 and 11
e.
Opening
Sections 4.5 and 4.6
Items 5, 6, 7 and 11
f.
Fees
Sections 3.2, 4.6, 4.7, 5.1, 5.2, 5.3, 6.1,
6.2, 6.3, 6.4, 6.5, 6.6, 8.3, 9.1, 9.3,
12.3(f), 13.5, 14.2, and 16.2; Schedule 1
to Franchise Agreement; Sections 1.4,
2.5, 3.4, Article 4, Article 5, and
Sections 12.3, 12.4, and 12.5 of
Sublease Agreement; also see Term
Purchase Addendum
Items 5, 6, 7, 11, and 17
g.
Compliance with
System Standards and
policies/Operating
Procedures Manual
Article 4 and Sections 5.1, 5.2, 5.3, 7.1,
7.2, 7.3, 7.4, 7.5, 8.1, 8.2, 9.2 and
Article 10
Items 6, 7, 8, 11, 13, 14, 15, and 16
h.
Marks and proprietary
information
Section 4.7, Article 10 and Sections
12.3(l), 13.1(d), 14.3 and 14.4; also see
Confidentiality Agreement
Items 8, 13, 14, and 17
i.
Restrictions on
products/services
offered
Sections 2.1, 7.1, 7.3, 9.2 and 10.7
Items 1, 8, 14, and 16
j.
Warranty and customer
service requirements
Sections 4.1, 4.2(d), 5.3, 7.1, 7.5, 15.2
and 15.6; Acknowledgment Addendum
to Franchise Agreement
Item 11
k.
Territorial development
and sales quotas
Not Applicable
Item 12
TCBY FDD 03/2014
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Obligation
l.
(1)
Ongoing
product/service
purchases
Items 8 and 11
m. Maintenance,
appearance, and
remodeling
requirements
Sections 3.2, 4.4, 4.6, 7.1, and 9.2;
Article 2 and Article 8 of Sublease
Agreement
Items 11, 13, and 17
n.
Insurance
Sections 4.5(e), 7.9 and 13.5; Article 8
of Sublease Agreement
Items 6, 7 and 11
o.
Advertising
Sections 4.6, 7.1, Article 9 and Article
10
Items 5, 6, 7, 11, and 13
p.
Indemnification
Sections 7.8, 10.5 and 15.6; Sections
2.5(a), 3.4, 6.7, 6.9 and 8.1 of Sublease
Agreement; Section 7 of Assignment,
Assumption and Consent
Item 6
q.
Owner’s participation/
management/staffing
Sections 5.1, 7.1, 7.2, 7.7, 7.8 and 13.5
Items 11 and 15
r.
Records and reports
Sections 7.1, 7.4, 7.6, 7.7, 8.1, 8.2 and
10.4
None
s.
Inspections and audits
Sections 7.5 and 8.3; Section 2.6 of
Sublease Agreement
Item 6
t.
Transfer
Section 4.7, Article 12 and Section
13.1(b); Article 11 of Sublease
Agreement; also see Assignment,
Assumption and Consent and Term
Purchase Addendum
Item 17
u.
Renewal
Section 3.2; Renewal Addendum
Item 17
v.
Post-termination
obligations
Sections 6.5, 7.8, 8.2, 8.3, 10.5, 10.8,
11.2, 12.3(j) and 12.3(1), Article 14,
Section 15.6, Article 16 and Article 18;
Sections 2.5(a), 3.2, 3.3, 3.4, 6.7, 6.9,
8.1 and 13.12 of Sublease Agreement
Item 17
w. Non-competition
covenants
Article 11 and Sections 12.3(j) and
12.5(c)
Item 17
x.
Dispute resolution
Articles 16 and 17
Item 17
y.
Other
Not Applicable
Not Applicable
Unless otherwise noted, Section references are to the Franchise Agreement.
TCBY FDD 03/2014
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This table lists your principal obligations under the Area Director Agreement and other agreements. It
will help you find more detailed information about your obligations in these agreements and in other items
of this disclosure document.
Obligation
a.
Site selection and
acquisition/lease
Not Applicable
Items 7 and 11
b.
Pre-opening purchases/leases
Section 9.2
Items 5, 6, 7 and 8
c.
Site development and other preopening requirements
Section 9.2
Items 7, 8 and 11
d.
Initial and ongoing training
Sections 7.1-7.4
Items 5, 6 and 11
e.
Opening
Section 9.2
Items 5 and 11
f.
Fees
Sections 5.1, 6.1-6.5
Items 5, 6 and 7
g.
Compliance with system
standards and
policies/Operating Procedures
Manual
Sections 8.1, 13
Items 6, 7, 8, 11, 14 and 16
h.
Trademarks and proprietary
information
Sections 10, 11; also see
Items 13 and 14
i.
Restrictions on
products/services offered
Sections 3, 4, 9.7
Items 6, 7, 8, 11, and 16
j.
Warranty and customer service
requirements
Sections 3.1, 9.7, 13.1
Items 6 and 11
k.
Territorial development and
sales quotas
Section 4.1, Appendix A
Item 12
l.
Ongoing product/service
purchases
Not Applicable
Items 6, 7 and 8
m. Maintenance, appearance, and
remodeling requirements
Not Applicable
Items 8 and 11
n.
Insurance
Section 13.7, 13.8
Items 6, 7 and 8
o.
Advertising
Sections 13.9, 13.10
Items 6, 7 and 11
p.
Indemnification
Section 18.4; also see Guaranty
None
q.
Owner’s participation/
management/staffing
Sections 9.1, 13.5; also see
Guaranty
Items 11 and 15
r.
Records and reports
Section 13.11, 13.12
None
s.
Inspections and audits
Section 14
Items 6 and 11
t.
Transfer
Section 15
Items 6 and 17
u.
Renewal
Sections 16.2-16.5
Items 6 and 17
v.
Post-termination obligations
Sections 17.3-17.8
Item 17
w. Non-competition covenants
Sections 12.1, 17.5
Item 17
x.
Dispute resolution
Section 19
Item 17
y.
Other
Not Applicable
Not Applicable
TCBY FDD 03/2014
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(1) Unless noted otherwise, references are to Sections of the Area Director Agreement.
ITEM 10. FINANCING
TCBY Stores
Except as described below or in Item 5 of this disclosure document, neither we nor an affiliate offer
direct or indirect financing. Neither we nor an affiliate guarantee your note, lease or obligation.
Our affiliate MFOC (sometimes referred to in this disclosure document as the “Sublessor”), may sublease
the Premises of your Store to you. In that case, you must sign a standard form of Sublease Agreement included in
Exhibit G to this disclosure document. If you are an Entity, the Sublessor has the right to require that each of
your Active Entity Owners guarantee payment and performance of your obligations under the Sublease
Agreement by signing a Guaranty in the form attached to the Sublease Agreement.
The amount due under the Sublease Agreement will be the same amounts as the rent and other amounts
due from the tenant under the Master Lease of the Premises from the landlord (Article 1 and Article 4 of the
Sublease Agreement). You must always pay us or Sublessor, as directed by the Sublessor, the full amount of all
rental payments due. The rent due will vary with the location of the Premises, and neither we nor our affiliates
can estimate that amount.
Sublessor has the right to require you to pay a security deposit under the Sublease Agreement
(Section 1.4(c) and Section 5.1 of the Sublease Agreement). Typically, a security deposit will be the equivalent
of one month’s rent. Other than this possible security deposit, there is no other security interest required.
The Sublease Agreement does not contain any prepayment penalties.
If you do not make your rental payments within 10 days of the due date or if you commit another breach
of the Sublease Agreement or the Master Lease and do not remedy the breach within the time periods specified in
the Sublease Agreement, Sublessor has the right to re-enter the Premises and relet the Premises and/or to sue you
to collect any unpaid rent or other amounts due. The Sublessor can collect our costs of enforcement and
collection, including court costs and attorneys’ fees. The Sublessor also has the right to charge a $100 late fee for
each delinquent payment. In addition, late payments will bear interest from the due date until paid at a rate equal
to the lesser of the highest applicable legal rate for open account business credit, or 1.5% per month (Section 12
of the Sublease Agreement).
Your breach of the Sublease Agreement and loss of possession of the Premises is also a default under the
Franchise Agreement and would permit us to terminate the Franchise Agreement (Section 13.1(f) of the Franchise
Agreement).
It is not our practice or intent to sell, assign or discount to a third party all or part of the sublease.
Area Directors
In some instances that we approve in advance you will pay us the initial Area Director fee on an
installment basis. In that case, we will retain the sales commissions you earn (as described in Item 11 and
Section 6.1 of the Area Director Agreement) and apply the sales commissions towards the initial Area Director
fee until the fee is paid in full.
TCBY FDD 03/2014
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ITEM 11. FRANCHISOR’S ASSISTANCE, ADVERTISING,
COMPUTER SYSTEMS, AND TRAINING
Except as listed below, TCBY is not required to provide you with any assistance.
If your store is located within an Area Director Territory, either at the time of opening or after you open
it, our Area Director will discharge some or all of the obligations that we describe in this Item 11 for us, as
allowed by the Franchise Agreement. The term “we” in this Item 11 refers interchangeably to us and to the Area
Director whom we may appoint to service an Area Director Territory that includes your Store. Ultimately,
however, we are responsible for ensuring that we comply with our obligations to you under your Franchise
Agreement with us.
STORE FRANCHISES
Assistance before Opening:
Before you open your Store, we or an affiliate will:
1.
Approve or disapprove a site that you propose for your Store within 30 days of the time you
submit your proposed site for our consideration. We may refer you to a recommended broker to assist you in
finding a site, although you are not required to use the broker. In evaluating a proposed site, we may inspect the
site and may consider a variety of factors, including demographic characteristics, traffic patterns, parking,
character of the neighborhood, competition from other dessert, snack food and bakery outlets in the area, the
proximity to other businesses (including other TCBY Stores), the nature of other businesses in proximity to the
site and other commercial characteristics (including the purchase price, rental obligations and other lease terms for
the proposed site), and the size, appearance and other physical characteristics of the proposed site (Franchise
Agreement, Section 4.1). Our approval of a site is no guarantee or assurance that you will be successful there.
2.
If you are developing a new TCBY Store, provide you with prototypical plans and specifications
on which to model the plans to build out your Store (Franchise Agreement, Section 4.3(a)).
3.
Provide you, through the Operating Procedures Manual and other materials, the standards and
specifications for the fixtures, furnishings, equipment (including computer hardware and software) and signs that
you must use (Franchise Agreement, Sections 4.4 and 5.2 and also Item 8 of this disclosure document).
4.
If you are developing a new store, provide you our standard marketing and public relations
programs and media and advertising materials for your grand opening at least 10 days before store opening
(Franchise Agreement, Section 4.6).
5.
Provide an initial training program for you and for your initial store manager once you have
signed your Franchise Agreement. However, as described in Item 7, you will be responsible for all compensation
and expenses (including travel, meals and lodging) incurred due to any training programs (Franchise Agreement,
Section 5.1). This training is described in detail later in this Item 11.
Assistance During Operation:
During the operation of your Store, we or an affiliate will:
1.
Loan you one copy of our Operating Procedures Manual, as described in Section 5.2 of the
Franchise Agreement. We have the right, at our option, to furnish or make available to you the Operating
Procedures Manual in the form of a paper copy, or an electronic copy (on CD Rom or accessed through the
Internet or other communication systems). Exhibit I to this disclosure document contains the Tables of Contents
TCBY FDD 03/2014
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of the Operating Procedures Manual and the number of pages devoted to each subject as of December 28, 2013,
as well as the total number of pages in the Operating Procedures Manual. As of December 28, 2013, the
Operating Procedures Manual contained a total of 255 pages.
2.
Provide training for any existing or replacement store managers, as explained above (Franchise
Agreement, Section 5.1).
3.
Furnish you guidance and operating assistance, at your request, about (a) methods, standards,
specifications and operating procedures; (b) purchasing required fixtures, furnishings, equipment, signs, materials,
supplies, TCBY Products; and (c) advertising and promotional programs. Occasionally, we may make special
assistance programs available to you, however, for which you must pay the daily fees and charges that we
establish (Franchise Agreement, Section 5.3).
4.
Provide you with the System Standards (as defined in Section 1.2(j) of the Franchise Agreement
and discussed in Section 7.1 of the Franchise Agreement). We may modify the System Standards periodically
and the modifications may obligate you to invest additional capital in your Store and to incur higher operating
costs (Franchise Agreement, Section 7.1).
5.
Provide advertising and marketing services to you as explained below.
Time to Open:
If you are developing a new TCBY Store, we estimate that it will take between 60 to 120 days between
the date you obtain our approval of and secured the Premises, and the date you open your Store. The interval may
vary depending upon factors such as the weather, the location and condition of the site, your ability to obtain any
necessary financing and building, zoning or other permits and approvals, construction delays, completion of
required training and so forth. Also, you may not open your Store for business until: (a) we approve the store for
opening; (b) pre-opening training of you and the store personnel has been completed to our satisfaction; (c) the
initial franchise fee and all other amounts then due to us have been paid in full; (d) the lease documentation has
been signed and all other documentation for development of your Store has been completed; and (e) we have been
furnished with copies of all required insurance policies or other evidence of insurance coverage and payment of
premiums we require.
Training:
You (or one of your Active Entity Owners) and any manager of your Store must successfully complete all
phases of our training program to our satisfaction. After signing your Franchise Agreement but before you can
register for training, you will be required to take and pass (to our satisfaction) an online basic skills test that
includes verbal and quantitative questions. Training is provided only in English, so all of your training attendees
must be sufficiently proficient in the English language to successfully complete our training program, to
adequately communicate and correspond with us and your employees, customers, manufacturers, suppliers,
vendors and distributors, and to effectively fulfill their responsibilities to manage and/or oversee the management
of your Store. All training occurs at our classroom facility located in Broomfield, Colorado, or any other location
designated by us. Classes are held periodically, and will last approximately 6 days. However, we may require
you to continue training for a longer period of time as we may deem reasonably necessary, but not to exceed
12 days. In addition to the training described below, a typical trainee will spend between 6 and 10 hours during
the course on recommended homework.
During the Effective Period, we require all franchisees to complete an annual training re-certification.
This consists of passing an online certification knowledge assessment managed by our training department with a
score of 90% or higher, achieving a compliant score on an in-store audit and attending all mandatory regional
meetings and conventions. As long as franchisees certify annually under this program, we will not require them
TCBY FDD 03/2014
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to attend additional training classes in Broomfield when they purchase additional Stores of the same brand,
although the additional Store must still be managed by someone who has successfully completed our training in
Broomfield or any other location designated by us. We have the right to periodically change this certification
program and additional training requirements (Franchise Agreement, Section 5.1).
We distribute training materials, including our Operating Procedures Manual, at various times during the
training course. The training program is overseen by Renee Roozen, who has over 16 years of food service and
training experience. Other of our employees may also participate in providing and conducting aspects of the
training program. All instructors will have a minimum of one year of training experience in the subject that they
teach and have been employed by us for a minimum of 3 months. In the case of a proposed transfer, we will
provide training to the proposed transferee and its attendees at our training facility in Broomfield or any other
location we designate. The transferee and its attendees must attend training before a proposed transfer is
completed, and before they can assume operations of the transferring TCBY Store. Currently, neither we nor an
affiliate charge you or your transferee a separate fee for any training we provide or for the in-store work
experience, but we have the right to do so in the future.
TRAINING PROGRAM
Hours of
Classroom
Training
Hours of “On
the Job
Training”
Welcome, training overview, company history,
mission, vision and values, brand blue print,
understanding your resources, approved suppliers,
advisory board, vendor applications, core lineup and
suggested retail prices, introduction to yogurt and
sorbet, review shelf life chart and equipment
temperatures
4
0
Broomfield, Colorado or other
designated locations
Review dry, hot and cold toppings. If applicable
review dipping cabinet, review sizes and sampling of
hand scooped yogurt
1
2
Review opening store, review soft serve machine
assembly and, yogurt handling
1
11
1
Subject
Review sampling soft serve. If applicable review
preparing cups and cones
Location
Review soft serve machines, re-priming (if applicable)
and opening and closing process, mixing juices,
changing flavors without dissemble product
temperatures, and breaking the cycle
1
4
If applicable review Shiver machine and all menu
items and review waffle cone bowls and smoothies.
0
1
Review take out freezer display, review quarts, pints
and pre-made cakes and pies (if needed).
0
1
Disassemble soft serve machines
0
4
How to place and receive product and small ware
orders, waste control, beverages and POS register
4
2
Customer service and handling complaints
4
4
TCBY FDD 03/2014
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Hours of
Classroom
Training
Hours of “On
the Job
Training”
Selecting and building a strong retail team: Training,
motivating, coaching, and leading your team
4
0
Financial Management: Planning sales and payroll
budgets, inventory, creating a P&L, and reporting
sales and P&L
4
0
Marketing presentation, food safety, health department
inspections, and critical control points
4
0
Meet with personnel from the Franchisee Support
Center
1
0
Final knowledge assessment
2
0
Subject
Location
We provide training for you (or one of your Active Entity Owners, if you are an entity) and the initial
store manager (if different from you) free of charge; however, you must pay all travel and living expenses
incurred during the training program. Store manager training is mandatory and must be completed before store
opening. We reserve the right to charge you for any additional person you send for training. All training must be
completed to our satisfaction and must be completed no more than 60 days before the opening of your Store.
Replacement store managers must also complete the initial training. We currently do not charge a fee for
replacement store managers to attend training; however, you may be required to pay a tuition fee for that training
in the future (Franchise Agreement, Section 5.1). Under no circumstances should you permit your Store to be
managed by a person who has not been certified by us as having completed all phases of our training program to
our satisfaction (Franchise Agreement, Section 5.1). We have the right to require previously trained and
experienced managers to attend periodic refresher courses at the times and locations that we designate. We have
the right to charge fees for refresher training courses.
We require you (or one of your Entity Owners, if you are an entity) and the initial store manager (if
different from you) to complete an annual recertification program online. You are required to complete this
program to our satisfaction. It is an assessment that you should be able to complete within 2 hours and covers the
following topics: operations, management, and customer service.
In the case of a proposed Transfer, we will provide training to the proposed transferee and its attendees, as
described above. We also may require the proposed transferee and its attendees to attend, an in-store work
experience at an existing TCBY Store. Currently, neither we or our affiliates, nor the host franchisee plan to
charge you or your transferee a fee for any training we provide or for the in-store work experience, but we have
the right to do so in the future. You must pay travel and living expenses for your trainees.
Marketing and Advertising:
Materials
We and our affiliates currently utilize point of purchase printed advertising for the sale of TCBY
Products, goods and services at TCBY Stores. We do not currently utilize electronic media such as radio or
television. We may also conduct coupon promotions. In that case, we may require you to accept coupons that are
issued by us or our affiliates and presented at your Store by your customers. You will receive certain
compensation for these coupons when you tender them to us in accordance with our System Standards. We
typically conduct coupon promotions on a regional basis. We currently use national advertising firms for the
production of advertising materials.
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We may provide you with copies of advertising, marketing and promotional formats and materials for use
in your Store, which we have prepared using marketing fees we have collected from TCBY Stores. In addition,
we may also offer you the option of purchasing other advertising, marketing and promotional formats and
materials that we have prepared and that are suitable for use at local TCBY Stores. For required advertising, you
must pay only shipping and handling costs. For optional materials or for additional or replacement copies of
required items, you must pay our direct cost of producing these items together with any related shipping, handling
and storage charges. You must participate in all mandatory promotions and product roll-outs. If you do not place
minimum orders of products and other items necessary for a mandatory promotion or product roll-out by a certain
date, we have the right to send, or direct suppliers to send, an automatic shipment of a specified minimum
quantity of these products and items to you, and you must accept and pay for them upon receipt. All payments
for the items described in this paragraph are nonrefundable and cannot be applied against the weekly marketing
fees that you must pay to us, as described in Item 6 of this disclosure document and below (Franchise Agreement,
Section 9.3). We are not required to spend any particular amount on advertising in the area in which your Store is
located.
You may use advertising materials prepared by you if the materials (a) comply with the requirements of
Articles 9 and 10 of the Franchise Agreement, (b) are completely clear and factual and not misleading, and (c)
conform to the highest standards of ethical marketing and promotion policies which we have the right to
prescribe. Before use, you must submit to us for approval all press releases and policy statements and samples of
all local advertising, marketing and related materials, including materials offering free TCBY Products, not
prepared or previously approved by us. We will not unreasonably withhold our approval. You may not advertise
your Store or the TCBY Products over the Internet (or any other form of electronic commerce) or establish a
related World Wide Web Site without our prior written consent. If we do not give you written approval of any
advertising or other promotional materials within 15 days from the date of receipt by us of the materials, we will
be deemed to have disapproved the submission. You may not use any advertising, marketing or related materials
that we have disapproved. You must list your Store in the principal telephone directories distributed in your
metropolitan area (Franchise Agreement, Section 9.2).
Marketing Fee
You must pay to us a weekly marketing fee of 3% of your Store’s Gross Revenues. TCBY Stores owned
by us or an affiliate contribute marketing fees on the same basis as similarly situated Stores operated by
franchisees, but that basis and the amount of marketing fees paid may differ from yours (Franchise Agreement,
Section 9.1(a)). You must pay marketing fees weekly by pre-authorized electronic bank transfer, at the same time
that you pay continuing fees (Franchise Agreement, Sections 6.4, 6.5 and 9.1(a)).
As of the issuance date of this disclosure document, we do not establish a required minimum amount for
local store advertising, but we encourage you to spend at least 3% of your Gross Revenues each year on local
store advertising.
We will administer the marketing fees we collect and direct all marketing programs financed by the
marketing fees, and have the right to determine the creative concepts, materials and endorsements used and the
geographic, market and media placement and allocation.
We will account for the marketing fees we collect separately from our other funds, although we are not
required to establish a separate marketing fund or bank account for those fees. We have the right to use the
marketing fees we collect to defray the salaries, administrative costs and overhead we and an affiliate may incur
in activities related to our marketing programs, including conducting market research, preparing advertising,
promotion and marketing materials and collecting and accounting for the marketing fees we collect. On your
prior written request made within the first quarter of any calendar year, we will make available to you no later
than 120 days after the end of each calendar year, an annual statement of moneys collected and costs incurred for
our marketing programs. No independent audit is required with this statement or the marketing fees we collect.
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We have the right in the future to create a marketing fund to be operated by us or through another form of entity
separate from us (Franchise Agreement, Section 9.1(c)).
Generally, we feel we will expend all marketing fees we collect during the taxable year within which the
contributions and earnings are received. However, any marketing fees we collect but do not spend in the fiscal
year in which they were accrued will be carried forward to the following fiscal year. We may spend in any fiscal
year an amount greater or less than the aggregate marketing fees collected from TCBY franchisees in that year
and we may make loans on behalf of the marketing fund bearing reasonable interest, not to exceed 10%, to cover
any deficits in the amount of marketing fees collected, and cause future collections to be applied first, at our
discretion, to any outstanding loans we have made on behalf of TCBY Store marketing programs.
Although we will endeavor to utilize the marketing fees to develop advertising and marketing materials
and programs and to place advertising that will benefit all TCBY Stores, we cannot ensure you that our
expenditure of marketing fees in or affecting any geographic area will be proportionate or equivalent to the
marketing fees paid to us by TCBY Stores operating in that geographic area or that any TCBY Store will benefit
directly or in proportion to the marketing fees it pays to us from the development of advertising and marketing
materials or the placement of advertising (Franchise Agreement, Section 9.1(d)). Except as described in this
Item 11, we are not obligated to conduct any advertising programs for the franchised system.
In 2013, marketing fee contributions were used as follows: (i) production, printing, and merchandising:
75%; (ii) administrative expenses (including salaries of advertising/marketing executives and employees of ours):
16%; and (iii) other expenses, consisting primarily of product development, marketing research and store design:
9%. In 2013, we did not spend any of the marketing fee contributions that we received for advertising that was
used principally to solicit new franchise sales, nor do we intend to do so in 2014. You may receive an accounting
of the marketing fee, including how the funds were raised and spent, as outlined in your Franchise Agreement.
In addition to the marketing fees you pay to us, you must also spend on advertising any amount required
under your lease or sublease. Those amounts typically vary from lease to lease, and therefore, franchisees are not
obligated to spend the same amount on local advertising and marketing (Franchise Agreement, Section 9.2). If
you are developing a new TCBY Store, you must also conduct a grand opening advertising and promotion
program as explained above in this Item 11 and in Item 5 of this disclosure document.
Advertising Cooperatives
As of the issuance date of this disclosure document, we do not form, organize, maintain or otherwise
make use of advertising cooperatives, nor do we require you to join one. We have the right, however, in the
future, to form, organize, maintain and otherwise make use of local or regional advertising cooperatives. As
described in Item 6 of this disclosure document, if a local or regional advertising cooperative is formed or
organized for the market that includes your Store, we have the right to require you to participate in and contribute
to the advertising cooperative an amount of up to 3% of your Gross Revenues, which is in addition to your
marketing fees and any lease-required advertising fees. All franchisees will contribute at the same rate. Each
TCBY Store located within an advertising cooperative, including any TCBY Stores owned by us or an affiliate,
will be a member of the advertising cooperative and have one vote per Store. The members of each advertising
cooperative and their elected officers will be responsible for all administration of the advertising cooperative.
Each advertising cooperative will engage the services of a professional advertising agency, public relations firm
or similar service that meets with our approval and has expertise in their market. Each advertising cooperative
must have an independent CPA prepare quarterly and annual financial statements, which will be made available to
us and all TCBY franchisees in the advertising cooperative. We have the right to require local and regional
advertising cooperatives to be formed, changed, dissolved or merged.
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Advertising Committee
We have the power to form, create or dissolve any advertising committee, and to determine how members
of any committee we form or create are selected. In addition, any advertising committee we form will serve in an
advisory capacity only.
Point of Sale System/Computer System Requirements
As of the date of this disclosure document, we require you to purchase and use the Treatware point-ofsale system by ICS (and applicable hardware as specified by ICS or us) in the operation of your Store. We also
require you to participate in the prepaid/stored value tracking system from a service managed by Opticard
Payment Services, Inc. (“Opticard”). The point-of-sale system and prepaid/stored value tracking system as
upgraded or modified by current releases or similar hardware and software constitute the current computer system
requirements (“Computer System”). The hardware operating with the ICS Treatware software also acts as your
cash register for recording sales transactions and printing customer receipts. As of the date of this disclosure
document, ICS is our only designated point-of-sale system provider and Opticard is our only designated
prepaid/stored value tracking system provider, but we reserve the right to designate a different provider or
providers in the future. You must obtain service contracts and pay monthly service and access fees of $65-$95 to
our designated point-of-sale system service provider, and $30-$50 to our designated prepaid/stored value tracking
system provider. The initial costs associated with the Computer System will range from $3,500 to $4,500.
We also currently require that you have high-speed Internet access in your Store premises in order to
electronically submit Gross Revenues and financial statement reports for your Store to us, and to allow us to
access information directly from your Computer System. You will spend approximately $150 for the initial
Internet installation and approximately $50 per month for Internet access.
In addition, we require you to establish and maintain a valid email address and authorize us to
communicate with you via e-mail at the address. Currently, you may use any Internet service provider that allows
you to access the Internet.
We have the right to require you in the future to purchase, install and use a different Computer System
and to designate in the future the supplier or suppliers (which may be or include us or an affiliate) from whom you
must purchase these items. You must purchase, install and begin using any required computer hardware and
software in your Store within 60 days of our notice to you. We have the right to require you, at your sole expense
to upgrade any required computer hardware and software to meet our then-current standards and specifications.
There is no limitation on the frequency and cost of this requirement. We estimate that the annual cost for any
upgrades, maintenance, or updating will be up to $500. We also have the right to independently access the
information and data you collect and gather using any required computer hardware and software, and there is no
limitation on our right to access this information.
AREA DIRECTOR FRANCHISE
Assistance Before Opening: Before you begin your AD Business, we will:
1.
Provide an initial training program to you or your Managing Owner and your Operations
Manager, if any (Area Director Agreement, Section 7.1). See Note 11 below in the “Area Director Franchise”
section of “Assistance During Operation” for information regarding training.
2.
Upon your request at the end of the initial training program, provide you or your Managing
Owner with additional training if you or your Managing Owner do not feel completely trained in the operation of
an AD Business after the initial training program (Area Director Agreement, Section 7.2).
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Assistance During Operation: During the operation of your AD Business, we will:
1.
Loan you a copy of our Area Director Operating Procedures Manuals (“Area Director
Manuals”) when available (Area Director Agreement, Section 8.1). We are currently in the process of
developing our Area Director Manuals, which will consist of our operations, training and other manuals, and
related materials, as well as materials specific to the operation of an AD Business. The Area Director Manuals
will contain mandatory and suggested standards and operating procedures. The Area Director Manuals may be
provided in paper or electronic form. The Area Director Manuals are confidential and remain our property. We
will occasionally modify or supplement the Area Director Manuals, and you must comply with current,
mandatory standards and procedures in the Area Director Manuals. Until the Area Director Manuals are
complete, we will loan you a copy (in paper or electronic form) of our current Operating Procedures Manual (as
described in Note 1 above in the “Store Franchise” section of “Assistance During Operation”) and other
materials we, in our sole judgment, deem appropriate.
2.
Register, as applicable, and furnish to you a current copy of our disclosure document for you to
use as we may request periodically in identifying prospective TCBY franchisees in your Area Director Territory
(Area Director Agreement, Section 4.2).
3.
Provide an initial training program to replacement or additional Managing Owners, Operations
Managers and other management personnel. We reserve the right to charge a tuition fee in advance of such
training (Area Director Agreement, Section 7.3).
4.
Provide you with advice relating to franchise sales, franchisee support and assistance via
telephone consultation, upon your reasonable request (Area Director Agreement, Section 8.2).
5.
Provide you with access to any franchise sales advertising and promotional materials that we may
(but are not required to) develop, the actual cost of which we may pass on to you (Area Director Agreement,
Section 8.2).
6.
Provide you with access to our point-of-sale, product promotions, coupons and other marketing
materials generally made available to TCBY Stores (Area Director Agreement, Section 8.2).
7.
Collect certain fees from TCBY franchisees within your Area Director Territory, and remit
commissions owed to you, as appropriate. Area Director commissions are summarized in the table below:
Commission
Amount
Section(s) of
Area Director
Agreement
When Paid
Sales Commissions
A percentage of Initial Franchise Fees
that will vary widely, negotiated between
the parties based on several factors,
including the Development Quota and
size of the Area Director Territory
Within 30 days after all
conditions of payment
have been met
6.1, 6.2
Transfer Commissions
If any, a percentage of transfer fees paid
by transferring franchisees as negotiated
between the parties based on several
factors, including the Development
Quota, size of the Area Director Territory
and number of existing TCBY Stores in
such Territory
Within 30 days after
completion of transfer (if
we ask you to perform
services in connection with
the transfer) and after all
conditions have been met
6.3
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Commission
Commissions on
Royalty and Service
Fees
Amount
When Paid
A percentage of royalty and service fees
that will vary widely, negotiated between
the parties based on several factors,
including the Development Quota, size of
the Area Director Territory and number
of existing TCBY Stores in such
Territory
Within 10 business days
after the end of each 4 or 5
week fiscal month
(excludes advertising fees,
company-owned TCBY
Stores, and certain other
excluded locations)
Section(s) of
Area Director
Agreement
6.4
General Note:
Conditions apply to payment of Area Director commissions. Refer to the Area Director Agreement,
attached to this disclosure document as Exhibit D, for more information. No commissions are paid to you unless
the underlying fees have been actually paid to us by TCBY franchisees within your Area Director Territory and
you have met all applicable conditions (Area Director Agreement, Section 6).
Time to Open:
The typical length of time between the effective date of the Area Director Agreement and the
commencement of your AD Business is approximately 1 to 2 months, depending on our scheduling of Area
Director training programs, your training attendees’ ability to complete the training program and our ability
register, as applicable, and furnish to you a current copy of our disclosure document for you to use in your Area
Director Territory. Under the Area Director Agreement, you have 60 days from the effective date to complete our
initial training program and commence operation of your AD Business. We will extend the time within which
you must commence operations for a reasonable period of time, if factors beyond your reasonable control prevent
you from meeting this schedule, if have made reasonable and continuing efforts to comply and you request an
extension in writing. If you fail to commence operation of your AD Business within 60 days from the effective
date or before the end of any agreed upon extension, we may terminate the Area Director Agreement (Area
Director Agreement, Section 9.2).
Training.
Before you commence operation of your AD Business, we will furnish an initial training program to up to
2 people from your management staff. Currently, you must attend the initial management and operational training
program we offer to TCBY franchisees (as described in Note 5 above in the “Store Franchise” section of
“Assistance Before Opening”). We will work with you to provide further training on topics we deem advisable,
depending on your training needs and past experience. We will furnish all training programs at the places and
times we designate. In addition to the instructional materials used in the TCBY Store initial training programs,
training materials for Area Directors will include our current disclosure document, advertising and marketing
materials, and other Area Director instructional materials. The initial training program for Area Directors will be
supervised and taught by the same individuals involved in the TCBY initial training program.
Training must be completed by you or your Managing Owner (if you are an entity) to our satisfaction and
may, at your option, be attended by your Operations Manager. “Managing Owner” and “Operations Manager”
are defined in Item 15. All training must be completed prior to your provision of services to any TCBY
franchisee or prospective franchisee (Area Director Agreement, Section 7.1).
You must pay for the salaries, wages, overtime, benefits, travel costs and expenses, and related costs for
persons associated with you who attend any of the training or other programs described in this Note 11, but we do
not collect a separate fee for you, your Managing Owner, or your Operations Manager to attend initial training.
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After the initial training program, you or your Managing Owner may request that we provide additional training,
at no additional cost to you, provided that you request the training in writing at the end of the initial training
program (Area Director Agreement, Section 7.2).
At all times during the term of the Area Director Agreement, you must have at least one person who has
completed our initial training program to our satisfaction. We reserve the right to charge a tuition fee for
replacement or additional Operations Managers and other management personnel (Area Director Agreement,
Section 7.3).
We may require you or your Managing Owner to attend ongoing training, seminars, conventions, and
development programs. We have the right to charge you a reasonable fee for your attendance at such programs.
If you fail to attend any mandatory program we offer without our prior written approval, you must make up the
missed program at a time and place we designate, and may be charged a reasonable fee not to exceed $1,000 for
each program missed (Area Director Agreement, Section 7.4).
With our prior written consent and subject to our then-current certification and training procedures, we
may require or authorize you to implement a training program for your agents and employees that provide
services to TCBY franchisees within your Area Director Territory. We have the right to designate and approve all
of the content for any such training program we may require (Area Director Agreement, Section 9.1).
Marketing and Advertising.
As further described in Item 6, you must spend an amount to advertise for prospective TCBY franchisees
within your Area Director Territory that will allow you, in your reasonable opinion, to meet your Development
Quota. Although we may provide you with promotional and recruiting materials to solicit prospective
franchisees, you are responsible for arranging media placement and for all media expenses. All advertising which
you conduct, even using the recruiting materials that we create, is subject to our prior approval, which you must
obtain in the same manner as applies to local advertising by TCBY franchisees. As a condition of our approval,
you must permit us and other Area Directors that we authorize to use the materials that we approve for your use,
without compensation to you. You may use materials that we approve only in the exact form that you submit
them to us. You agree, at your expense, to comply with all state filing requirements relating to the advertising
you use, unless we have previously filed the advertising with the particular state (Area Director Agreement,
Sections 13.9 and 13.10).
Point of Sale System/Computer System Requirements.
You must purchase a laptop computer and computer software for the operation of your AD Business.
Although we do not require you to purchase computer hardware and software that meets any particular
specifications, we recommend that you purchase for use in the operation of your AD Business a computer with
sufficient processor speed and memory to efficiently operate, along with an up-to-date operating system and
Microsoft Office software package (Area Director Agreement, Section 9.2). Currently, we estimate that the cost
of the computer hardware and software ranges from $0 to $3,000 and we estimate that you will spend up to $500
per year on optional maintenance, upgrades, updates or support contracts.
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ITEM 12. TERRITORY
Store Franchise.
Territory
We will grant you a franchise for a specific location that we must approve. You will not receive an
exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other
channels of distribution or competitive brands that we control.
You may not operate your Store at any other site without our prior written consent and you may not build
or relocate your Store until we have approved your location. In addition, you may only offer and sell finished,
approved TCBY Products over the counter to retail customers from your Store, and may not sell approved TCBY
Products or any materials, supplies, or inventory bearing the TCBY Marks at any other location or through any
alternative channel of distribution, including through the Internet (or any other form of electronic commerce),
mail order and catalog sales, telemarketing, and direct marketing, without our prior written consent. You may,
however, (1) offer and sell approved TCBY Products as part of off-site catering events and company account
programs, provided you deliver (and do not engage a major carrier to deliver) TCBY Products that meet System
Standards for quality and freshness and the sales are not part of a mail order program; (2) offer samples of
approved TCBY Products at or near your Store as approved by your landlord, where necessary, or at other
locations as approved by us or in accordance with any sampling or promotional program we approve or designate;
or (3) upon our prior written approval, offer and sell approved TCBY Products from a table, kiosk or cart at
satellite locations that we approve. You may not sell to anyone any materials, supplies, or inventory used in the
preparation of any TCBY Products. Further, you may not sell any TCBY Products to any person or entity
purchasing the TCBY Products for resale without our express written permission.
Your Franchise Agreement does not grant you any options, rights of first refusal or similar rights to
acquire additional franchises.
Relocation
You may not relocate your Store unless you relocate your Store as a result of condemnation, the exercise
of a relocation right by your landlord or for some other reason approved by us in writing. Upon the occurrence of
one of the relocations described in the preceding sentence, we will consent to such relocation at a site acceptable
to us provided that: (1) you are in full compliance with the Franchise Agreement; (2) you give us written notice of
your desire to relocate at least 30 days prior to the date your Store will close for relocation; (3) you find relocated
Premises that meet all of our then current site criteria for the development of new TCBY Stores and obtain our
written approval of the relocated Premises within 60 days after the date your Store will be closed for relocation
and before you sign a lease or sublease or begin construction of the relocated Premises, and you open the
relocated Store at the relocated Premises within 180 days after the date your Store closes for relocation; (4) you
construct and develop the relocated Store in accordance with all of our then current System Standards for TCBY
Stores, including designs and service systems, and trade dress; (5) you have sufficient term remaining under the
Franchise Agreement, or purchase from us sufficient additional term under the Franchise Agreement, to satisfy
our then current policy on remaining term requirements for relocations; (6) you pay to us our then current
relocation fee (if any); and (7) at our request, you execute a general release, in a form satisfactory to us, of any
and all claims against us or our affiliates and our and their respective officers, directors, attorneys, shareholders
and employees, and any other ancillary agreements we are then using for relocations, or, in the event you are
required to purchase additional term, you sign our then current form of Franchise Agreement.
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Our Reservation of Rights
We and our affiliates have the right, without compensation to you or any other franchisee, to do the
following: (1) franchise, license and/or own and operate TCBY Stores and Yovana® stores at any locations and
on any terms and conditions as we or an affiliate deem appropriate; (2) sell and license and franchise others to sell
TCBY Products and any other products or services under the TCBY Marks, or any trade names, trademarks,
service marks, trade dress or other commercial symbols of an affiliate, through alternative channels of distribution
(as described above) and to a variety of customers; and (3) franchise, license and/or own and operate businesses
(including dessert and snack food businesses) at any locations and on any terms and conditions as we or an
affiliate deem appropriate, or distribute products or services through alternative channels of distribution which are
similar to the TCBY Products under trade names, trademarks, service marks, trade dress or other commercial
symbols other than the TCBY Marks or those owned by us or an affiliate. These activities may compete with
you. We will not pay you any compensation for soliciting or accepting orders inside your Territory through
alternative channels of distribution.
Further, we or an affiliate may acquire or actively seek to acquire businesses or franchise systems that are
your competitors and those competitors may have locations near your Store, including locations within the same
shopping mall. In addition, we or an affiliate may enter into co-branding arrangements. These activities may
compete with you.
We enter into licensing and franchising arrangements with other individuals and entities, granting those
individuals and entities exclusive territorial rights which may restrict your rights to locate your Store in certain
locations. Any restrictions in effect will be explained to you as part of the site selection process for your Store.
Area Director Franchise.
Territory
We will grant you the right to perform sales services for us, and provide site services and support services
to TCBY franchisees within your Area Director Territory. You will not receive an exclusive territory. You may
face competition from other franchisees, from outlets that we own, or from other channels of distribution or
competitive brands that we control.
As a condition of maintaining your Area Director franchise, you must satisfy certain development
obligations (“Development Quota”) for each “Development Period” during the term of the Area Director
Agreement. The Development Quota consists of the number of new Stores, as well as the cumulative number of
Stores that must be open and operating within your territory. We and you will mutually agree upon the applicable
Development Quota to be included in Appendix A to the Area Director Agreement before you sign the Area
Director Agreement. Area Director Development Quotas vary considerably. We estimate, however, that the
typical Development Quota will be a cumulative total of approximately 10 to 30 TCBY Stores open and operating
at the end of the initial term of the Area Director Agreement.
In addition, at all times from and after the second Development Period, you must continuously own and
operate at least the minimum number of TCBY Stores that we designate within your Area Director Territory.
Further, renewal of the Area Director Agreement is contingent upon we and you agreeing on a new Development
Quota for the renewal term at least 90 days prior to the expiration of the previous term.
You may only solicit prospective TCBY franchisees that reside, or maintain their principal place of
business, within your Area Director Territory. You may not solicit prospective TCBY franchisees that reside, or
maintain their principal place of business, outside of your Area Director Territory.
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If you provide site services and support services to a TCBY franchisee located within your Area Director
Territory, even to a TCBY Store whom we recruit, we will pay you a percentage of the royalty and services fees
that we collect from that Store, except we do not share royalty and service fees from any TCBY Store that we or
any affiliate owns or any Excluded Locations.
Relocation
When we offer to sell you the Area Director franchise, we will identify the boundaries of your Area
Director Territory in Appendix A to the Area Director Agreement. The size may vary from one Area Director to
the next. Once established, you may not relocate your Area Director Territory.
Our Reservation of Rights
We and our employees, affiliates and designees reserve the right, without compensation to you (unless
otherwise specifically described below), to:
(a)
use, and license others to use, the Marks for the operation of TCBY Stores, sale of proprietary
products or any other business or endeavor at any location outside the Area Director Territory or in any channel of
distribution, including the Internet and other e-commerce;
(b)
solicit prospective TCBY franchisees and grant others the right to operate TCBY Stores outside
the Area Director Territory;
(c)
solicit prospective TCBY franchisees, with or without your involvement, and grant other TCBY
Store franchises in the Area Director Territory provided that (i) any new prospective site will first be offered to
you; (ii) new TCBY Stores open in the Area Director Territory will count towards your Development Quota and
(iii) you will receive your sales commission and related fees for those Stores;
(d)
own and operate TCBY Stores within the Area Director Territory without payment of sales
commissions or other fees in connection with those Stores;
(e)
solicit prospective TCBY franchisees and grant franchises or licenses to others to open TCBY
Stores or offer proprietary products at locations within the Area Director Territory that are to be co-branded with
stores that are part of a multi-unit chain or retailer, such as Starbucks®, Subway®, Quiznos®, Schlotzsky’s®,
Wal-Mart®, Blockbuster® or Build-a-Bear®, who have the right or ability to add food service to one or more of
their company-owned, franchised or licensed locations, provided that (i) you will provide the services and support
for those Stores within the Area Director Territory as set forth in the Area Director Agreement; and (ii) you will
receive your royalty fees (but no sales commissions) for those Stores;
(f)
offer franchises or licenses to others to operate TCBY Stores or offer proprietary products from
any location with premium, priority, or exclusive access, including a grant to a disadvantaged business entity
(DBE), masterconcessionnaire, or master franchisee or operator who is awarded a bid to operate stores or food
outlets at an airport, commercial or corporate park, school, hospital, food service court, stadium, toll stop or rest
area, outlet or factory stores, or masterconcessionnaire mall (“Excluded Locations”);
(g)
have the option, but not the obligation, to provide sales services, site services or support services
for franchised TCBY Stores within the Area Director Territory with no change in the percentage of royalty and
service fees commissions paid to you, unless you are in default under the Area Director Agreement;
(h)
use and license others the use of trademarks other than the Marks in connection with the
operation of retail outlets or businesses featuring similar products as the TCBY Stores from any location,
including within the Area Director Territory; and
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(i)
use any alternative channels of distribution, including the Internet and other e-commerce, catalog
or wholesale distribution, or branded and non-branded retail channels such as grocery, drug, club or convenience
stores, from any location, including within the Area Director Territory.
ITEM 13. TRADEMARKS
Under the Franchise Agreement, we grant you the right to operate a TCBY Store under the TCBY name
and Mark. You may also use our other Marks, as approved by us, in or with your TCBY Store. The following is
the principal TCBY Mark registered on the Principal Register of the United States Patent and Trademark Office
(“USPTO”):
Principal
Trademark
U.S. Serial No.
Principal/Supplemental Register
of the United States Patent
and Trademark Office
Date of Registration
TCBY
1,463,784
Principal
November 3, 1987
We renewed this registration on June 23, 2007. We have filed all required affidavits with the USPTO.
There are no currently effective material determinations of the USPTO, Trademark Trial and Appeal Board, the
Trademark Administrator of any state, or any court, nor are there any pending infringements, opposition or
cancellation proceedings or any pending material litigation, involving the TCBY Mark described above. There
are no agreements currently in effect which significantly limit our rights to use or franchise the use of this Mark.
Your right to use the TCBY Marks is derived solely from the Franchise Agreement and is limited to your
conduct of business in compliance with the Franchise Agreement and all applicable standards, specifications,
operating procedures and rules that we require.
You must use the applicable TCBY Marks as the sole identification of your Store, and you must identify
yourself as the independent owner in the manner we require. You may not use any TCBY Mark as part of any
corporate or trade name or with any prefix, suffix or other modifying words, terms, designs or symbols (other than
logos franchised to you under the Franchise Agreement), or in any modified form, including on any sites on the
Internet or World Wide Web, as an Internet domain name, or as part of an electronic mail address without prior
written approval from us. You must follow all other policies and procedures relating to the Marks, as contained in
the Operating Procedures Manual. You must display all applicable TCBY Marks in the manner we require, and
you must use the registration symbol “®” in using any of the registered Marks. You must refrain from any
business or marketing practice which may be injurious to our business and the good will associated with the
TCBY Marks or TCBY Stores. We have the right to require you to modify or discontinue use of any TCBY Mark
or use one or more additional or substitute trade or service marks if we determine that it becomes advisable at any
time.
You must immediately notify us of any apparent infringement of or challenge to your use of any TCBY
Mark or claim by any person of any rights in any Mark, and you must not communicate with any person other
than us or our counsel about the infringement, challenge or claim. We and our affiliates have the right to take the
action we deem appropriate and control exclusively any litigation, USPTO proceeding or any other administrative
or court proceeding concerning any TCBY Mark. You must sign any instruments and documents, render
assistance and do those things as, in the opinion of our legal counsel, may be necessary or advisable to protect and
maintain our interests in any litigation or USPTO or other proceeding or otherwise to protect and maintain our
interests in the TCBY Marks.
We will take the action we think appropriate. We will indemnify you against and reimburse you for all
damages for which you are held liable in any proceeding arising out of your authorized use of any TCBY Mark
and for all costs you reasonably incur in defending any claim brought against you or any proceeding in which you
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are named as a party, if you have timely notified us of the claim or proceeding and have otherwise complied with
the requirements of the Franchise Agreement. At our option, we and our affiliates are entitled to defend and
control the defense of any proceeding arising out of your authorized use of any TCBY Mark.
We do not know of any infringing uses that could materially affect your use of the Marks.
ITEM 14. PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION
Except as noted below, we and our affiliates do not own any patents or copyrights which are material to
the Franchise. As of the date of this disclosure document, there are no patents or copyrights registered or
pending, and no patent applications, that are material to the Franchise.
We claim copyrights in the Operating Procedures Manual and Area Director Manuals, construction plans,
specifications and materials, printed advertising, promotional, sales, training and management materials and in
related items you will use in operating your Franchise. We have not registered these copyrights with the U.S.
Registrar of Copyrights. You may use the Operating Procedures Manual (or Area Director Manuals if you are an
Area Director) and other materials during the term of the Franchise Agreement (or the Area Director Agreement if
you are an Area Director).
There are currently no effective determinations of the U.S. Copyright Office or any court regarding any of
the copyrights. There are no agreements currently in effect which significantly limit our rights to use or franchise
the copyrighted materials. Also, there are no superior prior rights or infringing uses actually known to us which
could materially affect your use of the copyrighted materials in any state.
Your right to use the copyrights is derived solely from the Franchise Agreement and is limited to your
conduct of business in compliance with the Franchise Agreement and all applicable standards, specifications,
operating procedures and rules that we require. We have the right to require you to modify or discontinue use of
any of the materials in which we claim copyrights if we determine that it becomes advisable at any time. In that
case, you must comply with our directions to modify or discontinue the use of those materials within a reasonable
time after notice from us.
You must immediately notify us if you learn that any person may be using our copyrighted materials
without our consent or authorization. You must also immediately notify us of any challenge to your use of any
copyright or claim by any person of any rights in any copyright. You must not communicate with any person
other than us or our counsel about any challenge or claim to any copyright. We and our affiliates have the right to
take the action we deem appropriate and the right to control exclusively any litigation, U.S. Copyright Office
proceeding or any other administrative proceeding concerning any copyright. You must sign any instruments and
documents, render assistance and do those things as, in the opinion of our legal counsel, may be necessary or
advisable to protect and maintain our interests in any litigation or Copyright Office or other proceeding or
otherwise to protect and maintain our interests in the copyrights.
We will compensate and reimburse you for all damages for which you are held liable in any proceeding
arising out of your authorized use of any copyright and for all costs you reasonably incur in defending any claim
brought against you or any proceeding in which you are named as a party, if you have timely notified us of the
claim or proceeding and have complied with your obligations under the Franchise Agreement. At our option, we
or our affiliates are entitled to defend and control the defense of any proceeding arising out of your use of any
copyright.
We also own the Confidential Information (as defined in Section 10) of the Franchise Agreement) and
claim copyrights in the Confidential Information. The Confidential Information includes trade secrets and is our
proprietary information. Portions of the Confidential Information required in the operation of your business will
be communicated to you. However, you will not acquire any interest in any Confidential Information, other than
TCBY FDD 03/2014
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the right to utilize Confidential Information disclosed to you in operating your Store during the term of the
Franchise Agreement. You may only use the Confidential Information as outlined in the Franchise Agreement.
We and our affiliates will own and have the perpetual right to use and authorize other TCBY Stores to
use, and you must fully and promptly disclose to us, all ideas, concepts, formulas, recipes, methods and
techniques relating to the development and/or operation of a yogurt, frozen yogurt, ice cream, dessert or retail
snack food business conceived or developed by you and/ or your employees during the term of the Franchise
Agreement. You agree that we shall have the perpetual right to use and authorize other TCBY Stores to use such
ideas, concepts, methods and techniques and, if incorporated in the System for the development and/or operation
of TCBY Stores, such ideas, concepts, methods and techniques shall become our sole and exclusive property
without any consideration to you. You must not, however, test, offer or sell any new products without our prior
written consent.
ITEM 15. OBLIGATION TO PARTICIPATE IN THE ACTUAL
OPERATION OF THE FRANCHISE BUSINESS
We recommend that you participate personally in the direct operation of your Store, although the
Franchise Agreement does not specifically obligate you to do so. However, you must either manage your Store
yourself, or use a full time “on Premises” manager. The manager need not have an ownership interest in a
franchisee that is an entity. Both you (or one of your Active Entity Owners, if you are an entity) and the manager
of your Store must be certified by us as having completed all phases of our training program to our satisfaction
and must participate in all other activities required to open your Store. Replacement managers must also
satisfactorily complete all phases of our training program.
If you are an entity, each Entity Owner must guarantee your obligations under the Franchise Agreement
by signing the Guaranty attached to the Franchise Agreement, a copy of which is included in Exhibit B.
We have the right to require your training attendees (including you and any Entity Owner or manager) to
sign a Confidentiality Agreement in the form of Exhibit J. In addition, we have the right to require each manager
of a TCBY Store to agree to the non-competition covenants described in Item 17 of this disclosure document.
During the term of the Franchise Agreement, you (or if you are an entity, an Entity Owner who manages
or oversees the management of your Store) and your on Premises manager must: (a) be sufficiently proficient in
the English language to adequately communicate and correspond with us and your employees, customers,
manufacturers, suppliers, vendors and distributors, and to effectively manage and/or oversee the management of
your Store; (b) be authorized to work in the U.S. without sponsorship by us or one of our affiliates and provide
proof satisfactory to us of your authority to work in the U.S.; and (c) successfully pass a workplace appraisal test
in the English language.
ITEM 16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
In operating your Store, you may offer for sale only those TCBY Products that we approve for you to sell
at the Premises. The Operating Procedures Manual explains the TCBY Products that you are authorized to offer
at your Store. Your lease may also impose other obligations or restrictions on the types of products that you may
offer from your Premises, and you must comply with those restrictions and obligations even if they would prevent
you from offering certain TCBY Products that we have approved for you to offer.
We have the right to change the types of authorized products and services you may offer and sell at your
particular Store and there are no limits on our right to make changes.
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You may not use your Store for any purpose other than the operation of a TCBY Store in compliance with
the Franchise Agreement. You may not: (a) offer TCBY Products or materials, supplies, or inventory bearing the
TCBY Marks at any site other than your Store Premises; (b) offer for sale any materials, supplies or inventory
used in the preparation of any of the TCBY Products; or (c) sell any TCBY Products to any person or entity
purchasing the TCBY Products for resale. You may only sell TCBY Products to retail customers.
ITEM 17. RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION
THE FRANCHISE RELATIONSHIP
This table lists certain important provisions of the franchise and related agreements. You should
read these provisions in the agreements attached to this disclosure document.
Provision
Section in
Franchise or Other
Agreement(1)
Summary(1)
a.
Length of the franchise term
Section 3.1; Section 3 of
Other Concepts Addendum
10 years (for Traditional Stores) or 5 years (for Other
Concepts Stores) from the date you have obtained our
approval of and secured the Premises for your Store.
b.
Renewal or extension of the
term
Section 3.2; Renewal
Addendum to Franchise
Agreement; Term Purchase
Addendum; Section 3 of
You have the right to renew for 1 additional 10-year
term (for Traditional Stores) or 5-year term (for Other
Concepts Stores) if you are not in default. In certain
circumstances, you may also be required or allowed to
purchase additional term under the Franchise
Agreement.
c.
Requirements for you to
renew or extend
Section 3.2
Give 180 days prior notice; sign then current Franchise
Agreement (which may contain materially different
terms and conditions than your original Franchise
Agreement) and our then current Renewal Addendum;
refurbish and remodel the Premises at our request;
remain in good standing with us during the initial
term; satisfy all monetary obligations; retain the
Premises for the renewal term; follow our then current
renewal process, including any requirements for
additional training and delivery of certain financial
statements and records.
d.
Termination by you
Section 13.4
You have the right to terminate if we breach the
Agreement and fail to cure the breach.
e.
Termination by us without
cause
Not applicable.
Not applicable.
f.
Termination by us with
cause
We can terminate if you are in default of any
agreement with us or an affiliate; see also “17.o.”
below.
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Provision
Section in
Franchise or Other
Agreement(1)
Summary(1)
g.
“Cause” defined - curable
defaults
Curable defaults: (1) you have 48 hours to cure failure
to comply with certain System Standards and health
requirements; (2) you have 10 days to cure failure to
make payments; and (3) you have 30 days to cure any
other default of Franchise Agreement or any other
agreement with us or an affiliate not listed above or in
“17.h.” below. Bankruptcy or other insolvency events
are defaults if not discharged within 60 days.
h.
“Cause” defined – noncurable defaults
Non-curable defaults:
(1) bankruptcy or other insolvency events;
(2) unauthorized transfers; (3) material misstatements
or omissions; (4) you are convicted or plead no contest
to a felony; (5) you engage in detrimental conduct;
(6) unauthorized use of the TCBY Marks or
Confidential Information; (7) abandonment of or
failure to actively operate your Store; (8) you are in
breach of your obligations under your lease or sublease
of the Store Premises or you lose the right of
possession of your Store Premises; (9) failure to pay
uncontested taxes; (10) repeated defaults, even if
cured; (11) you default on any financing obligations;
(12) failure to obtain our approval of and secure
Premises for your Store within 6 months after date of
Franchise Agreement; (13) possession or use of
unauthorized products; or (14) failure to satisfactorily
complete training.
i.
Your obligations on
termination/non-renewal
Sections 6.5, 7.8, 8.2, 8.3,
10.5, 10.8, 12.3(1), 13.6,
14.2, 14.3, 14.4, 15.6 and
Article 18
Pay all amounts due, including any late charges and
interest; continue to honor all guarantees, releases and
waivers; retain records and permit audits; not disclose
Confidential Information; discontinue use of TCBY
Marks; deliver to us all signs, equipment, supplies and
materials displaying the TCBY Marks; cancel any
fictitious or assumed name certificates; make required
changes to Premises; assign telephone listings; dispose
of non-returnable supplies and materials; honor
indemnification requirements; and continue to honor
and be bound by general provisions; see also “17.o.”
and “17.r.” below.
j.
Assignment of contract by
us
Section 12.1
No restriction on our right to transfer or assign.
k.
“Transfer” by you - defined
Section 1.2(o)
Includes transfer of Franchise Agreement or ownership
change.
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Provision
l.
Section in
Franchise or Other
Agreement(1)
Summary(1)
Our approval of transfer by
you
Sections 4.7, 12.2, 12.3 and
12.4; Assignment,
Assumption and Consent;
Section 12 of Other
Concepts Addendum
We have the right to approve all transfers but will not
unreasonably withhold approval if specified
requirements are met. Transfers to a wholly-owned
corporation or limited liability company do not require
our consent. Other Concepts Addendum: you must
submit a copy of written approval of the Host Concept
prior to transfer.
m. Conditions for our approval
of transfer
Section 12.3; Assignment,
Assumption and Consent;
Term Purchase Addendum;
Your Store is not closed for relocation; 60 day prior
written notice to us in a form satisfactory to us;
transferee qualifies; your obligations are paid and you
are not in default; transferee completes training; you,
transferee and us sign the Assignment, Assumption
and Consent, which contains a release of claims
against us; at our option, transferee signs our then
current Franchise Agreement and guaranty (if
applicable) for remaining term of Franchise
Agreement being transferred; you or your transferee
pays transfer fee; we approve terms of transfer; you
subordinate any obligations of the transferee to you to
the transferee’s obligations to us; you obtain any
required landlord consents; you agree not to use the
Marks; you or your transferee agrees to any
refurbishment or remodel that we require; you have
sufficient term under the Franchise Agreement, or the
transferee has agree to purchase from us sufficient
additional term under the Franchise Agreement, to
meet our standard for transfers; you and transferee use
a licensed escrow professional to conduct the closing
of the transfer; and you comply with any other
conditions we reasonably require; See also “17.r.”
below.
n.
Our right of first refusal to
acquire your business
Section 12.5
We can match any offer for your business or for a
controlling interest in you; see also “17.r.” below.
o.
Our option to purchase your
business
Section 14.5 and Article 16
We have the right, at our option, to purchase your
Store upon termination of Franchise Agreement unless
we are in default. Under the security agreement
contained in Article 16 of the Franchise Agreement,
we can foreclose and acquire the assets of your Store if
you default.
p.
Your death or disability
Section 12.6
Your successor must transfer your interest in the
Franchise Agreement or your controlling interest in an
entity developer within 12 months, to a transferee
approved by us.
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Provision
Section in
Franchise or Other
Agreement(1)
Summary(1)
q.
Non-competition covenants
during the term of the
franchise
Sections 11.1, 11.3,
11.4 and 18.1;
Section 10 of Other
Concepts Addendum
Traditional Stores: No interest in or services for a
competitive business; no solicitation of employees.
Other Concepts Stores: No interest or services for a
competitive business operated at your Other Concepts
Store premises.
r.
after the franchise is
terminated or expires
Sections 11.2, 11.3, 11.4,
12.3(j), 12.5(c) and 18.1;
Section 11 of Other
Concepts Addendum
Traditional Stores: No interest in or services for a
competitive business within 10 miles of your Store or
10 miles of any TCBY Store, for 2 years, if we don’t
purchase your Store (see “17.o.” above) or for 3 years,
if we do purchase your Store (including after a transfer
or exercise of your right of first refusal, for a 3 year
period). Other Concepts Stores: No interest in or
services for a competitive business operated at the
premises where your Other Concepts Store was
operated.
s.
Modification of the
agreement
Sections 11.4, 18.1, 18.2 and
18.8
Subject to automatic modification to conform to
mandatory provisions of applicable law. Other
modifications require mutual consent.
t.
Integration/merger clause
Section 18.15; Section 10 of
Assignment, Assumption
and Consent; Section 12 of
Only the terms of Franchise Agreement, Assignment,
Assumption and Consent, and Confidentiality
Agreement, are binding (subject to federal and state
law). Any other promises may not be enforceable.
Nothing in the Franchise Agreement or any related
agreement is intended to disclaim the representations
we made in this disclosure document.
u.
Dispute resolution by
arbitration or mediation
Not applicable
v.
Choice of forum
Section 17.5
Disputes must be conducted in the State of Colorado
(subject to state law)
Section 17.4
Colorado law applies to Franchise Agreement and
Confidentiality Agreement, unless governed by
applicable federal or state law.
w. Choice of law
(1) Unless otherwise noted, Section references and summaries are to the Franchise Agreement.
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THE FRANCHISE RELATIONSHIP
AREA DIRECTORS
This table lists certain important provisions of the franchise and related agreements. You should read
these provisions in the agreements attached to this disclosure document.
Provision
Section in
Area Director or Other
Agreement(2)
Summary(2)
a.
Length of the franchise term
Section 16.1
5 years
b.
Renewal or extension of the
term
Section 16.2
You have the right to renew for 1 additional 5-year
term if you are not in default.
c.
Requirements for you to
renew or extend
Section 16.2
Give 60 days prior notice; sign then current Area
Director Agreement (which may contain materially
different terms and conditions than your original Area
Director Agreement); be in compliance with all
provisions of your original Area Director Agreement;
execute a general release, if permitted under state law;
agree to new Development Quota.
d.
Termination by you
Section 17.1
Upon 90 days written notice if we are unable to
provide registered and effective FDDs that allow you
to sell within your Territory for more than 90
consecutive days; you have the right to terminate if we
breach the Agreement and fail to cure the breach
within 90 days.
e.
Termination by us without
cause
Not applicable.
Not applicable.
f.
Termination by us with
cause
Section 17.2
We can terminate if you: fail to complete training;
intentionally make any material misrepresentation or
omission in your application; fail to comply with
federal and state franchise laws; fail to meet your
Development Quota; fail to comply with any provision
of your Area Director Agreement; surrender control or
fail to actively operate your business; convicted of a
felony or other crime as we determine; declare or are
adjudicated bankrupt or insolvent; abandon or cease to
operate your business for 30 consecutive days; receive
3 notices of default within a 12 month period; fail to
pay any amounts due to us within 30 days’ notice.
g.
“Cause” defined - curable
defaults
Sections 17.2
Curable defaults: (1) you have 90 days to cure failure
to meet your Development Quota (or 180 days if the
default is for the cumulative number of Stores to be
open and in operation in your Territory); (2) you have
30 days to cure failure to make payments; and (3) you
have 30 days to cure any other default of Area Director
Agreement or any other agreement with us or an
affiliate not listed above or in “17.h.” below.
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Provision
Section in
Agreement(2)
Summary(2)
h.
“Cause” defined – noncurable defaults
Sections 17.2
Non-curable defaults:
(1) bankruptcy or other insolvency events;
(2) unauthorized transfers; (3) material misstatements
or omissions; (4) you are convicted or plead no contest
to a felony; (5) you engage in detrimental conduct;
(6) abandonment of or failure to actively operate your
business; (7) repeated defaults, even if cured;
(8) failure to satisfactorily complete training; (9)
failure to comply with requirements under federal and
state franchise laws.
i.
Your obligations on
termination/non-renewal
Section 17.3
Pay all amounts due, including any late charges and
interest; refrain from identifying yourself as our
current area director; immediately deliver to us all past
and present franchise sales leads, records, contracts,
acknowledgments of receipt and other information and
records related to franchisees; immediately deliver all
advertising materials, manuals, forms, FDDs, sales
brochures and other materials displaying the TCBY
Marks; refrain from communicating with franchisees;
cancel all fictitious or assumed name or equivalent
registrations; furnish within 30 days proof of
compliance with the foregoing obligations; and
continue to honor and be bound by general provisions;
see also “17.r.” below.
j.
Assignment of contract by
us
Section 15.1
No restriction on our right to transfer or assign.
k.
“Transfer” by you - defined
Section 15.2
Includes the voluntary, involuntary, direct, or indirect
assignment, sale, subfranchise, gift or other disposition
of any interest in the Area Director Agreement, the
ownership of the Area Director, Stores operated by the
Area Director, or assets of the Area Director business.
l.
Our approval of transfer by
you
Sections 15.3, 15.4 and 15.5
We have the right to approve all transfers but will not
unreasonably withhold approval if specified
requirements are met.
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Provision
Section in
Agreement(2)
Summary(2)
m. Conditions for our approval
of transfer
Section 15.3
You are in full compliance with your Area Director
Agreement; transferee has sufficient business
experience, aptitude and financial resources and agrees
to be bound by the Area Director Agreement;
transferee has completed our training program to our
satisfaction and paid a reasonable training fee; you
have paid all amounts owed to us, our affiliates and
third party creditors and submitted all required reports
and statements; you or your transferee has paid a
transfer fee to us; you execute a general release, where
permitted under state law; transferee signs an
assumption of your obligations or a current Area
Director Agreement; we approve the material terms
and conditions of the transfer; you agree that all
obligations of the transferee under any promissory
note, agreement or security interest will be subordinate
to transferee’s obligation to pay amounts due to us
(where applicable); you execute a noncompetition
covenant; and you comply with any other conditions
we reasonably require; See also “17.r.” below.
n.
Our right of first refusal to
acquire your business
Section 15.7
We can match any offer for your business or for a
controlling interest in you; see also “17.r.” below.
o.
Our option to purchase your
business
Section 15.7
We have the right of first refusal to acquire your
business. See “17.n” above.
p.
Your death or disability
Section 12.6
Your personal representative must transfer your
interest in the Area Director Agreement or your entity
within 6 months, to a transferee approved by us.
q.
during the term of the
franchise
Section 12
You may not: have an interest in a competitive
business, perform services for a competitive business,
divert or attempt to divert business to a competitive
business, solicit or employ an employee of us or our
affiliates.
r.
after the franchise is
terminated or expires
Section17.5
No interest in a competitive business in your territory
within 2 years.
s.
Modification of the
agreement
Subject to automatic modification to conform to
mandatory provisions of applicable law. Other
modifications require mutual consent.
t.
Integration/merger clause
Section 20.11
Only the terms of the Area Director Agreement and its
attachments are binding (subject to federal and state
law). Any other promises may not be enforceable.
Any representations or promises outside of the
disclosure document and Area Director Agreement
may not be enforceable.
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Section in
Agreement(2)
Provision
Summary(2)
u.
Dispute resolution by
arbitration or mediation
Section 19.1
You agree to mediate any dispute that does not include
injunctive relief or specific performance actions;
mediator will be agreed to by all parties; you must
participate in good faith; if dispute is not resolved
within 30 days, the parties can pursues legal action.
v.
Choice of forum
Section 19.2
Disputes must be conducted in the State of Colorado
(subject to state law)
Section 19.2
Colorado law applies to Franchise Agreement and
Confidentiality Agreement, unless governed by
applicable federal or state law.
w. Choice of law
(2)
Unless otherwise noted, Section references and summaries are to the Area Director Agreement.
ITEM 18. PUBLIC FIGURES
We do not use any public figure to promote our Franchise.
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 if 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 possible performance at a particular location or under
particular circumstances.
The financial representations in this Item 19 apply only to Self-Serve Stores.
The following represents the actual average sales, and these numbers are based on the actual historical
performance of TCBY Self-Serve Stores that were open for all 52 weeks of 2013, that operate under the standard
Self-Serve model presented in this FDD, and reported a full 52 weeks of sales. 59 locations that were either nonstandard locations or did not report a full 52 weeks of sales were excluded because they would not be indicative
of the standard Self-Serve Store operations. The remaining 89 stores are represented in table 1 below:
Table 1 shows the highest average unit sales volume (“AUV”) for calendar year 2013, as well as the
average AUV for the top 5 Self-Serve Stores and the bottom 5 Self-Serve Stores. Table 2 shows the number of
Stores above and below the average AUV, broken out by geographic area. All numbers in Tables 1 and 2 are
based on the 89 stores represented in Table 1 that operate under the standard Self-Serve model presented in this
FDD and that reported a full 52 weeks of sales. Some Self-Serve Stores have sold this amount. Your individual
results may differ. There is no assurance you’ll sell as much. The characteristics of the Self-Serve Stores
included below do not differ materially from the Self-Serve Stores that may be offered to prospective franchisees.
TCBY FDD 03/2014
55
Table 1
AUV
Top/bottom 5 Average
High Sales
$601,144
$563,715 (top 5)
Average Sales
$287,608
Low Sales
$93,922
$136,260 (bottom 5)
Table 2
Total Store Count
East Stores
(Note 1)
West Stores
(Note 1)
Stores above average
37
27
10
Stores below average
52
32
20
Total Stores
89
59
30
Note 1: Self-Serve Stores are divided into two geographic areas—East and West. The “East” area includes stores
in the following states: Connecticut, Florida, Georgia, Illinois, Maryland, Michigan, Mississippi, New Jersey,
New York, North Carolina, Pennsylvania, South Carolina, Tennessee, and Virginia. The “West” area includes
stores in the following states: Arkansas, California, Colorado, Louisiana, Oregon, Texas, Utah, and Washington.
The earnings figures in Tables 1and 2 may be different than the figures you will realize in operating your
Self-Serve Store. You should conduct an independent investigation of the costs and expenses you will incur in
operating your Self-Serve Store. Franchisees or former franchisees listed in the offering circular may be one
source of this information.
Bases and Assumptions
As of December 2013, there are a total of 148 Self-Serve Stores and 345 total Self-Serve and Full-Service
Stores combined. We compiled the quartile AUV numbers provided in Tables 1 and 2 from the unaudited sales
reports submitted to us by our Self-Serve store franchisees, as complied for the 2013 year.
There are 89 Self-Serve Stores represented in Tables 1 and 2 above. This represents 60% of the 148 SelfServe Stores and 26% of the total 345 locations open as of year-end 2013.
The market where your Self-Serve store is located may be in a different type of market. Accordingly, the
results achieved by these franchisees may not be typical for those in your area. Written substantiation for the
financial performance representation will be made available to the prospective franchisee upon reasonable
request.
Some Self-Serve Stores have sold this amount. Your individual results may differ.
The financial representations in this Item 19 apply only to Self-Serve Stores. Other than for Self-Serve
Stores, TCBY does not make any financial performance representations. We also do not authorize our employees
or representatives to make any such representations either orally or in writing. If you are purchasing an existing
outlet, however, we may provide you with the actual records of the outlet. If you receive any other financial
performance information or projections of your future income, you should report it to the franchisor’s
TCBY FDD 03/2014
56
management by contacting Michael Chao, CFO, 8001 Arista Place, Suite 600, Broomfield, CO 80021, (720) 5993384, the Federal Trade Commission, and the appropriate state regulatory agencies.
ITEM 20. OUTLETS AND FRANCHISEE INFORMATION
STORE FRANCHISES
TABLE NUMBER 1
Systemwide Store Summary (1)
For Years 2011 to 2013
Store Type
2011
Stores at the Start
of the Year
347
Stores at the End
of the Year
341
2012
341
343
Year
Franchised
Company-Owned
Total
Net Change
-6
+2
(2)
2013
2011
2012
2013
2011
343
2
2
2
349
2
2
1
343
+2
0
0
-1
-6
2012
2013
343
345
345
346
+2
+1
345
(1)
More than 30 TCBY stores co brand with Mrs. Fields.
More than 25 TCBY locations within Subway stores.
More than 50 TCBY locations within various gas station/convenience marts.
(2)
Includes TCBYP Smoothie location store #9384201 which is still Temporarily closed from 2012.
TABLE NUMBER 2
Transfers of Stores From Franchisee to New Owners (Other than the Franchisor)
State
Arizona
California
Delaware
Florida
TCBY FDD 03/2014
Year
2011
Number of Transfers
1
2012
0
2013
1
2011
1
2012
2
2013
1
2011
0
2012
2
2013
0
2011
2
2012
3
2013
1
57
State
Georgia
Idaho
Illinois
Indiana
Maryland
Michigan
Minnesota
Nebraska
North Carolina
Oregon
Texas
TOTAL
TCBY FDD 03/2014
Year
2011
Number of Transfers
0
2012
0
2013
1
2011
0
2012
0
2013
1
2011
0
2012
0
2013
1
2011
0
2012
0
2013
1
2011
0
2012
0
2013
1
2011
0
2012
0
2013
1
2011
1
2012
0
2013
0
2011
1
2012
0
2013
0
2011
0
2012
2
2013
1
2011
0
2012
1
2013
0
2011
1
2012
1
2013
4
2011
7
2012
11
2013
14
58
TABLE NUMBER 3
Status of Franchised Stores 1
Ceased
Reacquired
Stores at the
Operations /
by
End of the
Other
Franchisor
Year (1)
Reasons
State
Year
Stores at the
Start of the
Year(1)
Alabama
2011
13
0
0
0
0
0
13
2012
13
0
0
0
0
4
9
2013
9
1
0
0
0
0
10
2011
7
0
0
0
0
2
5
2012
5
0
0
0
0
3
2
2013
2
2
0
0
0
0
4
2011
5
2
0
0
0
0
7
2012
7
1
0
0
0
0
8
2013
8
0
0
0
0
2
6
2011
32
0
0
3
0
7
22
2012
22
1
0
0
0
3
20
2013
20
2
0
0
0
3
19
2011
7
5
0
0
0
1
11
2012
11
4
0
0
0
2
13
2013
13
3
0
0
0
2
14
2011
0
2
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
1
0
0
0
1
2
2011
4
0
0
0
0
0
4
2012
4
0
0
0
0
0
4
2013
4
0
0
0
0
0
4
2011
20
10
0
0
0
3
27
2012
27
5
0
0
0
6
26
2013
26
2
0
0
0
4
24
2011
10
1
0
1
0
1
9
2012
9
1
0
0
0
2
8
2013
8
0
0
0
0
2
6
2011
2
0
0
0
0
1
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
7
0
0
1
0
0
6
2012
6
0
0
0
0
1
5
2013
5
0
0
0
0
0
5
2011
7
2
0
0
0
0
9
2012
9
5
0
0
0
0
14
2013
14
6
0
0
0
1
19
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
TCBY FDD 03/2014
Stores
Opened
Terminations
NonRenewals
59
Ceased
Reacquired
Stores at the
Operations /
by
End of the
Other
Franchisor
Year (1)
Reasons
0
0
4
State
Year
Stores at the
Start of the
Year(1)
Indiana
2011
4
0
0
0
2012
4
1
0
0
0
1
4
2013
4
1
0
0
0
0
5
2011
2
1
0
0
0
0
3
2012
3
0
0
0
0
2
1
2013
1
0
0
0
0
0
1
2011
4
0
0
1
0
0
3
2012
3
1
0
0
0
1
3
2013
3
0
0
0
0
0
3
2011
13
2
1
0
0
2
12
2012
12
1
0
0
0
1
12
2013
12
0
0
0
0
2
10
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
1
0
2011
6
3
0
0
0
0
9
2012
9
0
0
0
0
1
8
2013
8
1
0
0
0
1
8
2011
2
0
0
0
0
1
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
9
0
0
0
0
0
9
2012
9
0
0
0
0
0
9
2013
9
0
0
0
0
1
8
2011
4
0
0
0
0
0
4
2012
4
0
0
0
0
1
3
2013
3
1
0
0
0
0
4
2011
4
1
0
0
0
0
5
2012
5
0
0
0
0
0
5
2013
5
1
0
0
0
0
6
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
1
1
2013
1
0
0
0
0
0
1
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
6
0
0
0
0
0
6
2012
6
1
0
0
0
1
6
2013
6
1
0
0
0
1
6
Iowa
Kansas
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
TCBY FDD 03/2014
Stores
Opened
Terminations
NonRenewals
60
Ceased
Reacquired
Stores at the
Operations /
by
End of the
Other
Franchisor
Year (1)
Reasons
0
1
3
State
Year
Stores at the
Start of the
Year(1)
Nevada
2011
4
0
0
0
2012
3
0
0
0
0
0
3
2013
3
0
0
0
0
1
2
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
1
0
0
0
1
2
2011
9
1
0
0
0
1
9
2012
9
1
0
0
0
2
8
2013
8
2
0
0
0
3
7
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
0
0
0
0
0
2
2011
23
1
0
2
0
1
21
2012
21
4
0
0
0
3
22
2013
22
4
0
0
0
3
23
2011
22
6
0
0
0
3
25
2012
25
7
0
0
0
3
29
2013
29
5
0
0
0
1
33
2011
5
0
0
1
0
0
4
2012
4
1
0
0
0
1
4
2013
4
0
0
0
0
0
4
2011
2
0
0
0
0
1
1
2012
1
0
0
0
0
1
0
2013
0
0
0
0
0
0
0
2011
3
0
0
1
0
1
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
1
0
2011
6
2
0
0
0
1
7
2012
7
0
0
0
0
0
7
2013
7
0
0
0
0
0
7
2011
11
1
0
0
0
6
6
2012
6
1
0
0
0
0
7
2013
7
3
0
0
0
0
10
2011
12
2
0
0
0
0
14
2012
14
2
0
0
0
1
15
2013
15
2
0
0
0
3
14
New
Hampshire
New Jersey
New Mexico
New York
North
Carolina
North
Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South
Carolina
TCBY FDD 03/2014
Stores
Opened
Terminations
NonRenewals
61
Ceased
Reacquired
Stores at the
Operations /
by
End of the
Other
Franchisor
Year (1)
Reasons
0
0
1
State
Year
Stores at the
Start of the
Year(1)
South Dakota
2011
2
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
20
2
0
0
0
3
19
2012
19
0
0
0
0
1
18
2013
18
0
0
0
0
1
17
2011
23
5
0
4
0
0
24
2012
24
13
0
0
0
3
34
2013
34
0
0
0
0
3
31
2011
6
0
0
0
0
2
4
2012
4
0
0
0
0
2
2
2013
2
1
0
0
0
1
2
2011
8
0
0
1
0
0
7
2012
7
1
0
0
0
2
6
2013
6
0
0
0
0
1
5
2011
5
1
0
0
0
1
5
2012
5
2
0
0
0
1
6
2013
6
4
0
0
0
0
10
2011
3
0
0
0
0
0
3
2012
3
0
0
0
0
1
2
2013
2
0
0
0
0
1
1
2011
2
0
0
0
0
0
2
2012
2
1
0
0
0
0
3
2013
3
0
0
0
0
0
3
2011
5
0
0
0
0
0
5
2012
5
0
0
0
0
1
4
2013
4
0
0
0
0
1
3
2011
347
50
1
16
0
39
341
2012
341
54
0
0
0
52
343
2013
343
44
0
0
0
42
345
Tennessee
Texas
Utah
Virginia
Washington
West
Virginia
Wisconsin
Wyoming
TOTAL
(1)
Stores
Opened
Terminations
NonRenewals
Notes stores that are closed temporarily as open. There are 7 TCBY Stores that are temporarily closed for
2013, all of which are TCBY Traditional locations except 1 TCBY Public location.
TCBY FDD 03/2014
62
TABLE NUMBER 4
Status of Company-Owned Stores (1)
Stores
Reacquired
From
Franchisees
Stores
Closed
State
Year
Colorado
2011
0
0
0
0
0
0
2012
0
0
0
0
0
0
2013
0
1
0
0
0
1
2011
2
0
0
0
0
2
2012
2
0
0
0
0
2
2013
2
0
0
0
2
0
2011
2
0
0
0
0
2
2012
2
0
0
0
0
2
2013
2
1
0
0
2
1
Utah
TOTAL
(1)
Stores
Opened
Stores at the
Start of the
Year
Stores Sold Stores at the
to
End of the
Franchisees
Year
This table includes Self-Serve Stores owned and operated by us or MFFB, our affiliate. It does not
include any locations owned by any other entity.
TABLE NUMBER 5
Projected Openings
As of December 28, 2013
California
Franchise Agreements
Signed But Store Not
Opened
3
Colorado
2
2
0
Connecticut
0
3
0
Florida
2
4
0
Illinois
3
4
0
Indiana
0
2
0
Kansas
0
2
0
Maryland
1
4
0
Nebraska
1
2
0
Nevada
0
4
0
New Hampshire
0
1
0
New Jersey
2
2
0
New York
2
4
0
North Carolina
3
4
0
Pennsylvania
0
2
0
South Carolina
2
4
0
State
TCBY FDD 03/2014
Projected New Franchised Projected New CompanyStores in the Next Fiscal
Owned Stores in the
Year
Current Fiscal Year
5
0
63
State
Texas
Franchise Agreements
Signed But Store Not
Opened
9
Washington
TOTAL
Projected New Franchised Projected New CompanyStores in the Next Fiscal
Owned Stores in the
Year
Current Fiscal Year
6
0
7
5
0
37
60
0
AREA DIRECTOR BUSINESSES
TABLE NUMBER 1
System Wide Business Summary(1)
2011
2012
Businesses at the
Start of the Year
3
6
Businesses at the
End of the Year
6
7
2013
7
7
0
2011
2012
0
0
0
0
0
0
2013
0
0
0
2011
2012
(2)
(2)
Business Type
Year
Franchised
Company-Owned
Total Businesses
2013
3
6(2)
72
6
7(2)
72
Net Change
+3
+1
+3(2)
+1(2)
0
(1)
The numbers throughout these Item 20 tables are as of December 28, 2013, December 29, 2012, and
December 31, 2011.
(2)
The table reflects 5 Area Director Businesses, operated under 5 Area Director Agreements, 3 of which
operate in 2 separate Area Director Territories. We list 6 Businesses in 2011 and 7 Businesses in 2012 in
the table to be consistent with Table 3 below, which breaks out the Businesses into separate states.
TABLE NUMBER 2
Transfers of Businesses from Area Directors to New Owners
(Other than the Franchisor)
For years 2011 to 2013
TCBY FDD 03/2014
State
Year
TOTAL
2011
2012
2013
Number of
Transfers
0
0
0
64
TABLE NUMBER 3
Status of Area Director Businesses
State
Year
Businesses
at Start of
Year
Hawaii(1)
2011
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
1(1)
1(1)
1(1)
1(1)
1(1)
1(1)
1
1
1
0
1
2(1)
0
0
1(1)
0
1(1)
1(1)
0
1(1)
1(1)
3
6
7(1)
Washington(1)
Texas
Colorado(1)
Wyoming(1)
North
Carolina(1)
South
Carolina(1)
Total
(1)
Businesses
Opened
Terminated
NonRenewals
Reacquired by
Franchisor
Ceased
Operations
Other
Reasons
Businesses
at End of
Year
0
0
0
0
0
0
0
0
0
1
1(1)
0
0
1(1)
0
1(1)
0
0
1(1)
0
0
3(1)
1(1)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1(1)
1(1)
1(1)
1(1)
1(1)
1(1)
1
1
1
1
2(1)
2(1)
0
1(1)
1(1)
1(1)
1(1)
1(1)
1(1)
1(1)
1(1)
61)
7(1)
7(1)
This table includes 3 Area Director Businesses operated in 6 Area Director Territories (Hawaii and
Washington, North Carolina and South Carolina, Colorado and Wyoming) each under a single Area
Director Agreement. There are a total of 7 separate Area Director Businesses operated under 5 Area
Director Agreements in 7 states.
TABLE NUMBER 4
Status of Company-Owned Businesses
State
Year
Businesses
at Start of
Year
TOTALS
2011
2012
2013
0
0
0
TCBY FDD 03/2014
Businesses
Opened
0
0
0
Businesses
Reacquired
from
Franchisee
0
0
0
Businesses
Closed
Businesses
Sold to
Franchisee
Businesses at
End of the
Year
0
0
0
0
0
0
0
0
0
65
TABLE NUMBER 5
Projected Openings
Area Director
Agreements Signed But
Business Not Opened
Projected New Area
Director Businesses In
The Next Fiscal Year
Projected New
Company-Owned
Businesses In The Next
Fiscal Year
Virginia
0
1
0
Pennsylvania
0
1
0
Florida
0
1
0
Ohio
0
1
0
TOTAL
0
4
0
State
Attached as Exhibit K, Part 1 are the names, address and telephone numbers of all TCBY franchisees as
of December 28, 2013; Exhibit K, Part 2 are the city, state, business telephone number (and if unknown, last
known home telephone number) of every franchisee who had an agreement terminated, not renewed, reacquired
or who otherwise voluntarily or involuntarily ceased to do business under the franchise agreement during our
2013 Fiscal Year; and Exhibit K, Part 3 are all franchised locations that were transferred during our 2013 Fiscal
Year. No franchisee has failed to communicate with the Company within 10 weeks of the issuance date of this
disclosure document. Names of and contact information for our Area Directors, as of December 28, 2013, are set
forth in Exhibit K, Part 4.
If you buy a TCBY Store franchise, your contact information may be disclosed to other buyers when you
leave the TCBY franchise system.
During the last 3 fiscal years, franchisees have signed confidentiality clauses. In some instances, current
and former franchisees sign provisions restricting their ability to speak openly about their experience with the
TCBY franchise system. You may wish to speak with current and former franchisees, but be aware that not all
such franchisees will be able to communicate with you.
THE COUNTRY’S BEST YOGURT FRANCHISEE ASSOCIATION (the “Association”) is an
independent association of franchisees of the TCBY system. We recognize the Association and regularly consult
with its leadership on a wide range of matters that affect the TCBY system.
The contact information for the Association is as follows:
Mailing Address: 620 W. Franklin, Boise, ID 83702
Telephone: 208-384-5010
President
Vice President
Secretary
Treasurer – Advisor
Marketing Committee Chair
Operations Committee Chair
Advisor
Advisor
TCBY FDD 03/2014
Mike Murtaugh
Brian Coury
Hannah Smith
Jim Mowbray
Tommy Douglas
Brandon Hopkins
Greg Forst
Ron Rye
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
66
ITEM 21. FINANCIAL STATEMENTS
Attached as Exhibit L to this disclosure document are: (i) the interim unaudited financial statements for
our affiliate and ultimate parent, MFOC, as of May 24, 2014; and (ii) the consolidated balance sheets of our
affiliate and ultimate parent, MFOC, as of December 28, 2013, December 29, 2012, and December 31, 2011 and
the related consolidated statements of operations and comprehensive loss, stockholders’ deficit and cash flows for
the year ended December 28, 2013, December 29, 2012, and December 31, 2011, together with the Independent
Auditors’ Report.
Separate stand-alone financial statements of us (TCBY Systems, LLC) are not included in this disclosure
document. Should we fail to fulfill our obligations to our franchisees, however, MFOC absolutely and
unconditionally guarantees to fulfill those obligations. A copy of the written guarantee is attached as Exhibit M.
ITEM 22. CONTRACTS
The following agreements proposed for use regarding the offering of a TCBY Franchise are attached to
this disclosure document:
Exhibit B Exhibit C Exhibit E Exhibit F Exhibit G Exhibit H Exhibit J Exhibit N Exhibit O -
Franchise Agreement (with Schedules and Exhibits)
Area Director Agreement (with Exhibits)
Term Purchase Addendum
Sublease Agreement; Assignment and Assumption of Sublease
Lease Addendum
Assignment, Assumption and Consent
Renewal Addendum to Franchise Agreement; Other Concepts Renewal
Addendum to Franchise Agreement
ITEM 23. RECEIPTS
The last two pages of this disclosure document are copies of a detachable acknowledgment of receipt.
Please sign and return to us our copy of the receipt (Copy for TCBY Systems, LLC), and sign and retain for your
records your copy of the receipt (Copy for Prospective Franchisee).
TCBY FDD 03/2014
67
EXHIBIT A
LIST OF STATE ADMINISTRATORS AND
AGENTS FOR SERVICE OF PROCESS
TCBY FDD 03/2014
EXHIBIT A: List of State Administrators
STATE
STATE ADMINISTRATOR/AGENT
ADDRESS
California
CA Commissioner, Department of Business
Oversight
320 West 4th Street, Suite 750
Los Angeles, CA 90013-2344
Hawaii
(State
Administrator)
Commissioner of Securities
Dept. of Commerce and Consumer Affairs
Business Registration Division
Securities Compliance Branch
Illinois Attorney General
335 Merchant Street
Room 203
Honolulu, HI 96813
Indiana
(State
Administrator)
Indiana
(Agent)
Indiana Securities Commissioner
Securities Division
302 West Washington Street, Room E111
Indianapolis, IN 46204
Indiana Secretary of State
302 West Washington Street, Room E018
Indianapolis, IN 46204
Maryland
(State
Administrator)
Maryland
(Agent)
Office of the Attorney General
Division of Securities
200 St. Paul Place
Baltimore, MD 21202-2020
Maryland Securities Commissioner
200 St. Paul Place
Baltimore, MD 21202-2020
Michigan
Michigan Department of Attorney General
Consumer Protection Division
Williams Building, 7th Floor
525 West Ottawa Street
Lansing, MI 48909
Minnesota
Commissioner of Commerce
Minnesota Department of Commerce
85 7th Place East, Suite 500
St. Paul, MN 55101-2198
New York
(State
Administrator)
New York
(Agent)
New York State Department of Law
Bureau of Investor Protection and Securities
120 Broadway, 23rd Floor
New York, NY 10271
Secretary of State of the State of New York
41 State Street, Second Floor
Albany, NY 12231
North Dakota
Securities Commissioner
600 East Boulevard Avenue, Fifth Floor
Bismarck, ND 58505-0510
Rhode Island
Director, Department of Business Regulation,
Securities Division
1511 Pontiac Avenue
John O. Pastore Complex – Building 69-1
Cranston, RI 02920
South Dakota
Director Division of Securities
445 East Capitol Avenue
Pierre, SD 57501
Virginia
(State
Administrator)
Virginia
(Agent)
Washington
Virginia State Corporation Commission
Division of Securities and Retail
1300 East Main Street, 9th Floor
Richmond, VA 23219-3630
Clerk of the State Corporation Commission
1300 East Main Street, 1st Floor
Richmond, VA 23219-3630
150 Israel Road SW
Tumwater, WA 98501
Department of Financial Institutions
345 W. Washington Ave., 4th Floor
Madison, WI 53703
Illinois
Wisconsin
Department of Financial Institutions
Securities Division
Commissioner of Securities
TCBY FDD 03/2014
EXHIBIT A: List of State Administrators
500 South Second Street
Springfield, IL 62706
1
EXHIBIT B
FRANCHISE AGREEMENT
TCBY FDD 03/2014
EXHIBIT B: Franchise Agreement
[#
]
TCBY®
FRANCHISE AGREEMENT
BETWEEN
TCBY SYSTEMS, LLC
8001 Arista Place
Suite 600
Broomfield, Colorado 80021
(720) 599-3350
AND
___________________________________________
___________________________________________
___________________________________________
Name(s) of Franchisee
___________________________________________
Street
___________________________________________
City
State Zip Code
(___)_______________________________________
Area Code
Telephone
Franchised Store:
____________________________________________
Street
____________________________________________
City
State Zip Code
(___)_______________________________________
Area Code
Telephone
Date of Franchise Agreement
_____________________________________, 20____
TCBY FDD 03/2014
ii
TCBY®
FRANCHISE AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS; PREAMBLES; AND ACKNOWLEDGMENTS ................................ 1
1.1 Date of Agreement .............................................................................................................................................. 1
1.2 Definitions .......................................................................................................................................................... 1
1.3 Preambles ............................................................................................................................................................ 3
ARTICLE 2 - GRANT OF FRANCHISE ................................................................................................ 3
2.1 Franchise ............................................................................................................................................................. 3
2.2 Reservation of Certain Rights ............................................................................................................................. 4
ARTICLE 3 - INITIAL TERM AND RENEWAL.................................................................................. 4
3.1 Initial Term of the Franchise Agreement ............................................................................................................ 4
3.2 Renewal .............................................................................................................................................................. 4
ARTICLE 4 - SITE SELECTION, LEASE OF PREMISES AND DEVELOPMENT OF YOUR
STORE ..................................................................................................................................... 5
4.1
4.2
4.3
4.4
4.5
4.6
4.7
Site Selection ...................................................................................................................................................... 5
Acquisition of the Premises ................................................................................................................................ 6
Franchised Store Development ........................................................................................................................... 7
Fixtures, Furnishings, Equipment, Signs and Computer Systems ...................................................................... 8
Franchised Store Opening ................................................................................................................................... 8
Grand Opening Promotion .................................................................................................................................. 9
Relocation ........................................................................................................................................................... 9
ARTICLE 5 - TRAINING AND GUIDANCE ....................................................................................... 10
5.1
5.2
5.3
5.4
Training............................................................................................................................................................. 10
Operations Manual ............................................................................................................................................ 10
Guidance and Operating Assistance ................................................................................................................. 11
National Conventions and Regional Meetings .................................................................................................. 11
ARTICLE 6 - FEES.................................................................................................................................. 11
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
Initial Franchise Fee.......................................................................................................................................... 11
Continuing Fees ................................................................................................................................................ 12
Yogurt Formulation Charge and YFC Reimbursement .................................................................................... 12
Date and Term of Payment ............................................................................................................................... 12
Payment by Pre-Authorized Bank Transfer ...................................................................................................... 12
Late Fees; Interest on Late Payments ............................................................................................................... 12
Application of Payments ................................................................................................................................... 13
No Right of Offset ............................................................................................................................................ 13
ARTICLE 7 - OBLIGATIONS RELATING TO OPERATIONS ....................................................... 13
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
System Standards .............................................................................................................................................. 13
Performance of Duties and Obligations ............................................................................................................ 13
Restrictions on Operations ................................................................................................................................ 14
Internet Use ....................................................................................................................................................... 14
Our Right to Inspect Your Store ....................................................................................................................... 14
Surveys ............................................................................................................................................................. 14
Entity Owners ................................................................................................................................................... 15
Guaranties by Entity Owners ............................................................................................................................ 15
Insurance ........................................................................................................................................................... 15
TCBY FDD 03/2014
iii
ARTICLE 8 - REPORTS AND RECORD KEEPING ......................................................................... 16
8.1 Accounting, Reports and Financial Statements ................................................................................................ 16
8.2 Retention of Records ........................................................................................................................................ 17
8.3 Our Right to Audit ............................................................................................................................................ 17
ARTICLE 9 - MARKETING AND PROMOTION .............................................................................. 17
9.1
9.2
9.3
9.4
Marketing Fees ................................................................................................................................................. 17
Advertising and Promotional Activities by You ............................................................................................... 18
Our Advertising Materials ................................................................................................................................ 18
Advertising Cooperatives.................................................................................................................................. 19
ARTICLE 10 - USE OF THE MARKS AND CONFIDENTIAL INFORMATION .......................... 19
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
Ownership and Goodwill of Marks ................................................................................................................. 19
Limitations on Your Use of Marks ................................................................................................................. 19
Discontinuance of Use of Marks ..................................................................................................................... 20
Notification of Infringements and Claims....................................................................................................... 20
Our Indemnification of You............................................................................................................................ 20
Copyrights....................................................................................................................................................... 20
Concepts Developed by You .......................................................................................................................... 20
Confidential Information ................................................................................................................................ 20
ARTICLE 11 - COVENANTS NOT TO COMPETE ........................................................................... 21
11.1
11.2
11.3
11.4
In Term Non-Compete .................................................................................................................................... 21
Post Term Non-Compete ................................................................................................................................ 21
Shareholder Exception .................................................................................................................................... 21
Enforcement of Non-Competes ...................................................................................................................... 21
ARTICLE 12 - TRANSFERS .................................................................................................................. 22
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
Transfers by Us ............................................................................................................................................... 22
Restrictions on Transfers by You.................................................................................................................... 22
Conditions for Approval of Transfers by You ................................................................................................ 22
Transfer to a Wholly-Owned Corporation or Limited Liability Company ..................................................... 24
Our Right of First Refusal............................................................................................................................... 24
Death or Permanent Disability ........................................................................................................................ 25
Effect of Consent to Transfer .......................................................................................................................... 25
Preparation of a Financial Report by You....................................................................................................... 25
ARTICLE 13 - DEFAULT AND TERMINATION .............................................................................. 25
13.1
13.2
13.3
13.4
13.5
13.6
Your Defaults .................................................................................................................................................. 25
Our Right to Terminate if You Default ........................................................................................................... 27
Our Right to Terminate if You Fail to Complete Training ............................................................................. 28
Your Right to Terminate if We Default .......................................................................................................... 28
Assumption of Management ........................................................................................................................... 28
Early Termination Damages ........................................................................................................................... 28
ARTICLE 14 - POST TERM OBLIGATIONS ..................................................................................... 29
14.1
14.2
14.3
14.4
14.5
14.6
Reversion of Rights ........................................................................................................................................ 29
Payment of Amounts Owed to Us and Others following Termination or Expiration ..................................... 29
Discontinuance of the Use of the Marks following Termination or Expiration .............................................. 29
Discontinuance of Use of Confidential Information following Termination or Expiration ............................ 30
Our Option to Purchase Franchised Stores ..................................................................................................... 30
Continuing Obligations ................................................................................................................................... 31
ARTICLE 15 - RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.................................. 31
15.1
15.2
15.3
15.4
15.5
Independent Contractors ................................................................................................................................. 31
No Liability for the Act of Other Party ........................................................................................................... 31
Your Control ................................................................................................................................................... 32
Our Approval and Enforcement ...................................................................................................................... 32
Taxes ............................................................................................................................................................... 32
TCBY FDD 03/2014
iv
15.6 Indemnification ............................................................................................................................................... 32
15.7 Waiver of Claims ............................................................................................................................................ 32
ARTICLE 16 - SECURITY AGREEMENT .......................................................................................... 32
16.1 Security Interest .............................................................................................................................................. 32
16.2 Requirements .................................................................................................................................................. 33
ARTICLE 17 - DISPUTE RESOLUTION............................................................................................. 33
17.1
17.2
17.3
17.4
17.5
17.6
17.7
Injunctive Relief ............................................................................................................................................. 33
Rights of Parties Are Cumulative ................................................................................................................... 33
Costs and Attorneys’ Fees .............................................................................................................................. 33
Governing Law ............................................................................................................................................... 33
Consent to Jurisdiction.................................................................................................................................... 34
Waiver of Punitive Damages and Jury Trial ................................................................................................... 34
Limitation of Claims ....................................................................................................................................... 34
ARTICLE 18 - GENERAL PROVISIONS ............................................................................................ 34
18.1 Severability ..................................................................................................................................................... 34
18.2 Rights Provided by Law.................................................................................................................................. 34
18.3 Waivers by Either of Us .................................................................................................................................. 35
18.4 Certain Acts Not to Constitute Waivers .......................................................................................................... 35
18.5 Excusable Non-Performance .......................................................................................................................... 35
18.6 Interpretation of Rights and Obligations ......................................................................................................... 35
18.7 Notice of Potential Profit to Us ....................................................................................................................... 36
18.8 Binding Effect ................................................................................................................................................. 36
18.9 No Third Party Beneficiaries .......................................................................................................................... 36
18.10 Approvals ...................................................................................................................................................... 36
18.11 Headings ....................................................................................................................................................... 36
18.12 Joint and Several Liability ............................................................................................................................ 36
18.13 Counterparts .................................................................................................................................................. 36
18.14 Notices and Payments ................................................................................................................................... 36
18.15 Entire Agreement .......................................................................................................................................... 37
SCHEDULE 1 – YOGURT FORMULATION CHARGE REIMBURSEMENT .............................. 38
ACKNOWLEDGEMENT ADDENDUM TO TCBY® FRANCHISE AGREEMENT ..................... 40
OWNERSHIP ADDENDUM TO TCBY® FRANCHISE AGREEMENT ......................................... 42
GUARANTY ............................................................................................................................................. 43
APPENDIX A – STORE PREMISES; START DATE ......................................................................... 45
ALTERNATIVE APPENDIX A – STORE PREMISES; START DATE ........................................... 46
APPENDIX B – AUTHORIZATION AGREEMENT FOR PREARRANGED PAYMENTS
(DIRECT DEPOSIT) ............................................................................................................ 47
TCBY FDD 03/2014
v
TCBY® FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT (the “Agreement”) is between TCBY SYSTEMS, LLC, a
Delaware limited liability company, with its principal business address at 8001 Arista Place, Suite 600,
Broomfield, Colorado 80021 (referred to in this Agreement as “we” and like terms), and
___________________________________________________________________________________,
a
_________________________________________________,
whose
principal
business
address
is
_______________________________________ (referred to in this Agreement as “you” and like terms).
OUR AGREEMENT WITH YOU: By signing this Agreement, you and we agree to all of the terms
and provisions in this Agreement and in any exhibits, addenda and appendices to this Agreement. By signing this
Agreement, you are also affirming that you understand and accept the Preambles in Article 1 of this Agreement.
Finally, by signing the Acknowledgment Addendum attached hereto, you are affirming that you understand and
accept all of the acknowledgments and representations contained therein.
ARTICLE 1
DEFINITIONS; PREAMBLES; AND ACKNOWLEDGMENTS
1.1
Date of Agreement. The date of this Agreement is ___________, 20__.
1.2
Definitions.
(a)
“Active Entity Owner” means, with respect to an Entity, either: (i) any Entity Owner
involved in the ongoing decision making of the entity and operations of the Store (i.e., manager or
operator, regardless of the actual percentage of ownership) rather than a passive interest investor in the
Entity; or (ii) any shareholder owning directly or beneficially twenty percent (20%) or more of any class
of securities of the Entity, any partner in a limited liability partnership or member in a limited liability
company owning directly or beneficially twenty percent (20%) or more ownership interests in the limited
liability partnership or limited liability company, or any beneficiary of a trust or estate owning, directly or
beneficially, a twenty percent (20%) or more interest in the trust or estate. If any Active Entity Owner
within the scope of this definition is itself an Entity, the term “Active Entity Owner” also includes Active
Entity Owners (as defined in the preceding sentence) in the Entity. It is the intent of this definition to
“trace back” and include within the definition of Active Entity Owner all natural persons owning the
requisite interests to qualify as Active Entity Owners.
(b)
“Affiliate,” as used in relation to us, means any person or entity that directly or indirectly
owns or controls us, is directly or indirectly owned or controlled by us or is under common control with
us, now or in the future; and as used in relation to you, means any person or entity that directly or
indirectly owns or controls you, is directly or indirectly owned or controlled by you or is under common
control with you, now or in the future.
(c)
“Competitive Business” means any business operating or granting franchises or licenses
to others to operate, a restaurant or retail outlet or any similar food service business selling or offering
fresh or frozen yogurt, smoothies or similar items, except for an existing restaurant or retail outlet or
similar food service business selling or offering such products owned and operated by you, which has
been disclosed to us in writing prior to execution of this Agreement or a restaurant or retail outlet or
similar food service business selling or offering such products as an incidental part of its operations. For
purposes of this definition, “incidental” shall be defined as less than ten percent (10%) of gross sales.
(d)
“Confidential Information” means any information relating to the TCBY Products or
the development or operation of TCBY Stores, including site selection criteria; recipes and methods for
TCBY FDD 03/2014
the preparation of TCBY Products; methods, techniques, formats, standards, specifications, systems,
procedures, sales and marketing techniques and knowledge of and experience in the development and
operation of TCBY Stores; marketing programs for TCBY Stores; knowledge of specifications for and
suppliers of certain TCBY Products, materials, supplies, equipment, furnishings and fixtures; and
knowledge of the operating results and financial performance of TCBY Stores other than the Franchised
Store.
(e)
“Controlling Interest” means an interest, the ownership of which empowers the holder
to exercise a material influence over the management, policies or personnel of an Entity. Ownership of
10% or more of the equity or voting securities of a corporation, limited liability company or limited
liability partnership or ownership of any general partnership interest in a general or limited partnership
will be deemed conclusively to constitute a Controlling Interest in the corporation, limited liability
company, or partnership, as the case may be.
(f)
“Entity” means a corporation, general partnership, joint venture, limited partnership,
limited liability partnership, limited liability company, trust, estate or other business entity.
(g)
“Entity Owner” means, with respect to an Entity, any shareholder owning directly or
beneficially any class of securities of the Entity; any general partner or co-venturer in the Entity; any
partner in a limited liability partnership or member in a limited liability company owning directly or
beneficially an ownership interests in the limited liability partnership or limited liability company; the
trustees or administrators of any trust or estate; and any beneficiary of a trust or estate owning, directly or
beneficially, an interest in the trust or estate.
(h)
“Gross Revenues” means the aggregate amount of all sales of TCBY Products, other
items, and services made and rendered in connection with the operation of the Franchised Store (as
defined in Section 2.1(a)), including sales made at or away from the Premises of your Store, whether for
cash or credit, but excluding all federal, state or municipal sales, use, or service taxes collected from
customers and paid to the appropriate taxing authority.
(i)
“Marks” means the trademarks, trade names, service marks, logos and other commercial
symbols which we authorize franchisees to use to identify the TCBY Products and/or services offered by
TCBY Stores, including the trademarks and service marks TCBY® and THE COUNTRY’S BEST
YOGURT® and the Trade Dress (as defined in Section 1.2(o)) and the goodwill associated therewith;
provided that we have the right to modify and/or discontinue the use of such trademarks, trade names,
service marks, logos and other commercial symbols and the Trade Dress, and establish, in the future,
additional or substitute trademarks, trade names, service marks, logos, commercial symbols or Trade
Dress.
(j)
“Restricted Person” means you; each of your Entity Owners, if you are an Entity; and
the spouses, natural and adopted children, and siblings of any of you and your Active Entity Owners.
(k)
“System Standards” means the operating procedures, standards, requirements and
specifications, whether contained in the Operations Manual or elsewhere, which we have the right to
improve, further develop or modify from time to time and which are mandatory in nature so as to
comprise the requirements to be followed with respect to TCBY Stores and the use of the Marks in
connection therewith.
(l)
“TCBY Products” means products approved or required by us or our Affiliates from
time to time for sale at or from TCBY Stores, including fresh and frozen yogurt, hand-dipped frozen
yogurt, other frozen desserts, other food and beverage items and other products approved by us or our
TCBY FDD 03/2014
2
Affiliates; provided that we have the right to modify and/or discontinue the use of the foregoing products
from time to time and include additional or substitute products.
(m)
“TCBY Store” means a retail outlet selling or offering for sale any TCBY Products for
on- or off-premises consumption and other products and services specified by us. The term “TCBY
Store” includes carts, kiosks, and other satellite units selling the TCBY Products. We have the right to
approve all carts, kiosks and satellite units.
(n)
“TCBY System” means our business formats, signs, equipment, methods, procedures,
designs, layouts, standards and specifications, including the use of the Marks and the Trade Dress, which
we have the right to modify in the future.
(o)
“Trade Dress” means the designs, color schemes, decor and images which we authorize
and require our franchisees to use in connection with the operation of TCBY Stores, which we or our
Affiliates have the right to revise and further develop from time to time.
(p)
“Transfer” means the voluntary or involuntary, direct or indirect transfer, assignment,
sale, gift, pledge, mortgage, hypothecation or other disposition (including those occurring by operation of
law and a series of transfers that in the aggregate constitute a Transfer) of any of your interest in this
Agreement, your TCBY Store or a substantial portion of its assets, the lease for your TCBY Store or a
Controlling Interest in you.
1.3
Preambles. TCBY Stores operate under distinctive business formats, systems, methods,
procedures, designs, layouts, standards and specifications, all of which we have the right to improve, further
develop or modify in the future. We and our Affiliates have expended a considerable amount of time and effort in
developing and refining the recipes and formulations for and the methods of preparation of TCBY Products to
obtain high product quality. We have the right to modify these recipes and methods of preparation as we deem is
in the best interest of the TCBY System. One of our Affiliates currently owns and operates TCBY Stores, and we
and our Affiliates may own and operate TCBY Stores in the future. We or our Affiliates own the Marks. We and
our Affiliates have franchised and licensed and, in the future, have the right to continue to franchise and license
others to operate TCBY Stores.
ARTICLE 2
GRANT OF FRANCHISE
2.1
Franchise.
(a)
Grant of Franchise. Subject to the terms and conditions of this Agreement, we grant you
a NON-EXCLUSIVE franchise (the “Franchise”) to own and operate a TCBY Store (the “Franchised
Store” or “Store”) at and only at the “Premises,” as described below in this Section. If at the time of
signing this Agreement you have obtained our approval of and secured the Premises for your Store, the
Premises will be identified in Appendix A attached to this Agreement. However, if at the time of signing
this Agreement you have not obtained our approval of and secured the Premises for your Store, you will
pay us an initial franchise fee deposit of $5,000, as further described in Section 6.1. You will then have a
period of 6 months from the date of this Agreement to obtain our approval of and secure the Premises for
your Store. If you subsequently obtain our approval of and secure the Premises for your Store within the
6-month period, we and you will sign Alternative Appendix A identifying the Premises for your Store. If
you fail to obtain our approval of and secure the Premises for your Store within the 6-month period,
however, we have the right to terminate this Agreement. You hereby accept the Franchise and undertake
the obligation to operate your Store using the TCBY System in accordance with the System Standards.
TCBY FDD 03/2014
3
The Franchise granted herein is limited to the right to operate the one Franchised Store at the Premises,
and does not include an exclusive area or protected territory within which we or our Affiliates agree not to
issue franchises or operate competing businesses. We and our Affiliates have the right to issue franchises
or operate competing businesses for or at locations, as determined by us or our Affiliates, near the
Premises. You have no right to construct or operate any additional, expanded or modified facilities on the
Premises, nor any right to construct or operate a TCBY Store at any location other than the Premises. In
addition, you have no right to sublicense pursuant to this Agreement. For purposes of this Agreement,
“secured the Premises for your Store” means that you have either (i) signed a lease or sublease we have
approved (including any required addenda thereto) for the Premises, as further described in Section 4.2(a)
of this Agreement, if you are leasing or subleasing the Premises, or (ii) taken possession of the Premises,
if you own the Premises.
(b)
TCBY Products. In operating your Store, you may offer for sale only those TCBY
Products that we approve from time to time for you to sell at the Premises. The TCBY Products that you
initially are authorized to offer at your Store are explained in the Operations Manual referred to in Section
5.2. In the future, we have the right to change or add to the TCBY Products that you are authorized to
offer at the Premises and notify you of such changes or additions, as we determine, through references to
the Operations Manual, bulletins and other written materials, electronic computer messages, telephonic
conversations, and/or consultations at our offices or at your Store. Although the TCBY Products sold at
TCBY Stores may vary from Store to Store, you may only sell those TCBY Products that we authorize
you to sell from your Store.
2.2
Reservation of Certain Rights. We and our Affiliates reserve all rights not expressly granted to
you in this Agreement, including but not limited to the rights to: (1) establish TCBY Stores, including TCBY
Store franchises, licenses or businesses owned by us or our Affiliates, at any locations we deem appropriate; (2)
distribute TCBY Products and any other products or services through alternative channels of distribution using the
Marks; and (3) establish businesses which are franchised, licensed or owned by us or our Affiliates at any
locations we deem appropriate or distribute products or services through alternative channels of distribution
which are similar to the TCBY Products under trade names, trademarks, service marks, trade dress or other
commercial symbols other than the Marks.
ARTICLE 3
INITIAL TERM AND RENEWAL
3.1
Initial Term of the Franchise Agreement. The initial term of this Agreement will be 10 years,
commencing on the date of this Agreement. Notwithstanding the preceding sentence, if at the time of signing this
Agreement we have not identified the Premises on Appendix A attached to this Agreement, the initial term will
commence as of the date of this Agreement, and continue for a period of 10 years from the date you and we sign
Alternative Appendix A identifying the Premises for your Store, unless otherwise terminated in accordance with
the terms of this Agreement. This Agreement may be renewed as provided in Section 3.2. This Agreement may
be terminated prior to expiration of its term if: (i) the lease or sublease of the Premises is terminated as provided
in Section 4.2(c) and 13.1(f); (ii) the lease or sublease of the Premises expires and you are unable to obtain a
replacement lease or sublease, as provided in Sections 4.2(c) and 13.1(f); or (iii) this Agreement is otherwise
terminated in accordance with Article 13. References in this Agreement to the term of this Agreement mean the
initial term and any properly exercised renewal term.
3.2
Renewal. If you are not in default at the time of exercise of a renewal option and at the time the
prior term expires, you shall have the right to renew this Agreement for one additional 10-year term, provided
that:
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(a)
You give us written notice of your intention to renew at least 180 days prior to expiration
of the then current term;
(b)
You sign our then current form of Franchise Agreement, which will include the same
financial terms (continuing fees, advertising fees and other fees) as this Franchise Agreement or the terms
of our then current form of Franchise Agreement, whichever you deem is more advantageous to you, and
sign our then current Renewal Addendum to such Franchise Agreement, which shall, among other things,
establish that the Franchise Agreement is for a renewal term with no additional renewal rights, and
contain a general release of claims against us;
(c)
At our request, you refurbish, remodel, redecorate, and renovate your Store at the
commencement of the renewal term to meet our then current System Standards for TCBY Stores,
including designs and service systems, computer and point-of-sale equipment, and Trade Dress;
(d)
You have complied with all of the terms and conditions of this Agreement or any other
agreement between you and us during the initial term;
(e)
All monetary obligations owed by you to us, our Affiliates or your suppliers or creditors,
whether pursuant to this Agreement or otherwise, have been satisfied prior to renewal, and have been paid
in a timely manner throughout the initial term;
(f)
You have the right to maintain the Premises for at least the duration of the renewal term
and provide a copy of the lease to us; and
(g)
You follow our then current renewal process, which may require you to deliver certain
financial statements and other records and reports to us, attend additional training and cooperate in any
audits and/or inspections we may conduct or require.
We will not charge any renewal fee in connection with any renewal under this Section 3.2. If we
determine that you have met all of the conditions described above prior to the expiration date, we will provide you
with an execution copy of the form of Franchise Agreement to be entered into for the renewal term. If you do not
execute and return the renewal Franchise Agreement to us within 30 days of receipt, then you will be deemed to
have withdrawn your notice of renewal, and this Agreement will terminate at the end of the current term.
ARTICLE 4
SITE SELECTION, LEASE OF PREMISES
AND DEVELOPMENT OF YOUR STORE
4.1
Site Selection. You must obtain our written approval of the Premises before you sign a lease or
sublease for or begin construction of the Premises. Our approval of the Premises is based and made in reliance
upon information you furnish and representations you make to us (all of which we assume you have carefully and
fully considered in selecting the Premises and proposing the Premises to us) with respect to the size, appearance
and other physical characteristics of the Premises, photographs of the Premises, and demographic characteristics,
traffic patterns, competition from other businesses in the area (including other TCBY Stores) and other
commercial characteristics (including the purchase price, rental obligations, and other lease terms). Our approval
of the Premises and any information communicated to you regarding the Premises do not constitute an express or
implied representation or warranty of any kind as to the suitability of the Premises for a TCBY Store or for any
other purpose. Our approval of the Premises indicates only that we believe that the Premises falls within our
criteria as of the time period encompassing the evaluation. Both you and we acknowledge that application of
criteria that have been effective with respect to other sites and premises may not predict the potential results for a
specific site and that, subsequent to our approval of a site and Premises, demographic and/or economic factors,
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including competition from other restaurants and retail outlets and similar food service businesses, included in or
excluded from our criteria, could change, thereby altering the potential of a site. The uncertainty and instability of
the factors included in the criteria are beyond our control and we will not be responsible to you for the failure of
the Premises to meet expectations as to potential revenue or operational criteria. We may have rendered certain
assistance in connection with you obtaining the Premises, including identifying one or more sites that we believe
are available for development, recommending a real estate or business broker, or utilizing any information,
contacts, databases and referral networks to which we may have access. Notwithstanding any such assistance,
you acknowledge that you have conducted your own diligent review of the site, and your acceptance of a
Franchise for the operation of a TCBY Store at the Premises is based on your own independent investigation of
the suitability of the Premises.
4.2
Acquisition of the Premises.
(a)
Your Obligation to Obtain Lease Unless you own the Premises, you agree to obtain any
necessary lease or sublease for the Premises. We may (but are not obligated to) assist you in the process
of obtaining and/or negotiating a lease or sublease for the Premises. In any event, you agree to obtain our
approval of the terms of the lease or sublease for the Premises prior to your execution of the lease or
sublease. You agree not to execute a lease or sublease which we have disapproved, and you must deliver
a copy of the signed, approved lease to us within 15 days after its execution. Any lease or sublease must
be in a form satisfactory to us. Prior to execution of the lease or sublease, you must also sign, and obtain
agreement from the landlord of the Premises to sign, an addendum to the lease or sublease in a form that
we provide or approve (the “Lease Addendum”). The lease, sublease or Lease Addendum must:
(i)
Provide for notice to us of any default by you under the lease or sublease and
provide us with a right (but no obligation) to cure the default. If we cure any default, the total
amount of all costs and payments incurred by us in curing the default will be immediately due
and owing to us by you;
(ii)
Provide that you have the right to assign your interest under the lease or sublease
to us without the lessor’s or sublessor’s consent;
(iii)
Authorize and require the lessor or sublessor to disclose to us, upon our request,
sales and other information that you furnish to the lessor or sublessor; and
(iv)
Provide that we, one of our Affiliates or, in the case that clause (4) below is
applicable, our assignee has the right to assume the lease or sublease:
(1)
(2)
sublease, or
Upon expiration or termination of this Agreement, or
If you fail to exercise any options to renew or extend the lease or
(3)
If you commit a default that gives the lessor or sublessor the right to
terminate the lease or sublease, or
(4)
If we or one of our Affiliates or our assignee purchases your Store as
permitted by Section 14.5.
(b)
Use of Premises Currently Under Lease to Us. If we or one of our Affiliates is currently
leasing the Premises and has the right under that lease to sublease the Premises to you, and you desire to
sublease the Premises from us or our Affiliate, and we or our Affiliate offer the Premises to you, then you
agree to execute our then current form of sublease and, if you are an Entity, have each of your Active
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Entity Owners execute our then current form of guaranty. If we or one of our Affiliates elects to assign
an existing lease to you and you desire to obtain an assignment of the existing lease, unless we otherwise
agree, you agree to arrange for the release of us or our Affiliate from all obligations under the assigned
lease, as of the date of the assignment, and you agree to obtain from the landlord any consents,
agreements, and lease amendments as are required so that the assigned lease satisfies the requirements of
Section 4.2(a), as if the assigned lease were a third-party lease.
(c)
Expiration or Termination of Lease. If a current lease or sublease will expire prior to
expiration of this Agreement, you may attempt to obtain a replacement lease or sublease. We will have
the right to approve any proposed replacement lease or sublease as otherwise provided in this Article 4. If
you are unable to obtain a replacement lease or sublease that meets our approval prior to the expiration of
the current lease or sublease, (i) you have the right to terminate this Agreement, subject to your
observation of all notice provisions and post-term obligations set forth in this Agreement, including the
continuing obligations described in Section 14.6, or (ii) we have the right to terminate this Agreement in
accordance with Section 13.1(f). In addition, if the current lease or sublease is terminated for any reason
prior to its expiration, we have the right to terminate this Agreement in accordance with Section 13.1(f).
(d)
Effect of our Approval of Lease. Our approval of a lease or sublease for the Premises or
the granting by us or one of our Affiliates of a sublease or lease assignment for the Premises does not
constitute an express or implied warranty by us of the successful operation or profitability of a TCBY
Store operated at the Premises. The approval indicates only that we believe the Premises and the terms of
the lease fall within the acceptable criteria established by us as of the time period encompassing the
evaluation.
4.3
Franchised Store Development.
(a)
Plans and Specifications. You are responsible for constructing and developing your
Store. We will furnish you with prototypical plans and specifications for a TCBY Store, including
requirements for exterior and interior materials and finishes, dimensions, design, image, interior layout,
decor, fixtures, equipment, signs, furnishings and color scheme. You must comply with these plans and
specifications. You agree to have prepared all required construction plans and specifications to suit the
shape and dimensions of the Premises and to ensure that the plans and specifications comply with
applicable ordinances, building codes and permit requirements and with lease requirements and
restrictions. You acknowledge that construction plans must be based on the prototypical plans and
specifications. You agree to submit construction plans and specifications to us for our approval before
construction of your Store is commenced, and you agree to submit all revised plans and specifications to
us for our approval during the course of construction. Unless specifically informed otherwise by us, you
are required to purchase certain furniture, fixtures and equipment, as well as services related to the build
out of your store from Venture Projects, Inc. dba Concept Services, or other providers we may designate
from time to time in our discretion, for the construction and development of your Stores. You agree that
you must use an architect and contractor that we designate or approve. We do not receive any financial
compensation from the approved architect and contractor. Upon completion of construction, you also
agree to provide us with a set of “as built” plans and specifications. Further, you acknowledge and agree
that you assume all risk relating to the construction and development of your Store, and our designation
or approval of your architect, contractor, construction plans and specifications does not constitute an
express or implied representation or warranty of any kind as to the quality of such construction or
development or the success of your Store.
(b)
Development Obligations. You agree to do each of the following:
(i)
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Secure all financing required to develop and operate your Store;
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(ii)
Obtain all required building, utility, sign, health, sanitation, business,
environmental and other permits and licenses required for construction and operation of your
Store;
(iii)
Construct all required improvements to the Premises and decorate your Store in
compliance with plans and specifications that we approve;
(iv)
Purchase and install all fixtures, furnishings, equipment and signs required for
your Store in accordance with Section 4.4; and
(v)
Purchase an opening inventory of TCBY Products, materials and supplies.
4.4
Fixtures, Furnishings, Equipment, Signs and Computer Systems. In developing and operating
your Store, you agree to do each of the following:
(a)
Use only the fixtures, furnishings, equipment and signs that we require and have
approved for TCBY Stores as meeting our System Standards;
(b)
Place or display at the Premises (interior and exterior) only the signs, emblems, lettering,
logos and display materials that we approve in writing. However, we have the right to install all required
signs at the Premises at your sole expense; and
(c)
Use the computer equipment and operating software and point of sale or electronic cash
register (“Computer System”) that we determine is necessary. We have the right to require you to obtain
specified computer hardware and/or software and modify specifications for and components of the Computer
System from time to time. Our modification of specifications for the Computer System’s components may
require you to incur costs to purchase, lease and/or license new or modified computer hardware and/or
software, obtain service and support for the Computer System during the term of this Agreement and pay any
related connection fees. We have the right to require you in the future to purchase additional or different
components of the Computer System, including computer hardware and software and connection and other
related services, from a supplier or suppliers we designate, which may include us or our Affiliates. You agree
to incur the costs of obtaining the computer hardware and software comprising the Computer System (or
additions or modifications). Within 60 days after you receive notice from us, you agree to obtain the
components of the Computer System that we designate. We have the right to independently access the
information and data you collect and gather using any Computer System or other data collection equipment
(such as an electronic cash register) we require for your Store.
You agree that all fixtures, furnishings, equipment, signs and computer systems used in connection with the
operation of your Store will be free and clear of all liens, claims and encumbrances, except for liens, claims or
encumbrances asserted by us and except for third party purchase money security interests.
4.5
Franchised Store Opening. You will not open your Store for business until:
(a)
(b)
satisfaction;
(c)
We approve your Store for opening;
Pre-opening training of you and Franchised Store personnel has been completed to our
The initial franchise fee and all other amounts then due to us have been paid in full;
(d)
The lease documentation, including the Lease Addendum, has been executed and all other
documentation has been completed in connection with the development of your Store; and
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(e)
We have been furnished with copies of all insurance policies required by this Agreement
and evidence of payment of premiums.
Subject to your compliance with the conditions set forth in this Section 4.5, you agree to open your Store for
business by the “Start Date,” which is the date that is 120 days after either (i) the date of this Agreement, if at the
time of signing this Agreement we have identified the Premises on Appendix A attached to this Agreement, or
(ii) the date you and we sign Alternative Appendix A identifying the Premises for your Store, if at the time of
signing this Agreement we have not identified the Premises on Appendix A attached to this Agreement. Your
Start Date is listed on Appendix A or Alternative Appendix A, as applicable.
4.6
Grand Opening Promotion. You agree to conduct a grand opening advertising and promotion
program for a newly developed Franchised Store for a period of at least 7 to 14 days, commencing within 30 days
after the opening of your Store. The grand opening program shall conform to our requirements and shall utilize
the media and advertising formats designated by us. We have the right to require you to submit a grand opening
plan that meets our approval containing details about the grand opening promotion. You shall expend for the
grand opening program an amount determined by us, but not to exceed $10,000. We have the right to require you
to purchase grand opening advertising and promotional materials from us, our affiliates or our designees in
advance of or during the grand opening program. You may also make payments to other vendors and suppliers
for grand opening advertising or promotional materials. Payments to us or our affiliates for any grand opening
advertising or promotional materials are non-refundable.
4.7
Relocation. Should it become necessary, on account of the condemnation of the Premises or the
exercise of a relocation right by your landlord or for some other reason approved by us in writing to relocate the Store,
we will consent to such relocation at a site acceptable to us provided that:
(a)
You are in full compliance with this Agreement;
(b)
You give us written notice of your desire to relocate at least 30 days prior to the date your
Store will close for relocation;
(c)
You find relocated Premises that meet all of our then current site criteria for the
development of new TCBY Stores and obtain our written approval of the relocated Premises within 60
days after the date your Store will be closed for relocation and before you sign a lease or sublease or
begin construction of the relocated Premises, and you open the relocated Store at the relocated Premises
within 180 days after the date your Store closes for relocation;
(d)
You construct and develop the relocated Store in accordance with all of our then current
System Standards for TCBY Stores, including designs and service systems, and Trade Dress;
(e)
You have sufficient term remaining under this Agreement, or purchase from us sufficient
additional term under this Agreement, to satisfy our then current policy on remaining term requirements
for relocations; and
(f)
At our request, you execute a general release, in a form satisfactory to us, of any and all
claims against us or our Affiliates and our and their respective officers, directors, attorneys, shareholders
and employees, and any other ancillary agreements we are then using for relocations, or, in the event you
are required to purchase additional term as set forth in Section 4.7(e), you sign either an extension of the
existing Franchise Agreement or our then current form of Franchise Agreement (which will have the
same financial terms as this Franchise Agreement or the financial terms of our then current form of
Franchise Agreement as you deem is in your best interest), which will be effective for a period
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commencing on the date you sign such agreement or extension and ending upon the expiration of the
additional term.
In the event we consent to a relocation of your Store, you must, upon the closure of your former Store and
at your expense: (i) promptly remove from the former Store Premises any and all signs, fixtures, furniture,
posters, furnishings, equipment, menus, advertising materials, stationery supplies, forms and other articles which
display any of the Marks or any distinctive features or designs associated with the System and either use them in
your relocated Store or dispose of them as directed by us, and (ii) immediately make such modifications or
alterations as we deem necessary to distinguish the former Store Premises from other TCBY Stores so as to
prevent any possibility of confusion by the public. If after consenting to a relocation of your Store you fail to
comply with any of the conditions set forth in this Section 4.7, we have the right to revoke our consent to such
relocation and hold you in default of this Agreement for abandonment. In addition, while your former Store is
closed for relocation, you may not Transfer your interest in this Agreement, and any such transfer will constitute a
breach of this Agreement and will be void and of no effect.
ARTICLE 5
TRAINING AND GUIDANCE
5.1
Training.
(a)
Training for You and your Store Manager. Prior to your Store’s opening, we will furnish
an initial training program on the operation of TCBY Stores to you (or one of your Active Entity Owners,
if you are an Entity) and the initial store manager (if the store manager is different from you). The
training program will be furnished at our designated training facility, a TCBY Store owned and operated
by one of our Affiliates, or any other location designated by us. You (or one of your Active Entity
Owners) and the manager of your Store (if different from you) agree to complete all phases of the training
program to our satisfaction and to participate in all other activities required to open your Store.
Subsequent managers will also be required to satisfactorily complete all phases of our training program.
Under no circumstances shall you permit management of the Store by a person who has not been certified
by us as qualified to manage the Store by completing all phases of our training program to our
satisfaction. We will furnish the initial training program to you (or one of your Active Entity Owners, if
you are an Entity) and to the initial store manager (if different from you) free of charge if it is conducted
at our training facility or a TCBY Store owned and operated by one of our Affiliates; however, if we
agree to provide the training at any other location, we may charge a reasonable fee to cover our costs,
including living expenses during the training for our employees or agents who provide the training. We
have the right to charge a fee for the training for subsequent managers, which you will be required to pay
at least 10 days prior to beginning of training.
(b)
Refresher Training. We have the right to require you and/or previously trained and
experienced managers to attend periodic refresher courses at the times and locations that we designate.
We have the right to charge fees for refresher training courses.
5.2
Operations Manual. We will loan to you during the term of this Agreement one copy of our
operating procedures manual (the “Operations Manual”). We have the right, at our option, to furnish or make
available to you the Operations Manual in the form of a paper copy, an electronic copy on computer diskette or
CD Rom, or an electronic copy accessed through the Internet or other communication systems. The Operations
Manual contains mandatory and suggested specifications, standards and operating procedures, including System
Standards that we prescribe for TCBY Stores and contain information relating to your other obligations under this
Agreement. We have the right to modify the Operations Manual in the future to reflect changes in the image,
specifications, standards, procedures, TCBY Products, TCBY System, and System Standards. However, no
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provision of the Operations Manual, and no modification of the same, may (a) amend or override any of the
express provisions of this Agreement, or (b) impose new fees or increase the fees payable by you to us and our
affiliates. You may not at any time copy any part of the Operations Manual, either physically or electronically. If
your copy of the Operations Manual is lost, destroyed or significantly damaged, you will be obligated to obtain
from us, at our then applicable charge, a replacement copy of the Operations Manual.
5.3
Guidance and Operating Assistance. Although we do not have an obligation to do so, we may
advise you from time to time of operating problems of your Store which come to our attention. At your request,
we will furnish to you guidance and operating assistance in connection with:
(a)
Methods, standards, specifications and operating procedures utilized by TCBY Stores;
(b)
Purchasing required fixtures, furnishings, equipment, signs, TCBY Products, materials
and supplies; and
(c)
Advertising and promotional programs.
Any guidance and assistance we furnish or make available to you will be, at our option, in the form of references
to the Operations Manual, bulletins and other written materials, electronic computer messages, telephonic
conversations and/or consultations at our offices or at your Store. You agree that we will not be liable to you or
any other person, and you waive all claims for liability or damages of any type (whether direct, indirect,
incidental, consequential, or exemplary), on account of any guidance or operating assistance offered by us in
accordance with this Section 5.3, except to the extent caused by our gross negligence or intentional misconduct.
We will make no separate charge to you for such operating assistance and guidance as we customarily provide to
our franchisees generally. Occasionally, we may make special assistance programs available to you, however, for
which you will be required to pay the daily fees and charges that we establish.
5.4
National Conventions and Regional Meetings. We encourage you (or one of your Active Entity
Owners, if you are an Entity) and a store manager (if the store manager is different from you) and/or an approved
trainer (if you are a multi-unit TCBY Store franchisee) to attend all national conventions and regional meetings
that we may hold periodically. These conventions and regional meetings will take place at the locations we
designate. If you or your representatives attend these conventions and regional meetings, you will be responsible
for all travel and living expenses and all other costs associated with such attendance.
ARTICLE 6
FEES
6.1
Initial Franchise Fee. You agree to pay us a nonrecurring initial franchise fee in the amount of
$__________. If at the time of signing this Agreement we have identified the Premises on Appendix A attached
to this Agreement, the entire initial franchise fee is payable upon your execution of this Agreement. If at the time
of signing this Agreement we have not identified the Premises on Appendix A attached to this Agreement, you
will pay us an initial franchise fee deposit of $5,000 when you sign this Agreement. This $5,000 deposit is
refundable until you secure our approval of and secure the Premises for your Store. You will pay us the
remaining balance of the initial franchise fee at the time you obtain our approval of and secure the Premises for
your Store, and you and we sign Alternative Appendix A identifying the Premises for your Store. If you fail to
obtain our approval of and secure the Premises for your Store within the 6-month period described in
Section 2.1(a) of this Agreement, however, we have the right to terminate this Agreement, in accordance with
Sections 13.1 and 13.2. If we terminate this Agreement after you secure your Premises, we will keep the $5,000
deposit, although you will not be required to pay to us the remaining balance of the initial franchise fee. The
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initial franchise fee will be fully earned by us when paid and is not refundable, except as provided in
Section 13.3(a).
6.2
Continuing Fees. In addition to the initial franchise fee, you agree, for the entire term of this
Agreement, to pay us a weekly continuing fee of 6% of your Store’s Gross Revenues.
6.3
Yogurt Formulation Charge and YFC Reimbursement. The parties acknowledge that we
typically receive a formulation charge from our designated manufacturers (“Manufacturers”) or distributors
(“Distributors”) of certain TCBY Products. The amount of the formulation charge that we receive is based on
the purchases of such products by franchisees and licensees from our designated Distributors. As incentive for
you to develop the Store and enter into this Agreement, we agree to provide you with a reimbursement (the “YFC
Reimbursement”) of all of the yogurt formulation charge that we actually collect for certain yogurt products
purchased by you for your Store. The amount of your YFC Reimbursement is set forth on Schedule 1 attached
hereto. Any YFC Reimbursement to which you are entitled will be paid in a manner and with a frequency
reasonably determined periodically by us, including without limitation, by rebate or by reducing the cost that you
pay for TCBY Products. Payment of any YFC Reimbursement to you shall be subject to your material
compliance with this Agreement at the time of payment and other conditions described on Schedule 1.
6.4
Date and Term of Payment. You agree to pay the weekly continuing fees pursuant to Section 6.2,
and the marketing fees pursuant to Section 9.1, to us on or before the close of business on Wednesday of each
week for the preceding week by pre-authorized electronic bank transfer from your account to our account or as
otherwise directed by us. We expressly reserve the right to modify the timing and method of payment of the fees
from time to time during the term of this Agreement, provided that the fees shall be payable no more frequently
than weekly.
6.5
Payment by Pre-Authorized Bank Transfer. You agree to execute and complete the form
Authorization Agreement attached as Appendix A to this Agreement, and/or such other documents as we may
require from time to time, to authorize and direct your bank or financial institution to pay and deposit directly to
our account, and to charge to your account, the amount of the continuing fees, marketing fees, and other amounts
due and payable by you pursuant to this Agreement. Your authorizations will permit us to initiate debit entries
and/or credit correction entries to your account for the amount of the continuing fees, marketing fees and other
amounts then payable to us from you. You agree to maintain, at all times during the term of this Agreement, a
balance in your account at your bank or financial institution sufficient to allow the appropriate amount to be
debited from your account for payment of the continuing fees, marketing fees and other amounts payable by you
for deposit in our account. The continuing fee and marketing fee amount actually transferred from your account
each week shall be based on the Gross Revenue Report you provide to us for such week, as required in Section
8.1(a). If you do not provide us with a Gross Revenue Report for any given week, we have the right to estimate in
good faith your Store’s Gross Revenues for the missing period and debit your account in an amount equal to the
continuing fees and marketing fees that would be due based on such estimation. In making our good faith
estimate, we may consider the last Gross Revenue Report that we received from you, any seasonal sales trends,
and any system-wide averages and other pertinent information available to us.
You are responsible for any
penalties, fines or other similar expenses associated with the pre-authorized bank transfers described in this
Section 6.5.
6.6
Late Fees; Interest on Late Payments. To compensate us for the increased administrative expense
of handling late payments and late reports, we have the right to charge a $100 late fee for each delinquent
payment, due when the delinquent payment is due, and a $100 late fee for each delinquent report, due when the
delinquent report is due. We will continue to charge a late fee for each period that the report remains delinquent.
These late fees are not interest or a penalty. They are only to compensate us for increased administrative and
management costs due to your late payment or late report. The late fees are non-refundable. All continuing fees,
amounts due for purchases by you from us or our Affiliates and other amounts which you owe to us or our
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Affiliates will bear interest from their due date until paid at a rate equal to the lesser of the highest applicable legal
rate for open account business credit, or 1.5% per month, payable when the corresponding delinquent payment is
made. You agree that this Section 6.6 does not constitute our or our Affiliates’ agreement to accept payments
after they are due or a commitment by us or our Affiliates to extend credit to you or otherwise to finance the
operation of your Store.
6.7
Application of Payments. Regardless of any designation by you, we have the right to apply any
payments by you to any of your past due indebtedness for continuing fees, marketing fees, purchases from us or
our Affiliates, interest or any other indebtedness or amounts owed to us or our Affiliates.
6.8
No Right of Offset. You have no right of “offset” and will not withhold payment, for any reason,
of any continuing fees, marketing fees or any other payment due to us under this Agreement or any other
agreement.
ARTICLE 7
OBLIGATIONS RELATING TO OPERATIONS
7.1
System Standards; Refresh and Remodel.
(a)
You acknowledge and agree that the operation of your Store in accordance with the
System Standards is the essence of this Agreement and is essential to preserve the goodwill of the Marks
and all TCBY Stores. Therefore, you agree that, at all times during the term of this Agreement, you will
maintain and operate your Store in accordance with each of the System Standards. You agree that we
have the right to modify the System Standards from time to time and acknowledge that the modifications
may obligate you to invest additional capital in your Store and to incur higher operating costs. We agree
not to modify the System Standards in such a way as to obligate you to complete a material remodel
during the initial term of your Agreement, except as expressly set forth in this Agreement, or obligate you
to invest additional capital at a time when the investment cannot in our reasonable judgment be amortized
during the remaining term of this Agreement, unless required by the lease or sublease for the Premises or
applicable law. Specifically, we will not require you to perform a refresh or remodel of your Store
(assuming it met the prior System Standard) during the first two (2) years or last three (3) years of your
initial Term.
(b)
If, at any time in our reasonable judgment, your Store or any part thereof, including
without limitation its design, finishes, fixtures, equipment, furniture, signs or utensils, do not meet our
then-current System Standards (if not excepted above), we will notify you, specifying in reasonable detail
the actions to be taken by you to comply with System Standards. If you fail or refuse to initiate promptly
and timely complete the necessary actions as set forth in the notice, you will be in default under this
Agreement. In addition to any of our other rights to enforce this Agreement, we will have the right (but
not the obligation), pursuant to Section 13.2(e), to enter upon your Store premises and complete the
necessary actions described in the notice, such as refurbishment, repairs, replacements and maintenance,
and you will reimburse us for the entire cost thereof upon demand. You agree to cooperate fully with us
in connection with any of our actions under this Section.
7.2
Performance of Duties and Obligations. You will at all times faithfully, honestly and diligently
perform your obligations under this Agreement and you will continuously exert your best efforts to promote and
enhance the business of your Store. You will not engage in any other business or activity that may conflict with
your obligations under this Agreement.
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7.3
Restrictions on Operations. You may not operate your Store at any site other than the Premises
without our prior written consent. In addition, you may only offer and sell finished TCBY Products that have
been approved for sale, as provided in Section 2.1(b), over the counter to retail customers from your Store, and
may not sell approved TCBY Products or any materials, supplies, or inventory bearing the Marks at any other
location or through any alternative channel of distribution without our prior written consent. “Alternative
channels of distribution” includes, but is not limited to, the operation of a food cart or kiosk, sales through the
Internet (or any other form of electronic commerce), mail order and telephone sales. Notwithstanding the above
restrictions, you may: (i) offer and sell approved TCBY Products as part of off-site catering events and company
account programs, provided you deliver (and do not engage a major carrier to deliver) TCBY Products that meet
System Standards for quality and freshness and the sales are not part of a mail order program; (ii) offer samples of
approved TCBY Products at or directly in front of your Store or other locations near your Store as approved by
your landlord, where necessary, or at other locations in your community as approved by us or in accordance with
any sampling or promotional program we approve or designate; or (iii) upon our prior written approval, offer and
sell approved TCBY Products from a table, kiosk or cart at satellite locations that we approve. You may not sell
to anyone any mix, materials, supplies, or inventory used in the preparation of any TCBY Products. Further, you
may not sell any TCBY Products to any person or entity purchasing the TCBY Products for resale.
7.4
Internet Use. You acknowledge that the Internet is a powerful and expanding medium through
which business is conducted. You may not, however, advertise your Store or the TCBY Products over the
Internet (or any other form of electronic commerce) or establish a related World Wide Web Site without our prior
written consent. In addition, your general conduct on the Internet (or any other form of electronic commerce) and
specifically your use of the Marks is subject to the provisions of this Agreement. Without limiting the foregoing,
you agree to follow our policies and procedures as they may be communicated to you periodically in the
Operations Manual or otherwise regarding the use of social media and similar methods of communication.
Further, you acknowledge that we have the right to require you to have access to the Internet from your Store
Premises and submit reports, including Gross Revenue Reports, to us over the Internet in accordance with System
Standards. We also have the right to require you to establish and maintain a valid email address and authorize us
to communicate with you by this method at such address.
7.5
Our Right to Inspect Your Store. To determine whether you are complying with this Agreement
and with all System Standards and whether your Store is in compliance with the terms of this Agreement, we and
our designated agents have the right to, at any reasonable time and without prior notice to you:
(a)
Inspect the Premises;
(b)
Observe, photograph and video tape your Store’s operations for such consecutive or
intermittent periods as we deem necessary;
(c)
Remove samples of any TCBY Products, materials or supplies for testing and analysis;
(d)
Interview personnel of your Store;
(e)
Interview customers of your Store; and
(f)
your Store.
Access, inspect and copy any books, records and documents relating to the operation of
You agree to cooperate fully with us in connection with any of our inspections, observations, photographing,
videotaping, product removal and interviews.
7.6
Surveys. You will present to your customers such evaluation forms as we periodically require
and will participate in and request your customers to participate in any surveys performed by or on our behalf.
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7.7
Entity Owners; Name Change. You agree, for the entire term of this Agreement, to identify your
Entity Owners, if any, on the Ownership Addendum attached to this Agreement and send us prior notification of
any change. Additionally, if you change your name, or your Entity changes its name or entity type, but no
Transfer occurs as a result, you must notify us promptly following the change, provide us with any documentation
we reasonably request to verify the name change, and pay us our then-current documentation fee (if any) to defray
our costs associated with documenting the change, provided no fee will be charged for the first name change
during the Term of the Agreement.
7.8
Guaranties by Entity Owners. If you are an Entity, you represent and warrant to us that you are
duly organized or formed and validly existing in good standing under the laws of the state of your incorporation
or formation, are qualified to do business in all states in which you are required to qualify and have the authority
to execute, deliver and carry out all of the terms of this Agreement. If you are an Entity, each of your Active
Entity Owners must execute our current form of Guaranty attached to this Agreement prior to or upon the date of
this Agreement. Any person or Entity that at any time after the date of this Agreement becomes an Active Entity
Owner pursuant to Article 12 or otherwise must, as a condition of becoming an Active Entity Owner, execute our
then current form of Guaranty.
7.9
Insurance.
(a)
Property Insurance. You agree, at your sole cost and expense, at all times during the term
of this Agreement, to keep all of your goods, fixtures, furniture, equipment, and other personal property
located on your Store Premises insured to the extent of 100% of the full replacement cost against loss or
damage from fire and other risks normally insured against in special cause of loss coverage. You will
also maintain business income and extra expense coverage to cover loss of income and extra expense for
at least one year.
(b)
Liability Insurance. You agree, at your sole cost and expense, at all times during the term
of this Agreement, to maintain in force an insurance policy or policies, on an occurrence basis, which will
name both us and our Affiliates as additional insureds on a primary non-contributory basis, insuring
against all liability resulting from damage, injury, or death occurring to persons or property in or about
your Store Premises (including products liability insurance and broad form contractual liability
insurance), the liability under such insurance to be not less than $1,000,000 for one person injured,
$1,000,000 for any one accident, and $1,000,000 for property damage. The original of such policy or
policies shall remain in your possession. However you agree to give us a copy of the policy upon our
request.
(c)
Workers’ Compensation and Employers Liability Insurance. You also agree to maintain
and keep in force all workers’ compensation and employers liability insurance on your employees, if any,
in the following amounts:
(i)
Workers Compensation: The amount required under the applicable workers’
compensation laws of the state in which your Store is located.
(ii)
Employers Liability: No less than $100,000 per accident for bodily injury by
accident, no less than $100,000 per employee for bodily injury by disease and no less than a
$500,000 policy limit for bodily injury by disease.
(d)
Other Insurance Policies. At your sole cost, you agree, at all times during the term of this
Agreement, to maintain in force such other and additional insurance policies as a prudent franchisee in
your position would maintain or as we reasonably require.
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(e)
Policy Requirements. The deductibles on all insurance policies required under this
Section 7.9 shall not exceed $5,000, and all insurance policies will contain provisions to the effect that the
insurance will not be canceled or modified without at least 30 days prior written notice to us and that no
modification will be effective unless approved in writing by us. All such policies will be issued by a
company or companies, rated “A-XII” or better by Best’s Insurance Guide, responsible and authorized to
do business in the state in which your Store is located, as you may determine, and will be approved by us,
which approval will not be unreasonably withheld. You shall provide us with certificates of insurance for
all insurance policies required under this Section 7.9 at the time you procure the insurance. You agree to
send the certificates of insurance to Risk Management, TCBY Systems, LLC, at the address set forth
above or as we designate periodically.
(f)
Release of Insured Claims. You release and relieve us and our Affiliates, and all of our
and their officers, directors, shareholders, employees, agents, successors, assigns, contractors, and
invitees and waive your entire right of recovery against us and our Affiliates and all of our officers,
directors, shareholders, employees, agents, successors, assigns, contractors, and invitees for loss or
damage arising out of or incident to the perils required to be insured against under this Section 7.9, which
perils occur in, on or about your Store Premises or relate to your business on the Premises, whether due to
the negligence of us or our Affiliates or you or any of our or your related parties.
ARTICLE 8
REPORTS AND RECORD KEEPING
8.1
Accounting, Reports and Financial Statements. You agree to establish and maintain a
bookkeeping, accounting, record keeping and data processing system conforming to the requirements and formats
that we prescribe. You agree to furnish to us reports relating to your Store by the delivery method (including
without limitation via the Internet) and in such form and content as we have the right to prescribe from time to
time. These reports include, but are not limited to, the following:
(a)
Gross Revenue Reports. On or before noon on Wednesday of each week, a report of your
Store’s Gross Revenues for the previous week;
(b)
Monthly Financial Reports. Within 25 days after the end of each fiscal calendar month, a
profit and loss statement for your Store for the previous fiscal calendar month and a year-to-date
statement of financial condition as of the end of the previous fiscal calendar month;
(c)
Semi-Annual Reports. Within 25 days after the end of each 6-fiscal calendar month
period, a balance sheet for your Store as of the end of that semi-annual period;
(d)
Annual P&L Reports. Within 25 days after the end of each fiscal year, a profit and loss
statement setting out cost of goods, labor and other items to allow us to include needed details in our
franchise disclosure document for the next fiscal year; and
(e)
Tax Returns. Within 10 days after the returns are filed, exact copies of federal and state
income, sales and any other tax returns and the other forms, records, books and other information as we
have the right to periodically require.
Each report and financial statement will be signed and verified by you in the manner we specify. We have the
right to disclose data derived from the sales reports to other franchisees and licensees. We have the right to
charge you a late fee for each delinquent report due to us, for each period that such report remains delinquent, as
further described in Section 6.5.
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8.2
Retention of Records. You agree to keep full, complete and proper books, records and accounts
of Gross Revenues and of your operations at your Store or at your business office. All the books, records and
accounts will be kept in the English language and will be retained for a period of at least 3 years following the end
of each fiscal year. The books and records will include: tax returns (sales and income); semi-annual balance
sheets and monthly profit and loss statements; monthly inventories; records of promotions and coupon
redemptions; and such other records as we request.
8.3
Our Right to Audit. At any time during business hours and without prior notice to you, we and
our representatives have the right to inspect and audit the business records, bookkeeping and accounting records,
sales and income tax records and returns and other records of your Store as well as your books and records. You
agree to fully cooperate with representatives and independent accountants hired by us to conduct any inspection or
audit. If an inspection or audit discloses an understatement of your Store’s Gross Revenues, you will pay to us,
within 15 days after receipt of the inspection or audit report, the continuing fees due on the amount of the
understatement, plus interest (at the rate and on the terms provided in Section 6.5) from the date originally due
until the date of payment. Further, if inspection or audit is made necessary by your failure to furnish reports,
supporting records or other information as required by this Agreement, or to furnish the reports, records or
information on a timely basis, or if an understatement of Gross Revenues for the period of any audit is determined
by the audit or inspection to be greater than three percent (3%), then within 15 days after receipt of the inspection
or audit report, you will reimburse us for the cost of the audit or inspection, including the charges of attorneys and
any independent accountants and the travel expenses, room and board and compensation of our employees. If you
fail to cooperate with our audit, or are unwilling or unable to provide us with sufficient records, including the
records and reports that you are required to maintain under this Agreement, to complete the audit to our
reasonable satisfaction, we may establish a reasonable estimation of your Gross Revenues based on the data
available to us (which may include records regarding product purchases, percentage rent reports or other
information obtained from third parties) and collect from you any estimated amount that we deem was
underreported or underpaid pursuant to this Agreement. These remedies are in addition to our other remedies and
rights under this Agreement or applicable law, and our right to audit will continue for 2 years following
termination of this Agreement.
ARTICLE 9
MARKETING AND PROMOTION
9.1
Marketing Fees.
(a)
Collection of Marketing Fees. You agree, for the entire term of this Agreement, to pay to
us a weekly marketing fee of 3% of your Store’s Gross Revenues. Marketing fees will be payable weekly
by pre-authorized bank transfers, together with the continuing fees, in accordance with Sections 6.3 and
6.4. TCBY Stores owned by us and our Affiliates in the same market area as you will contribute
marketing fees on the same basis as similarly situated franchisees in the area.
(b)
Right to Direct Operation of the Marketing Fees Collected. Marketing fees pay for
marketing programs. We will direct all marketing programs financed by the marketing fees we collect,
and have the right to determine the creative concepts, materials and endorsements used and the
geographic, market and media placement and allocation. You agree that we have the right to use the
marketing fees we collect to meet any and all costs of maintaining, administering, directing and preparing
advertising materials and marketing programs, including: preparing and producing video, audio and
advertising materials; administering and funding local, regional and multi-regional marketing programs;
purchasing direct mail and other media marketing; employing advertising, promotion and marketing
agencies; supporting public relations; conducting market research; implementing and testing Trade Dress
and design prototypes; and other advertising, promotion and marketing activities. We have the right, at
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our option, to use marketing fees to prepare, furnish and/or offer for sale to you advertising, marketing
and promotional formats and materials as described in Section 9.3.
(c)
Accounting for the Marketing Fees Collected. The marketing fees we collect will be
accounted for separately from our other funds, although we are not required to establish a separate
marketing fund or bank account for such fees. We have the right to use the marketing fees we collect to
defray the salaries, employee benefits, administrative costs and overhead we and our Affiliates may incur
in activities related to our marketing programs, including conducting market research, preparing
advertising, promotion and marketing materials and collecting and accounting for the marketing fees we
collect. Upon your prior written request made within the first quarter of any calendar year, we will make
available to you no later than 120 days after the end of the calendar year, an annual statement of moneys
collected and costs incurred for our marketing programs. No independent audit is required in connection
with this statement or the marketing fees we collect. We and our Affiliates have no fiduciary obligation
above and beyond the contractual obligations listed herein to franchisees with respect to the collection
and expenditure of marketing fees. We have the right to create a marketing fund in the future to be
operated by us or through an entity separate from us.
(d)
Benefits to Individual Stores. You understand and agree that our collection expenditure
of marketing fees is intended to maximize recognition of the Marks and patronage of TCBY Stores.
Although we will endeavor to utilize the marketing fees we collect to develop advertising and marketing
materials and programs and to place advertising that will benefit all TCBY Stores, we cannot ensure you
that our expenditure of marketing fees in or affecting any geographic area will be proportionate or
equivalent to the marketing fee contributions by TCBY Stores operating in that geographic area or that
any TCBY Store will benefit directly or in proportion to the marketing fees it pays to us from the
development of advertising and marketing materials or the placement of advertising.
9.2
Advertising and Promotional Activities by You. In addition to marketing fees, you agree that you
will spend on marketing and related programs any amount that is required under your lease or sublease. Those
amounts cannot be applied against the weekly marketing fees you are required to pay us. In addition, those
amounts typically vary from lease to lease, and therefore, all TCBY Store franchisees will not be obligated to
spend the same amount on local advertising and marketing. You agree that all advertising, promotion and
marketing by you will comply with the requirements of Article 10, will be completely clear and factual and not
misleading, and will conform to the highest standards of ethical marketing and promotion policies which we have
the right to prescribe. Prior to use, all press releases and policy statements and samples of all local advertising,
marketing and related materials not prepared or previously approved by us will be submitted to us for approval.
Our approval will not be unreasonably withheld. Pamphlets, brochures, cards or other promotional materials
offering free Products may only be used if prepared by us, unless otherwise approved in advance by us. However,
we will give favorable consideration to your use of free product cards developed by you, if the cards clearly state
that they may only be redeemed at TCBY Stores owned by you. If we do not give you written approval of any
advertising or other promotional materials within 15 days from the date of receipt by us of the materials, we will
be deemed to have disapproved the submission. You agree not to use any advertising, marketing or related
materials that we have disapproved. You also agree to list your Store in the principal telephone directories
distributed in your metropolitan area.
9.3
Our Advertising Materials. From time to time, we will provide you with copies of advertising,
marketing and promotional formats and materials for use in your Store, which we have prepared using marketing
fees we have collected from TCBY Stores. You are only required to pay shipping and handling costs for these
items or, if you want additional or replacement copies, our direct cost of producing such items together with any
related shipping, handling and storage charges. In addition to these items, we may offer you the option of
purchasing other advertising, marketing and promotional formats and materials that we have prepared and that are
suitable for use at local TCBY Stores. We may provide samples, copies or information explaining these items to
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you from time to time. If you elect to purchase any such items from us, we will provide them to you at our direct
cost of producing them plus any related shipping, handling and storage charges. In addition, we have the right to
develop and market special mandatory promotional items for TCBY Stores and require you to maintain a
representative inventory of these promotional items to meet public demand. In such case, we will make these
items available to you at our direct cost plus a reasonable mark-up and any shipping, handling and storage
charges. You will have the right to purchase alternative promotional items if the alternative items conform to the
specifications and quality standards we establish and you obtain our prior written approval. We also have the
right to conduct coupon promotions. In such case, we have the right to require you to accept coupons that are
issued by us or our Affiliates and presented at your Store by your customers. You will receive certain
compensation for these coupons when you tender them to us in accordance with our System Standards. You
acknowledge and agree that all payments to us for the items described in this Section 9.3 are nonrefundable and
cannot be applied against the weekly marketing fee you are required to pay to us. You must participate in all
mandatory promotions and product roll-outs that are agreed upon by the franchisee marketing committee (if the
franchisee association has established that committee or one performing a similar function) and us. If you do not
place minimum orders of products and other items necessary for a mandatory promotion or product roll-out by a
certain date, we have the right to send, or direct suppliers to send, an automatic shipment of a specified minimum
quantity of such products and items to you, and you must accept and pay for them upon receipt.
9.4
Advertising Cooperatives. We have the right, at any time, to form, organize, maintain and
otherwise make use of, local advertising cooperatives in areas that include your Store but we will not require you
to participate in or contribute to the advertising cooperative unless you agree to do so in writing.
ARTICLE 10
USE OF THE MARKS AND CONFIDENTIAL INFORMATION
10.1
Ownership and Goodwill of Marks. You acknowledge that we or our Affiliates are the exclusive
owners of the Marks and that your right to use the Marks is derived solely from this Agreement and is limited to
the conduct of business in compliance with this Agreement and all applicable System Standards, specifications
and operating procedures that we require. Any unauthorized use of the Marks by you will constitute a breach of
this Agreement and an infringement of our rights in the Marks. You agree that your usage of the Marks and any
goodwill established by that use will be for our and our Affiliates’ exclusive benefit. This Agreement does not
confer any past, present or future goodwill or other interests in the Marks upon you, other than the right to operate
a TCBY Store in compliance with this Agreement. All provisions of this Agreement applicable to the Marks will
apply to any additional proprietary trade and service marks and commercial symbols we or our Affiliates
authorize for your use in the future.
10.2
Limitations on Your Use of Marks. You agree to use the Marks as the sole identification of your
Store. You will not use any Mark as part of any corporate or trade name or with any prefix, suffix or other
modifying words, terms, designs or symbols (other than logos licensed to you under this Agreement), or in any
modified form, nor may you use any Mark in connection with the performance or sale of any unauthorized
services or products or in any other manner not expressly authorized in writing by us. You agree to display the
Marks prominently at your Store, on supplies or materials designated by us and in connection with packaging
materials, forms, labels and advertising and marketing materials. All Marks will be displayed in the manner we
require. You agree to use the registration symbol “®” in connection with your use of the Marks that are registered.
You agree to refrain from any business or marketing practice which may be injurious to our business and the
goodwill associated with the Marks and other TCBY Stores. You agree to give such notices of trade and service
mark registrations as we specify and to obtain such fictitious or assumed name registrations as may be required
under applicable law. You may not use any Mark as part of an electronic mail address or on any sites on the
Internet or World Wide Web. Without limiting the foregoing, you may not use or register the Marks as an
Internet domain name.
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10.3
Discontinuance of Use of Marks. We have the right to require you to modify or discontinue use
of any Marks or use one or more additional or substitute trade or service marks if we determine it becomes
advisable to do so at any time. In such case, you agree to comply with our directions to modify or discontinue the
use of the Mark or use one or more additional or substitute trade or service marks within a reasonable time after
notice from us. We will reimburse you for your reasonable direct expenses in modifying or discontinuing the use
of a Mark and substituting a different trademark or service mark. However, we will not be obligated to reimburse
you for any loss of goodwill associated with any modified or discontinued Mark or for any expenditures made by
you to promote a modified or substitute trademark or service mark.
10.4
Notification of Infringements and Claims. You agree to immediately notify us of any apparent
infringement of or challenge to your use of any Mark or claim by any person of any rights in any Mark, and you
will not communicate with any person other than us or our counsel in connection with the infringement, challenge
or claim. We and our Affiliates will have the right to take the action we deem appropriate and control exclusively
any litigation, U.S. Patent and Trademark Office proceeding or any other administrative or court proceeding
arising out of any such infringement, challenge or claim or otherwise relating to any Mark. You agree to execute
any instruments and documents, render such assistance and do those things as, in the opinion of our legal counsel,
may be necessary or advisable to protect and maintain our interests in any litigation or U.S. Patent and Trademark
Office or other proceeding or otherwise to protect and maintain our interests in the Marks.
10.5
Our Indemnification of You. We agree to indemnify you against and to reimburse you for all
damages for which you are held liable in any proceeding arising out of your authorized use of any Mark in
compliance with this Agreement, provided that you have timely notified us of the claim or proceeding and have
otherwise complied with this Agreement. We and our Affiliates shall control the defense of any proceeding
arising out of your authorized use of any Mark.
10.6
Copyrights. We or our Affiliates claim copyrights in the Confidential Information, the
Operations Manual, our construction plans, specifications and materials, printed advertising and promotional
materials and in related items used in operating the Franchise. You may use the Operations Manual and other
materials during the term of the Franchise Agreement. The provisions of Sections 10.1, 10.3, 10.4 and 10.5
relating to Marks also apply to copyrights owned by us, as if copyrights were included within the definition of
Marks.
10.7
Concepts Developed by You. We and our Affiliates will have the perpetual right to own and use
and authorize other TCBY Stores to use, and you will fully and promptly disclose to us, all ideas, concepts,
formulas, recipes, methods, techniques and other materials relating to the development or operation of a restaurant
or retail outlet serving products similar to TCBY Products or any similar food service business conceived or
developed by you or your employees during the term of this Agreement. You may not test, offer, or sell any new
products without our prior written consent.
10.8
Confidential Information. We may disclose certain Confidential Information to you in training,
the Operations Manual and in guidance furnished to you during the term of the Franchise. You are not acquiring
any interest in Confidential Information, other than the right to utilize Confidential Information disclosed to you
in the operation of your Store during the term of this Agreement. Your use or duplication of any Confidential
Information in any other business will constitute an unfair method of competition and a violation of this
Agreement. The Confidential Information is proprietary, includes our trade secrets and is disclosed to you solely
on the condition that you agree:
(a)
Not to use Confidential Information in any other business or capacity;
(b)
To maintain the absolute confidentiality of Confidential Information during and after the
term of this Agreement;
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(c)
Not to make unauthorized copies of any portion of Confidential Information disclosed in
written or other tangible form; and
(d)
To adopt and implement all reasonable procedures that we prescribe to prevent
unauthorized use or disclosure of Confidential Information, including restrictions on disclosure of
Confidential Information to your employees and compliance with the requirement that certain key
employees execute confidentiality agreements as a condition of employment.
ARTICLE 11
COVENANTS NOT TO COMPETE
11.1
In Term Non-Compete. You agree and acknowledge that we would be unable to protect the
Confidential Information against unauthorized use or disclosure and would be unable to encourage a free
exchange of ideas and information among TCBY Stores if franchised owners of TCBY Stores or the manager of
your Store were permitted to hold interests in or perform services for a Competitive Business. You also
acknowledge and agree that we have granted the Franchise to you in consideration of and reliance upon your
agreement to deal exclusively with us. Therefore, during the term of this Agreement, no Restricted Person and no
manager of your Store will:
(a)
Have any direct or indirect interest in a Competitive Business, except other TCBY Stores
or other stores operated by you under franchise agreements with us or any of our Affiliates;
(b)
Perform services as a director, officer, manager, employee, consultant, representative,
agent or otherwise for a Competitive Business, except other TCBY Stores or other stores operated by you
under franchise agreements with us or any of our Affiliates; or
(c)
Recruit or hire any employee who, within the immediately preceding 6-month period,
was employed by us or any TCBY Stores operated by us, our Affiliates or another franchisee or licensee
of us, without obtaining the prior written permission of us or the franchisee or licensee.
11.2
Post Term Non-Compete. Upon termination of this Agreement for any reason other than as a
result of our default, you agree that, for a period of 2 years (or 3 years if we purchase your Store as provided in
Section 14.5) commencing on the effective date of termination, no Restricted Person will have any direct or
indirect interest as an owner, investor, partner, director, officer, employee, consultant, representative or agent or in
any other capacity in any Competitive Business located or operating within (a) 10 miles of your Store, or (b) 10
miles of any TCBY Stores, except TCBY Stores that you operate under agreements with us or our Affiliates. You
expressly acknowledge that you and the other Restricted Persons possess skills and abilities of a general nature
and have other opportunities for exploiting those skills. Consequently, enforcement of the covenants made in this
Section 11.2 will not deprive you or any of the other Restricted Persons of their personal goodwill or ability to
earn a living.
11.3
Shareholder Exception. The restrictions of Sections 11.1 and 11.2 do not apply to the ownership
of shares of a class of securities listed on a stock exchange or traded on the over-the-counter market that represent
2% or less of the number of shares of that class of securities issued and outstanding.
11.4
Enforcement of Non-Competes. If any covenant in this Agreement which restricts competitive
activity is deemed unenforceable by virtue of its scope in terms of area, business activity prohibited and/or length
of time, but would be enforceable by reducing any part or all of the covenant, you and we agree that the covenant
will be enforced to the fullest extent permissible under the laws and public policies applied in the jurisdiction in
which enforcement is sought.
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ARTICLE 12
TRANSFERS
12.1
Transfers by Us. This Agreement is fully transferable by us and will inure to the benefit of any
transferee or other legal successor to our interest in this Agreement.
12.2
Restrictions on Transfers by You. Your rights and duties created by this Agreement are personal
to you, and we have granted this Agreement to you in reliance upon our perceptions of the individual or collective
character, skill, aptitude, attitude, business ability and financial capacity of you and, if you are not an individual,
your Entity Owners. Accordingly, you must give us written notice in a form satisfactory to us of your intention to
accomplish any Transfer hereunder no less than 60 days prior to the proposed Transfer, and no Transfer will be
made without our prior written approval. Any Transfer without our approval will constitute a breach of this
Agreement and will be void and of no effect.
12.3
Conditions for Approval of Transfers by You. If you are in full compliance with this Agreement
and provide prior written notice to us in accordance with Section 12.2, we will not unreasonably withhold our
approval of a Transfer that meets all of the following requirements:
(a)
Character. The proposed transferee and the individuals ultimately owning the transferee,
if the transferee is an Entity, must be individuals of good moral character and otherwise meet our then
applicable standards for owners of TCBY Stores;
(b)
Business Experience. The transferee and, if the transferee is an Entity, its Entity Owners
must have sufficient business experience, aptitude and financial resources to purchase under the terms and
conditions proposed, own and operate the Store and its business and comply with this Agreement;
(c)
Training. The proposed transferee and/or its senior management personnel have
completed to our satisfaction our then current training program for transferees after signing the franchise
documents set forth herein, but prior to assuming operations of the Store;
(d)
Satisfaction of Obligations. You have paid all amounts owed for purchases by you from
us and our Affiliates and all other amounts owed to us or our Affiliates and third-party creditors;
(e)
Execution of Assignment and Assumption Agreement. You and your transferring Entity
Owners, if you are an Entity, the transferee and its Entity Owners, if the transferee is an Entity, and us
have entered into our then current form of assignment and assumption agreement, pursuant to which
(i) the transferee has agreed to be bound by and has expressly assumed all of the terms and conditions of
this Agreement for the remainder of its term, (ii) the transferee’s Entity Owners, if any, have executed our
then current form of guaranty, and (iii) you and your Entity Owners, if any, have agreed to release us and
our Affiliates and our and their respective officers, directors, employees and agents from any and all
claims;
(f)
Execution of New Agreement at Our Option. In addition to entering into our then current
assignment and assumption agreement, at our option, the transferee has executed our then current form of
Franchise Agreement for a term equal to the remainder of current term of this Agreement and any
additional term purchased in accordance with Section 12.3(n), and if the transferee is an Entity, each
Entity Owner of the transferee has executed our then current form of guaranty;
(g)
Payment of Transfer Fees. You or the transferee has paid our then current transfer fee for
a Franchise Agreement. However, we will not charge a transfer fee if the Transfer is among existing
Entity Owners of you and the names and identity of all Entity Owners remain the same following the
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Transfer. We reserve the right to charge a reduced fee in certain circumstances, including a Transfer to a
wholly-owned corporation under Section 12.4 and may refund the transfer deposit if we do not approve
the transfer or in other circumstances that we agree to in writing;
(h)
Approval of Terms of Transfer. We have approved the material terms and conditions of
the Transfer, including, without limitation, the price and terms of payment. However, our approval of a
Transfer does not ensure the transferee’s success as a TCBY Store franchisee nor should the transferee
rely upon our approval of the Transfer in determining whether to acquire your Store;
(i)
Subordination. If you (or your Entity Owners) finance any part of the sale price of the
transferred interest, you and the Entity Owners have agreed that all obligations of the transferee under any
promissory notes, agreements or security interests reserved by you (or your Entity Owners) will be
subordinate to the transferee’s obligations to us and our Affiliates;
(j)
Non-Competition Agreement. Each Restricted Person has executed a non-competition
agreement in our favor and in favor of the transferee agreeing that, for a period of 3 years commencing on
the effective date of the transfer, no Restricted Person will acquire or hold any direct or indirect interest as
an owner, investor, partner, director, officer, manager, employee, consultant, representative or agent, or in
any other capacity, in a Competitive Business located within (i) 10 miles of your Store, or (ii) 10 miles of
any TCBY Store, except TCBY Stores that you operate under agreements with us or our Affiliates. The
restrictions of this Section 12.3(j) will not apply to the ownership of shares of a class of securities listed
on a stock exchange or traded on the over-the-counter market that represent 2% or less of the number of
shares of that class of securities issued and outstanding;
(k)
Landlord Consent. If consent is required, the lessor of the Premises consents to the
assignment or sublease of the Premises to the transferee;
(l)
Non-Use of Marks. You and your Entity Owners have agreed that you and they will not
directly or indirectly at any time or in any manner (except with respect to TCBY Stores owned and
operated by you or them) identify yourself or themselves or any of their businesses as a current or former
TCBY Store, or as a franchisee, licensee or dealer of us or our Affiliates, use any Mark, any colorable
imitation of any of the Marks or other indicia of a TCBY Store in any manner or for any purpose or
utilize for any purpose any trade name, trade or service mark or other commercial symbol that suggests or
indicates a connection or association with us or our Affiliates;
(m)
Refurbishment. You or the transferee has agreed to any refurbishment or remodel of the
Store required by us to bring the Store in compliance with the then current System Standards and Trade
Dress, including without limitation, any Mid-Term Refresh that you would otherwise have been required
to complete under this Agreement during a period of 12 months before or 12 months after the transfer
date;
(n)
Sufficient Term. You have sufficient term remaining under this Agreement, or the
transferee has agreed to purchase from us, pursuant to our then-current term pre-purchase agreement,
sufficient additional term under this Agreement to satisfy our then current policy on remaining term
requirements for transfers;
(o)
Licensed Escrow Professional. You and the transferee, at your cost, use a licensed
escrow professional or other qualified third party acceptable to us to conduct the closing of the Transfer.
We have the right to require that all documents and fees payable to us shall be deposited into escrow prior
to the time that your transferee attends our training program, together with escrow instructions in form
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and content satisfactory to us providing for a final closing of the Proposed Transfer after the transferee
successfully completes all required training; and
(p)
Other Conditions. You and your transferring Entity Owners, if you are an Entity, have
complied with any other conditions that we reasonably require from time to time as part of our transfer
policies.
In connection with any assignment permitted under this Section 12.3, you will provide us with all documents to
be executed by you and the proposed transferee at least 30 days prior to execution.
12.4
Transfer to a Wholly-Owned Corporation or Limited Liability Company. If you are in full
compliance with this Agreement, you will have the right to transfer your rights in this Agreement to a corporation
or limited liability company which will conduct no business other than the business contemplated by this
Agreement, which you actually manage and in which you maintain management control and own and control
100% of the equity and voting power of all issued and outstanding capital stock or other ownership interests.
Transfers of shares or other ownership interests of you will be subject to the provisions of Sections 12.2 and 12.3.
Even though a transfer is made under this Section 12.4, you will remain personally liable under this Agreement as
if the transfer to such corporation or limited liability company had not occurred. The articles of incorporation, bylaws and other organizational documents of the corporation or limited liability company will recite that the
issuance and assignment of any interest in the corporation or limited liability company is restricted by the terms of
this Article 12, and all issued and outstanding stock certificates and other documents representing ownership
interests in you will bear a legend reciting or referring to these restrictions.
12.5
Our Right of First Refusal.
(a)
Submission of Offers to Us. If you or one or more of your Entity Owners desires to make
a Transfer, you or the Entity Owner will obtain a bona fide, executed written offer and an earnest money
deposit (in the amount of 5% or more of the offering price) from a responsible and fully disclosed
purchaser and will immediately submit to us a true and complete copy of such offer, which will include
details of the payment terms of the proposed sale and the sources and terms of any financing for the
proposed purchase price and a list of the owners of record and beneficially of any offeror that is an Entity
and the individuals ultimately owning or controlling the offeror. If the offeror or an owner of the offeror
is a publicly-held Entity, you will also submit to us copies of the most current annual and quarterly
reports of the publicly-held Entity. To be a valid, bona fide offer, the proposed purchase price will be
denominated in a dollar amount. The offer must apply only to an interest in this Agreement or a
Controlling Interest in you and may not include an offer to purchase any other property or rights of you or
your Entity Owners. However, if the offeror proposes to buy any other property or rights from you or
your Entity Owners under a separate, contemporaneous offer, the price and terms of purchase offered to
you or your Entity owners for the interest in this Agreement or the Controlling Interest in you will reflect
the bona fide price offered for that interest and will not reflect any value for any other property or rights.
(b)
Our Right to Purchase. We will have the right, exercisable by written notice delivered to
you or your Entity Owners within 30 days from the date of delivery of an exact copy of the offer to us, to
purchase the interest in this Agreement or such Controlling Interest in you for the price and on the terms
and conditions contained in the offer. However we have the right to substitute cash for any form of
payment proposed in the offer, our credit will be deemed equal to the credit of any proposed purchaser,
and we will have not less than 60 days to close the purchase. Without regard to the representations and
warranties demanded by the proposed purchaser, if any, we will have the right to purchase the interest,
receiving from you all customary representations and warranties given by the seller of the assets of a
business or equity interest in an Entity, as applicable, including representations and warranties as to
ownership, condition of and title to assets, absence of liens and encumbrances relating to the ownership
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interest and assets, and validity of contracts and liabilities affecting the assets being purchased, contingent
or otherwise.
(c)
Non-Competition Restriction. If we exercise our right of first refusal, you and each other
Restricted Person must execute a non-competition agreement in our favor agreeing to the same
restrictions described in Section 12.3(j). If we exercise our right of first refusal, you and your Entity
Owners further agree that you will abide by the restrictions of Section 12.3(l).
(d)
Non-Exercise by Us of Our Right of First Refusal. If we do not exercise our right of first
refusal, you (or your Entity Owners) may complete the sale to such purchaser pursuant to and on the
terms of such offer, subject to our approval as provided in Sections 12.2 and 12.3. However, if the sale to
the purchaser is not completed within 120 days after delivery of the offer to us, or if there is a material
change in the terms of the sale, our right of first refusal will be extended for 30 days after the expiration
of the 120-day period or after the material change in the terms of the sale.
12.6
Death or Permanent Disability. If you are an individual, upon your death or permanent disability
or, if you are an Entity, upon the death or permanent disability of an individual owner of a Controlling Interest in
you, the executor, administrator, conservator or other personal representative of that person will transfer his
interest in this Agreement or his Controlling Interest in you within a reasonable time, not to exceed 12 months
from the date of death or permanent disability, to a third party approved by us. A transfer under this Section 12.6,
including, without limitation, transfer by devise or inheritance, will be subject to all of the terms and conditions
for Transfers contained in Sections 12.2 and 12.3, and unless transferred by gift, devise or inheritance, subject to
the terms of Section 12.5. Failure to dispose of such interest within the specified period of time will constitute a
breach of this Agreement. For purposes of this Agreement, the term “permanent disability” will mean a mental
or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent you
or an owner of a Controlling Interest in you from supervising the operation of your Store for a period of 6 months
from the onset of such disability, impairment or condition.
12.7
Effect of Consent to Transfer. Our consent to a Transfer will not constitute a waiver of any
claims we may have against the transferor nor be deemed a waiver of our right to demand full compliance by the
transferee with the terms or conditions of this Agreement.
12.8
Preparation of a Financial Report by You. We have the right to require you to prepare and furnish
to a prospective transferee and/or us such financial reports and other data relating to your Store and its operations as
we deem necessary or appropriate for the prospective transferee and/or us to evaluate the Store and the proposed
transfer. You agree that we have the right to confer with prospective transferees and furnish them with information
concerning your Store and proposed transfer without being held liable to you, except for intentional misstatements
made to any such transferee. Any such information furnished by us to prospective transferees is for the sole purpose
of permitting the transferees to evaluate your Store and the proposed transfer and shall not be construed in any manner
or form whatsoever as financial performance representations, or representations or claims of success or failure.
ARTICLE 13
DEFAULT AND TERMINATION
13.1
Your Defaults. You will be in default under the terms of this Agreement if any of the following
occur:
(a)
Insolvency. You become insolvent or admit in writing your inability to pay your debts as
they mature, or make an assignment for the benefit of creditors, file a petition under any bankruptcy act,
receivership statute, or the like or if a petition is filed by a third party, or if an application for a receiver is
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made by anyone and the petition or application is not resolved favorably to you within 60 days (any such
event described in this Section 13.1(a) being referred to as an “Insolvency Event”);
(b)
Unauthorized Transfer. A Transfer occurs in violation of the provisions of Article 12;
(c)
Misstatements and other Adverse Developments. You (or, if you are an Entity, any
Entity Owner of you) have made any material misrepresentation or omission in your application for the
rights conferred by this Agreement, are convicted by a trial court of or plead no contest to a felony or to
any other crime or offense that may adversely affect the goodwill associated with the Marks, or if you
engage in any conduct which may adversely affect the reputation of any TCBY Store or the goodwill
associated with the Marks;
(d)
Unauthorized Use of Marks or Confidential Information. You or an Entity Owner of you
makes any unauthorized use of the Marks or any unauthorized use or disclosure of Confidential
Information;
(e)
Abandonment. You abandon or fail actively to operate your Store for 3 consecutive days
unless your Store has been closed for a purpose approved in advance by us in writing or because of fire,
flood or other casualty, government order or other reasons beyond your reasonable control;
(f)
Breach of Lease; Loss of Right of Possession. You are in breach of any of your
obligations under your lease or sublease of the Premises or you lose the right to possession of the
Premises;
(g)
Failure to Comply with Certain System Standards and Health Requirements. You fail or
refuse to comply with System Standards relating to the cleanliness or sanitation of your Store or violate
any health, safety or sanitation law, ordinance or regulation;
(h)
Understatements of Gross Revenues. You understate your Store’s Gross Revenues in any
report or financial statement by an amount greater than 5%;
(i)
Failure to Make Payments. You or any of your Affiliates fail to make payments, when
due, of any amounts due to us or our Affiliates under this Agreement or any other agreement with us or
our Affiliates, or fail to make payments, when due, of any amounts due to vendors, distributors, suppliers
or landlords of the Store that relate to the Store’s operation;
(j)
Failure to Pay Taxes. You fail to pay any federal or state income, sales or other taxes due
with respect to your Store’s operations unless you are in good faith contesting your liability for the taxes;
(k)
Failure of Inspection. You fail to achieve a passing score reasonably established by us on
two consecutive announced or unannounced store inspections conducted by us or our agents;
(l)
Other Breaches. You fail to comply with any other provision of this Agreement or any
System Standard;
(m)
Repeated Breaches. You fail on 2 or more separate occasions within any period of 12
consecutive months or on 3 occasions during the term of this Agreement to submit when due reports or
other data, information or supporting records or to pay when due the continuing fees or other payments
due to us or our Affiliates or otherwise fails to comply with this Agreement, whether or not the failures to
comply are corrected after notice thereof is delivered to you;
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(n)
Financing Defaults. You default with respect to any of your obligations to us or any
other lender under any financing provided to you in connection with this Franchise Agreement or a
purchase of Franchised Store assets; or
(o)
Default of any Other Agreement. You default in the performance or observance of any of
your obligations under any other agreement with us or our Affiliates.
(p)
Failure to Secure Store Premises. You fail to obtain our approval of and secure the
Premises for your Store within the 6-month period described in Section 2.1(a) of this Agreement, if at the
time of signing this Agreement we have not identified the Premises on Appendix A attached to this
Agreement.
(q)
Possession or Use of Unauthorized Products. You possess or use on the Premises of your
Store unauthorized products, as specified periodically by us in the Operations Manual or otherwise.
13.2
Our Right to Terminate if You Default. We have the right to terminate this Agreement in
accordance with the following provisions:
(a)
Immediate Termination With No Opportunity to Cure. You will have no right or
opportunity to cure any of the defaults described in Sections 13.1(a), 13.1(b), 13.1(c), 13.1(d), 13.1(e),
13.1(f), 13.1(j), 13.1(m), 13.1(n), 13.1(p) and 13.1(r) and, upon the occurrence of one of these defaults,
this Agreement will terminate effective immediately on our issuance of written notice of termination.
(b)
Immediate Termination After 48 Hours to Cure. You will have 48 hours after written
notice of default to cure a default relating to your failure to comply with certain System Standards and
health requirements, as described in Section 13.1(g). If you fail to cure or only partially cure such a
default within the 48-hour cure period, we will have good cause to terminate this Agreement and such
termination will be effective immediately upon on our issuance of written notice of termination.
(c)
Immediate Termination After 10 Days to Cure. You will have 10 days from the date of
written notice of default to cure a default relating to your failure to make payments, as described in
Section 13.1(i). If you fail to cure or only partially cure such a default within the 10-day cure period, we
will have good cause to terminate this Agreement and such termination will be effective immediately
upon on our issuance of written notice of termination.
(d)
Termination After Opportunity to Cure.
Except as otherwise provided in
Sections 13.2(a), 13.2(b) and 13.2(c): (i) you will have 30 days from the date of written notice of default
to cure any default under this Agreement or, if the default cannot reasonably be cured within 30 days
from the date of written notice of default, provide proof acceptable to us of efforts which are reasonably
calculated to correct the default within a reasonable time, which will in no event be more than 30 days
from the date of written notice of default; (ii) your failure to fully cure a default within the applicable cure
period will provide us with good cause to terminate this Agreement; (iii) the termination will be
accomplished by mailing or delivering to you written notice of termination that will identify the grounds
for the termination; and (iv) the termination will be effective 30 days after the date of written notice of
termination.
(e)
Other Rights and Remedies. If you cure any default after the applicable cure period has
expired, we still have the right to terminate this Agreement. In any event, our right to terminate this
Agreement is in addition to whatever other rights and remedies are available to us. Without limiting the
foregoing, we reserve the right to interrupt your product shipments or ordering privileges instead of or in
addition to exercising our right to terminate this Agreement, or require you to sign our then-current form
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of Franchise Agreement if we choose to rescind our termination of this Agreement. We also reserve the
right (but not the obligation), at your sole expense, to take actions necessary to cure any default that you
do not timely cure within any applicable period provided in this Agreement, and to establish reasonable
conditions that you must satisfy to cure any default, such as requiring you to pay for a year of monthly
Store inspections if you commit a default relating to Section 13.1(k).
(f)
Effect of Other Laws. The provisions of any valid, applicable law or regulation
prescribing permissible grounds, cure rights or minimum periods of notice for termination of this
Franchise will supersede any provision of this Agreement that is less favorable to you than such law or
regulation.
13.3
Our Right to Terminate if You Fail to Complete Training. If you or your initial store manager
fails to complete all phases of the initial training program to our satisfaction, we will have the right to terminate
this Agreement effective upon delivery of notice of termination to you. If we terminate the Agreement as
permitted by this provision, we will refund to you the initial franchise fee less all reasonable expenses incurred by
us in connection with (i) the preparation of this Agreement and all related agreements, (ii) the grant of the
Franchise, (iii) approval of the Premises, (iv) selection of the Premises, and (v) any other services performed by
us in connection with the establishment and development of your Store. However, in no event will the refund
exceed 50% of the initial franchise fee. In addition, we will not refund any portion of the $5,000 deposit you pay
to us if at the time of signing this Agreement we have not identified the Premises on Appendix A attached to this
Agreement, as described in Section 6.1. The refund will be delivered to you upon execution of all releases,
waivers and other agreements necessary to terminate the relationship between you and us.
13.4
Your Right to Terminate if We Default. We will be in default under this Agreement if we
materially breach a provision contained herein. Our failure to either cure such a default within 30 days from the
date of a written notice of default delivered to us or, if such default cannot reasonably cured within 30 days, to
provide proof to you of efforts which are reasonably calculated to cure such default within a reasonable time
(which will in no event be more than 60 days after notice), will give you good cause to terminate this Agreement;
provided you are in compliance with this Agreement. Termination will be accomplished by delivering to us
written notice of termination, which notice will state the grounds for the termination and will be effective 10 days
after delivery to us. Your right to terminate this Agreement is in addition to whatever other rights and remedies
are available to you.
13.5
Assumption of Management. If you are in default of this Agreement for abandonment (as
described in Section 13.1(e)), we have the right, at our option, to enter the Premises and assume the management
of your Store for any period of time we deem appropriate. If we assume management of your Store, we will
appoint a manager who will maintain Store operations. All funds from the operation of your Store during the
period of management by our appointed manager will be kept in a separate fund, and all expenses of your Store,
including compensation, other costs, and travel and living expenses of our appointed manager, will be charged to
such fund. As compensation for such management services, we will charge such fund 10% of the Gross
Revenues of your Store during the period of our management. Operation of your Store during any such period
will be on your behalf, provided that we will have a duty only to utilize our good faith effort and will not be liable
to you for any debts or obligations incurred by your Store or to any of your creditors for any merchandise,
materials, supplies or services purchased by your Store during any period in which your Store is managed by our
appointed manager. You will maintain in force for your Store all insurance policies required by this Agreement.
Our right to assume management of your Store pursuant to this Section 13.5 is in addition to and does not affect
our right to terminate this Agreement under Section 13.2.
13.6
Early Termination Damages. Upon (i) our termination of this Agreement according to its terms
and conditions, except as a result of the circumstances set forth in Section 4.2(c), or (ii) your termination of this
Agreement prior to expiration of its current term, except for termination as a result of the circumstances set forth
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in Section 4.2(c) or in accordance with Section 13.1(f), you understand that we may seek damages, and you
acknowledge and agree we will be entitled to damages, for anticipated and reasonably estimated lost profits.
ARTICLE 14
POST TERM OBLIGATIONS
14.1
Reversion of Rights. You agree that upon termination or expiration of this Agreement, all of your
rights to use the Marks and all other rights and licenses granted herein and the right and license to conduct
business under the Marks at your Store and on the Premises shall revert to us without further act or deed of any
party. All right, title and interest of you in, to and under this Agreement shall become our property.
14.2
Payment of Amounts Owed to Us and Others following Termination or Expiration. You agree to
pay us within 15 days after the date of termination or expiration of this Agreement, or such later date as the
amounts due to us are determined, the continuing fees, marketing fees, amounts owed for purchases by you from
us or our Affiliates, interest due on any of the foregoing and all other amounts owed to us or our Affiliates which
are then unpaid.
14.3
Discontinuance of the Use of the Marks following Termination or Expiration. You agree that,
upon termination or expiration of this Agreement, you will:
(a)
Not directly or indirectly at any time or in any manner (except with respect to other
TCBY Stores owned and operated by you) identify yourself or any business as a current or former TCBY
Store, or as a franchisee, licensee or dealer of us or our Affiliates, use any Mark, any colorable imitation
of a Mark or other indicia of a TCBY Store in any manner or for any purpose or utilize for any purpose
any trade name, trade or service mark or other commercial symbol that suggests or indicates a connection
or association with us or our Affiliates;
(b)
Deliver to us all signs, sign-faces, sign-cabinets, marketing materials, forms, invoices and
other materials containing any Mark or otherwise identifying or relating to a TCBY Store and allow us,
without liability, to remove all such items from your Store;
(c)
Take such action as may be required to cancel all fictitious or assumed name or
equivalent registrations relating to your use of any Mark;
(d)
If we do not purchase your Store as provided in Section 14.5, make the changes to the
exterior and interior appearance of your Store to distinguish the Trade Dress as are reasonably required by
us;
(e)
Deliver all materials and supplies identified by the Marks in full cases or packages to us
for credit and dispose of all other materials and supplies identified by the Marks within 30 days after the
effective date of termination of this Agreement;
(f)
Notify the telephone company and all telephone directory publishers of the termination of
your right to use any telephone and telecopy numbers and any regular, classified or other telephone
directory listings associated with any Mark and to authorize transfer of those rights to us, or at our
direction, our designee. You agree that, as between you and us, we have the right to and interest in all
telephone and telecopy numbers and directory listings associated with any Mark. You authorize us and
appoint us and any of our officers as your attorney in fact, to direct the telephone company and all
telephone directory publishers to transfer any telephone and telecopy numbers and directory listings
relating to your Store to us, or our designee, should you fail or refuse to do so, and the telephone company
and all telephone directory publishers may accept such direction or this Agreement as conclusive of our
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exclusive rights in the telephone and telecopy numbers and directory listings and our authority to direct
their transfer; and
(g)
Furnish us, within 30 days after the effective date of termination, with evidence
satisfactory to us of your compliance with the obligations in this Section 14.3.
You agree that if you fail to fulfill any of the obligations contained in this Section 14.3 upon termination or
expiration of this Agreement, we have the right, at our option, to perform such obligations at your expense.
14.4
Discontinuance of Use of Confidential Information following Termination or Expiration. You
agree that, upon termination or expiration of this Agreement, you will immediately cease to use any Confidential
Information disclosed to you pursuant to this Agreement in any business or otherwise and you will return to us all
copies of the Operations Manual and any other confidential materials which we have loaned to you.
14.5
Our Option to Purchase Franchised Stores.
(a)
Option to Purchase. Upon termination or expiration of this Agreement other than as a
result of our default, we or our assignee will have the right, at our option, exercisable by giving written
notice thereof within 60 days from the date of such termination or expiration, to acquire from you the
inventory of TCBY Products, materials, and supplies that are in good and saleable condition and not
obsolete or discontinued (the “Inventory”) and the equipment, furnishings, signs, and the other tangible
assets of your Stores (collectively, with the Inventory, the “Assets”). We will have the right to assign this
option to purchase and our rights under this Section 14.5. We will be entitled to all customary warranties
and representations in connection with our purchase, including, without limitation, representations and
warranties as to ownership, condition of and title to the Assets, no liens and encumbrances on the Assets,
and validity of contracts and agreements and liabilities benefiting us or affecting the Assets, contingent or
otherwise.
(b)
Purchase Price. The purchase price for the Assets will be equal to the greater of:
(i)
The sum of the book value of your Store’s Assets, other than Inventory,
amortized on a straight-line basis over a 10-year period, plus the lesser of cost and the thencurrent wholesale market value of the Inventory, or
(ii)
The product of your Store’s average cash flow for the 2 most recently completed
fiscal years, multiplied by 2. “Cash flow” means your Store’s Gross Revenues less all
Franchised Store-related costs (i.e., cost of goods sold, labor, occupancy and other Franchised
Store expenses) as well as annual administrative costs of $15,000, continuing fees and marketing
fees, but not including interest and depreciation.
We will have the right to set off against and reduce the purchase price by any and all amounts owed by
you to us or our Affiliates. We have the right to exclude from the Assets purchased any equipment,
furnishings, signs, and usable inventory of TCBY Products, materials, or supplies of your Stores that we
have not approved as meeting our standards for TCBY Stores, and the purchase price will be reduced by
the replacement cost of such excluded items which are required in the operation of your Stores being
purchased.
(c)
Payment of Purchase Price. The purchase price will be paid in cash at the closing of the
purchase, which will take place no later than 90 days after your receipt of our notice of exercise of this
option to purchase your Stores, at which time you will deliver instruments transferring to us good and
merchantable title to the Assets purchased, free and clear of all liens and encumbrances and with all sales
and other transfer taxes paid by you, and with all licenses or permits of your Stores which may be
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assigned or transferred. If the closing of the purchase does not occur within the 90-day period because
you fail to act diligently in connection with the purchase, the purchase price will be reduced by 10%. The
purchase price will be further reduced by 10% per month for each subsequent month you fail to act
diligently to consummate the purchase. Prior to closing, you and we will comply with the applicable
Bulk Sales provisions of the Uniform Commercial Code as enacted in the state where your Store is
located.
(d)
Lease of Premises. In connection with the purchase of the Assets of a Franchised Store,
you will also deliver to us an assignment of the lease for your Store Premises (or, if assignment is
prohibited, subleases for the full remaining term and on the same terms and conditions as your lease). If
you own the Premises of your Store, you agree to lease the Premises to us pursuant to the terms of our
standard lease, for a term of 5 years with two successive 5-year renewal options at fair market rental
during the initial and renewal terms.
(e)
Interim Management. If we exercise the option to purchase your Store, pending the
closing of such purchase, we have the right to appoint a manager to maintain the operation of your Store
or, at our option, require you to close your Store during such time period without removing any assets. If
we appoint a manager to maintain the operation of your Store pending closing of such purchase, we will
have the right to manage your Store under the same terms and conditions as described in Section 13.5.
(f)
Termination of Franchise Agreement. Upon the closing of the purchase of the Assets and
satisfaction by you of all of your obligations under this Agreement accruing through the closing, this
Agreement will terminate.
14.6
Continuing Obligations. All obligations of us and you which expressly or by their nature survive
the termination or expiration of this Agreement will continue in full force and effect subsequent to and
notwithstanding termination or expiration and until they are satisfied in full or by their nature expire. Included in
the obligations that will continue following termination or expiration of this Agreement are the provisions of
Sections 6.3, 7.9, 8.2, 8.3, 10.5, 10.8, 11.2, 12.3(m), 14.1, 14.2, 14.3, 14.4, 14.5, 14.6, 15.6, 15.7, 16.1, and the
provisions of Articles 17 and 18.
ARTICLE 15
RELATIONSHIP OF THE PARTIES/INDEMNIFICATION
15.1
Independent Contractors. This Agreement does not create a fiduciary relationship between the
parties. We and you are independent contractors and nothing in this Agreement is intended to make either party a
general or special agent, joint venturer, partner or employee of the other for any purpose. You will conspicuously
identify yourself in all dealings as the owner of your Store under a franchise granted by us and will place such
other notices of independent ownership on the forms, business cards, stationery, marketing and other materials as
we have the right to require from time to time.
15.2
No Liability for the Act of Other Party. You will not employ any of the Marks in signing any
contract or applying for any license or permit or in a manner that may result in our liability for any indebtedness
or obligations of you, nor may you use the Marks in any way not expressly authorized by us. Neither we nor you
will make any express or implied agreements, warranties, guarantees or representations or incur any debt in the
name or on behalf of the other or be obligated by or have any liability under any agreements or representations
made by the other. We will not be obligated for any damages to any person or property directly or indirectly
arising out of the operation of your business authorized by or conducted pursuant to this Agreement.
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15.3
Your Control. You have the sole right and responsibility for the manner and means by which the
day-to-day operation of your Store is determined and conducted and for achieving your business objectives.
Subject to any approval, inspection and enforcement rights reserved to us, this right and responsibility includes
the employment, supervision, setting the conditions of employment and discharge for your employees at your
Store, daily maintenance, safety concerns, and the achievement of conformity with the System Standards.
15.4
Our Approval and Enforcement. Our retention and exercise of the right to approve certain
matters, to inspect your Store and its operation and to enforce our rights, exists only to the extent necessary to
protect our interest in the TCBY System and the Marks for the benefit of us and the TCBY System. Neither the
retention nor the exercise is for the purpose of establishing any control, or the duty to take control, over those
matters which are clearly reserved to you, nor shall they be construed to do so.
15.5
Taxes. We will have no liability for any sales, use, service, occupation, excise, gross receipts,
income, property or other taxes, whether levied upon you or your assets or upon us, arising in connection with
your sales or the business conducted by you pursuant to this Agreement, except for taxes that we are required by
law to collect from you with respect to purchases from us and except for our own income taxes. Payment of all
such taxes will be your responsibility.
15.6
Indemnification. You agree to indemnify, defend and hold harmless us, our parent company,
subsidiaries and Affiliates and each of our and their respective shareholders, directors, officers, employees,
agents, successors and assigns (the “Indemnified Parties”) against and to reimburse the Indemnified Parties for
any claims, liabilities, lawsuits, demands, actions, damages and expenses arising from or out of (a) any breach of
your agreements, covenants, representations, or warranties contained in this Agreement, (b) any damages or injury
to any person, including, but not limited to, your employees, our employees and agents, your customers, and
members of the public, suffered or incurred on or about any Franchised Store owned or operated by you, (c)
product liabilities claims or defective manufacturing of TCBY Products by you, or (d) the activities under this
Agreement of you or any of your officers, owners, directors, employees, agents or contractors. We agree to
indemnify you against and reimburse you for any obligations or liability for damages attributable to agreements,
representations or warranties of Franchisor, or caused by negligence or willful action of Franchisor, and for costs
reasonably incurred by you in the defense of any such claim brought against you or in any action in which you are
named as a party, provided that Franchisor will have the right to participate in and, to the extent Franchisor deems
necessary, to control any litigation or proceeding which might result in liability of or expense to Franchisee
subject to such indemnification. For purposes of this indemnification, claims will mean and include all
obligations, actual, consequential, and incidental damages and costs reasonably incurred in the defense of any
claim against the Indemnified Parties or you, including reasonable accountants’, arbitrators’, attorneys’ and expert
witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living
expenses. We will have the right to defend any such claim against us, using counsel of our choice, at your
expense. This indemnity will continue in full force and effect subsequent to and notwithstanding the termination
of this Agreement.
15.7
Waiver of Claims. You agree to waive all claims against us for damages to property or injuries to
persons arising out of the operation of your Store.
ARTICLE 16
SECURITY AGREEMENT
16.1
Security Interest. In order to secure full and prompt payment of the fees and other charges to be
paid by you to us, and to secure performance of your other obligations and covenants under this Agreement, you
hereby grant us a security interest in, lien upon, and right of set off against all of your interest in the
improvements, fixtures, inventory, goods, appliances and equipment now or hereafter owned and located at your
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Store (whether annexed to the Premises or not) or used in connection with the business conducted at the Premises,
including all raw materials, work in process and finished goods, and all replacements thereof, attachments,
additions, and accessions thereto, and products and proceeds thereof in any form, including but not limited to
insurance proceeds and any claims against third parties for loss or damage to or destruction of any or all of the
foregoing (collectively, the “Collateral”).
16.2
Requirements. Without our prior written consent, you agree that no lien upon or security interest
in the Collateral or any item thereof will be created or suffered to be created and that no lease will be entered into
with respect to any item of Collateral. Without our prior written consent, you will not sell or otherwise dispose of
any item of Collateral, or remove any Collateral from the Premises, unless the same is replaced by a similar item
of equal or greater value, and except for the sales of inventory in the ordinary course of business. You agree to
give to us advance notice in writing of any proposed change in your name, identity, or structure and not to make
any change without our prior written consent and compliance with the provisions of this Agreement, including
Article 12. You agree to execute for filing the financing statements and continuation statements as we have the
right to require from time to time. You agree to pay all filing fees, including fees for filing continuation
statements in connection with the financing statements, and to reimburse us for all costs and expenses of any kind
incurred in connection therewith. If you default under this Agreement, we will have all the remedies and rights
available as a “secured party” with respect to the Collateral under the Uniform Commercial Code as in effect from
time to time in the state where the Premises are located. The grant of the security interest by you pursuant to
Section 16.1 will not be construed to derogate from or impair any other rights which we may have under this
Agreement or otherwise at law or equity. The provisions of this Section 16.2 shall survive the termination of this
Agreement.
ARTICLE 17
DISPUTE RESOLUTION
17.1
Injunctive Relief. Nothing in this Agreement will prohibit us or you from exercising the right in a
proper case to obtain specific performance, eviction from the Premises, temporary restraining orders and
temporary or preliminary injunctive relief from a court of competent jurisdiction. You agree that we may have
temporary or preliminary injunctive relief without bond, but upon due notice, and your sole remedy in the 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 the injunction being expressly waived.
17.2
Rights of Parties Are Cumulative. Our and your rights under this Agreement are cumulative and
the exercise or enforcement of any right or remedy under this Agreement will not preclude the exercise or
enforcement by a party of any other right or remedy under this Agreement which it is entitled by law or this
Agreement to exercise or enforce.
17.3
Costs and Attorneys’ Fees. If we or you are required to enforce this Agreement in any
proceeding, the party prevailing in such proceeding will be entitled to reimbursement of its costs and expenses,
including reasonable court costs, accounting and legal fees, whether incurred prior to, in preparation for or in
contemplation of the filing of any written demand, claim, action, hearing or proceeding to enforce the obligations
of this Agreement. If we incur expenses in connection with your failure to pay when due amounts owing to us, to
submit when due any reports, information or supporting records or otherwise to comply with this Agreement,
including, but not limited to court costs, legal and accounting fees, you will reimburse us for any such costs and
expenses which we incur.
17.4
Governing Law. EXCEPT TO THE EXTENT GOVERNED BY THE UNITED STATES
TRADEMARK ACT OF 1946 (LANHAM ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL
LAW, THIS AGREEMENT AND THE RELATIONSHIP BETWEEN YOU AND US WILL BE GOVERNED
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BY THE LAWS OF THE STATE OF COLORADO, EXCEPT THAT ANY OTHER STATE LAW RELATING
TO (1) THE OFFER AND SALE OF FRANCHISES (2) FRANCHISE RELATIONSHIPS, OR (3) BUSINESS
OPPORTUNITIES, WILL NOT APPLY UNLESS THE APPLICABLE JURISDICTIONAL REQUIREMENTS
ARE MET INDEPENDENTLY WITHOUT REFERENCE TO THIS PARAGRAPH.
17.5
Consent to Jurisdiction. WE MAY INSTITUTE ANY ACTION AGAINST YOU IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF COLORADO, AND
YOU IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE ANY
OBJECTION YOU MAY HAVE TO EITHER THE JURISDICTION OF OR VENUE IN SUCH COURTS.
17.6
Waiver of Punitive Damages and Jury Trial. BOTH PARTIES AGREE THAT NEITHER
SHALL BE ENTITLED TO NOR SHALL EITHER DEMAND A JURY TRIAL IN THE EVENT OF
LITIGATION, AND EACH WAIVE THEIR RIGHT TO A TRIAL BY JURY. The parties acknowledge
that their waiver of jury trial rights provides the parties with the mutual benefit of uniform interpretation of this
Agreement and resolution of any dispute arising out of this Agreement or any aspect of the parties’ relationship.
You and we further acknowledge the receipt and sufficiency of mutual consideration for such benefit. Except as
specifically provided in this Agreement, neither you nor we are entitled to any compensation or reimbursement
for loss of prospective profits, anticipated sales, or other losses occasioned by cancellation or termination of this
Agreement. You and we each EXPRESSLY WAIVE ANY CLAIM FOR PUNITIVE, MULTIPLE,
AND/OR EXEMPLARY DAMAGES, except that we shall be free at any time hereunder to bring an action
for willful trademark infringement and, if successful, to receive an award of multiple damages as provided
by law. You and we each EXPRESSLY AGREE THAT NO PARTY BOUND HEREBY MAY RECOVER
DAMAGES FOR ECONOMIC LOSS ATTRIBUTABLE TO NEGLIGENT ACTS OR OMISSIONS
EXCEPT FOR CONDUCT WHICH IS DETERMINED TO CONSTITUTE GROSS NEGLIGENCE OR
AN INTENTIONAL WRONG. BY INITIALING HERE:
_________ [FRANCHISEE TO INITIAL HERE]
YOU ACKNOWLEDGE AND AGREE THAT YOU HAVE READ THIS SECTION, UNDERSTAND ITS
PROVISIONS, and that we have accorded you ample time and opportunity to consult with financial and legal
advisors of your own choosing about the effect of these provisions on your rights under this Agreement.
17.7
Limitation of Claims. Any and all claims arising out of or relating to this Agreement or the
relationship among the parties to this Agreement will be barred unless an action or proceeding is commenced
within one year from the date you or we knew or should have known of the facts giving rise to such claim.
ARTICLE 18
GENERAL PROVISIONS
18.1
Severability. Each article, section, paragraph, term and provision of this Agreement will be
considered severable and if, for any reason, any provision of this Agreement is held to be invalid, contrary to or in
conflict with any applicable present or future law or regulation in a final, unappealable ruling issued by any court,
agency or tribunal with competent jurisdiction in a proceeding to which we are a party, that ruling will not impair
the operation of, or have any other effect upon, such other portions of this Agreement as may remain otherwise
intelligible, and such other portions will continue to be given full force and effect and bind the parties, although
any portion held to be invalid will be deemed not to be a part of this Agreement from the date the time for appeal
expires, if you are a party thereto, otherwise upon your receipt of a notice of non-enforcement thereof from us.
18.2
Rights Provided by Law. If any applicable and binding law or rule of any jurisdiction requires a
greater prior notice of the termination or non-renewal of this Agreement than is required under this Agreement, or
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the taking of some other action not required under this Agreement, or if, under any applicable and binding law or
rule of any jurisdiction, any provision of this Agreement is invalid or unenforceable, the prior notice and/or other
action required by such law or rule will be substituted for the comparable provisions of this Agreement, and we
will have the right to modify the invalid or unenforceable provision to the extent required to be valid and
enforceable. You agree to be bound by any promise or covenant imposing the maximum duty permitted by law
which is subsumed within the terms of any provision of this Agreement, as though it were separately articulated in
and made a part of this Agreement, that may result from striking from any of the provisions of this Agreement any
portion or portions which a court may hold to be unenforceable in a final decision to which we are a party, or
from reducing the scope of any promise or covenant to the extent required to comply with such a court order.
Such modifications to this Agreement will be effective only in such jurisdiction, unless we elect to give them
greater applicability, and will be enforced as originally made and entered into in all other jurisdictions.
18.3
Waivers by Either of Us. Either we or you may by written instrument unilaterally waive or
reduce any obligation of or restriction upon the other under this Agreement, effective upon delivery of written
notice of waiver to the other or such other effective date stated in the notice of waiver. Any waiver granted by us
will be without prejudice to any other rights we may have, will be subject to our continuing review and may be
revoked by us at any time and for any reason, effective upon delivery to you of 10 days’ prior written notice.
18.4
Certain Acts Not to Constitute Waivers. Neither we nor you will be deemed to have waived or
impaired any right, power or option reserved by this Agreement (including, without limitation, the right to
demand exact compliance with every term, condition and covenant in this Agreement or to declare any breach to
be a default and to terminate this Agreement prior to the expiration of its term) by virtue of (i) any custom or
practice of the parties at variance with the terms of this Agreement; (ii) any failure, refusal or neglect of us or you
to exercise any right under this Agreement or to insist upon exact compliance by the other with its obligations
under this Agreement, including any waiver, forbearance, delay, failure or omission by us to exercise any right,
power or option, whether of the same, similar or different nature, with respect to other TCBY Stores or franchise
agreements; or (iii) our acceptance of any payments due from you after any breach of this Agreement.
18.5
Excusable Non-Performance. Neither we nor you will be liable for loss or damage or deemed to
be in breach of this Agreement if the failure to perform obligations results from transportation shortages;
inadequate supplies of equipment, merchandise, supplies, labor, material or energy or the voluntary suspension of
the right to acquire or use any of those items in order to accommodate or comply with the orders, requests,
regulations, recommendations or instructions of any federal, state or municipal government or any governmental
department or agency; compliance with any law, ruling, order, regulation, requirement or instruction of any
federal, state or municipal government or any governmental department or agency; acts of God; fires, strikes,
embargoes, war or riot; or any other similar event or cause beyond the reasonable control of the party. Any delay
resulting from any of those causes will extend performance accordingly or excuse performance, in whole or in
part, as may be reasonable.
18.6
Interpretation of Rights and Obligations. The following provisions will apply to and govern the
interpretation of this Agreement, the parties’ rights under this Agreement, and the relationship between the
parties:
(a)
Our Rights. Whenever this Agreement provides that we have a certain right, that right is
absolute and the parties intend that our exercise of that right will not be subject to any limitation or
review. We have the right to operate, administrate, develop, and change the TCBY System in any manner
that is not specifically precluded by the provisions of this Agreement.
(b)
Our Reasonable Business Judgment. Whenever we reserve or are deemed to have
reserved discretion in a particular area or where we agree or are deemed to be required to exercise our
rights reasonably or in good faith, we will satisfy our obligations whenever we exercise Reasonable
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Business Judgment in making our decision or exercising our rights. A decision or action by us will be
deemed to be the result of Reasonable Business Judgment, even if other reasonable or even arguably
preferable alternatives are available, if our decision or action is intended, in whole or significant part, to
promote or benefit the TCBY franchise system generally even if the decision or action also promotes a
financial or other individual interest of us. Examples of items that will promote or benefit the TCBY
franchise system include, without limitation, enhancing the value of the Marks, improving customer
service and satisfaction, improving product quality, improving uniformity, enhancing or encouraging
modernization, and improving the competitive position of the TCBY franchise system. Neither you nor
any third party (including, without limitation, a trier of fact), shall substitute its judgment for our
Reasonable Business Judgment.
18.7
Notice of Potential Profit to Us. We hereby advise you that we and/or our Affiliates have the right
from time to time to make available to you goods, products and/or services for use in your Store on the sale of which
we and/or our Affiliates may make a profit. We further advise you that we and/or our Affiliates have the right from
time to time to receive consideration from suppliers, distributors and/or manufacturers related (directly or indirectly)
to sales of goods, products or services to you, the promotion of goods, products or services by the TCBY System or in
consideration of services rendered or rights licensed to such persons, including yogurt formulation charges. You
agree that we and/or our Affiliates shall be entitled to said profits and/or consideration.
18.8
Binding Effect. Subject to the restrictions on Transfers contained in this Agreement, this
Agreement is binding upon the parties hereto and their respective executors, administrators, heirs, assigns and
successors in interest and will not be modified except by written agreement signed by both you and us.
18.9
No Third Party Beneficiaries. Nothing in this Agreement is intended, nor will be deemed, to
confer any rights or remedies upon any person or legal entity not a party to this Agreement.
18.10 Approvals. Except where this Agreement expressly obligates us reasonably to approve or not
unreasonably to withhold our approval of any action or request by you, we have the right to refuse any request by
you or to withhold our approval of any action by you that requires our approval.
18.11 Headings. The headings of the several sections and paragraphs of this Agreement are for
convenience only and do not define, limit or construe the contents of such sections or paragraphs.
18.12 Joint and Several Liability. If you consist of 2 or more persons or Entities, whether or not as
partners, joint venturers, or co-owners, the obligations and liabilities of each person and Entity to us are joint and
several.
18.13
an original.
Counterparts. This Agreement may be executed in multiple copies, each of which will be deemed
18.14 Notices and Payments. All written notices and reports permitted or required to be delivered by
the provisions of this Agreement will be deemed so delivered at the time delivered by hand; 1 business day after
transmission by telegraph, facsimile, or other electronic system; 1 business day after being placed in the hands of
a commercial courier service for next business day delivery; or 3 business days after placement in the United
States Mail by registered or certified mail, return receipt requested, postage prepaid, and will be addressed to the
parties at the addresses set forth on the first page of this Agreement or to such other address as a party may
specify in a written notice to the other party. Any required payment or report not actually received by us during
regular business hours on the date due (or postmarked by postal authorities at least 2 days prior thereto) will be
deemed delinquent.
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18.15 Entire Agreement. The Preambles and any exhibits, addenda and appendices attached hereto are
a part of this Agreement. This Agreement constitutes the entire agreement of the parties except as provided below
in this Section 18.15, and there are no other oral or written understandings or agreements between us and you
relating to the subject matter of this Agreement, except that you acknowledge that we justifiably have relied on
your representations made prior to the execution of this Agreement. Nothing in this or in any related agreement,
however, is intended to disclaim the representations we made in the franchise disclosure document that we
furnished to you.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the day and year
first above written. This Agreement is not valid until signed by our authorized officer.
TCBY SYSTEMS, LLC,
,
a Delaware limited liability company
a
By:
By:
Title:
Title:
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SCHEDULE 1
YOGURT FORMULATION CHARGE REIMBURSEMENT
This schedule sets forth the YFC Reimbursement, if any, to which you are entitled in accordance with
Section 6.3 of this Agreement. It will only be valid if signed by an authorized agent of you and TCBY
SYSTEMS, LLC in the space provided below. This schedule is hereby incorporated into the Agreement in its
entirety and is subject to the terms thereof.
1. YFC Reimbursement Amount:
$12.03 per 36 lb case of TCBY soft serve product;
$ 4.92 per 3-gallon tub of TCBY hardpack product;
$ 3.90 per 8-unit case of TCBY prepacked quarts;
$ 2.34 per 4-unit case of TCBY 8” yogurt pies; and
$1.59/$1.92/$3.93 per 6/4/4-unit case of TCBY 7” cakes/ 9” cakes/sheet cakes, respectively (the listed
products, collectively, the “Subject Products”)
In order to qualify for the YFC Reimbursement, the Subject Products must be purchased from us or our
authorized manufacturers (“Manufacturers”) or distributors (“Distributors”), and be fully and timely paid for by
you. You shall submit, and agree that Manufacturers and Distributors may submit, any documentation required
by us to verify your purchase of and payment for Subject Products. The YFC Reimbursement amount is
calculated based on existing case sizes described above and remains subject to change to provide for the same
YFC Reimbursement level if the case size changes. You must use the Subject Products for your business at the
Store only. Without limiting the generality of the foregoing, you may not transfer or sell such products to another
store operated by you or another TCBY franchisee or licensee.
We may review and audit any and all documentation submitted in connection with the YFC
Reimbursement and, if such audit shows that you received an incorrect amount of YFC Reimbursement for any
period, we may reconcile and adjust future YFC Reimbursements accordingly. You shall have access to any and
all documentation that we use to reconcile your YFC Reimbursement upon reasonable notice and written request
to the COMPANY.
2. YFC Reimbursement Method/Frequency: As of the date of this Agreement, the YFC Reimbursement shall be
paid to you monthly, for purchases of Subject Products made by you during our immediately prior fiscal month,
within thirty (30) days of the later to occur of the date that we receive payment of our YFC for your purchases of
Subject Products for such month from Manufacturers and Distributors and the date we receive proper verification
documentation from you (including weekly reports of your Store’s Gross Revenues) and/or Manufacturers and
Distributors. This method, including the timing of payment, may be changed periodically by us upon thirty (30)
days written notice to you. Without limiting the foregoing, if at any time the YFC Reimbursement for any
monthly period is less than One Hundred Dollars ($100), we may remit the YFC Reimbursement on a quarterly
basis.
3. Term of YFC Reimbursement: We will remit any YFC Reimbursement that is due to you, subject to the
terms and provisions of this Agreement, for a period commencing with the date that the STORE opens for
business, up to and including the expiration or termination of the initial term of this Agreement, and throughout
any properly exercised and granted extension or renewal of this Agreement (the “YFC Reimbursement Term”).
While the YFC Reimbursement is intended to help reduce your costs, we expressly reserve the ability of
us and our Manufacturers or Distributors to (a) change the cost of products as a result of commodity or other raw
ingredients pricing, packaging, manufacturing and distribution fees and costs; (b) change any surcharge that is
added to product pricing for remittance of the royalty and advertising fund contributions if that method of
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payment is required under this Agreement; (c) receive contributions, rebates or other payments, including YFC,
for products other than the Subject Products, paper products and toppings that you purchase for the Store; (d)
retain the amount of YFC in excess of the YFC Reimbursement, if any, that we receive from Manufacturers based
on your purchases as of the date you sign this Agreement (such as for other Stores you own that are not subject to
YFC Reimbursement); or (e) terminate or discontinue the YFC Reimbursement in accordance with the provisions
of this Agreement.
4. Assignability of YFC Reimbursement; Default: The YFC Reimbursement may not be assigned separately
from your interests in the Store and this Agreement and may only be assigned as part of an approved transfer in
accordance with Section 12 of this Agreement. Any payments due hereunder shall cease and the YFC
Reimbursement shall be subject to automatic termination upon any unauthorized transfer or assignment of any of
your interest in the Store or this Agreement, or upon your default of this Agreement, without cure within any
applicable cure period.
5. Acknowledgment: In consideration of the YFC Reimbursement and other covenants and benefits received by
you hereunder, you acknowledge our right (but not the obligation) to (a) collect YFC in any manner not
inconsistent with this Agreement, and to accept rebates or other payments from Manufacturers, Distributors and
other suppliers and vendors, and (b) make payments from our funds or the TCBY marketing fund to franchisees
or others related to any business plan improvement and store revitalization programs we prescribe.
DATED ______________________, 20__
FRANCHISEE
TCBY SYSTEMS, LLC
By:
By:
Its:
Its:
TCBY FDD 03/2014
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ACKNOWLEDGEMENT ADDENDUM TO
TCBY® FRANCHISE AGREEMENT
Acknowledgments and Representations.
1.
You acknowledge and represent that you have read this Agreement and our disclosure document
and understand and accept the provisions of this Agreement as being reasonably necessary to maintain our high
standards of quality and service and the uniformity of those standards at all TCBY Stores franchised by us and to
protect and preserve the goodwill of the Marks.
2.
You acknowledge that you have conducted an independent investigation of the business venture
contemplated by this Agreement and you recognize that, like any other business, the nature of the business
contemplated by this Agreement may change over time, that an investment in a TCBY Store involves business
risks, and that the success of the venture is largely dependent upon your business abilities and efforts.
3.
You acknowledge and understand that any information relating to the sales, profits or cash flows
of TCBY Stores operated by us or our Affiliates, or our franchisees that may be contained in our disclosure
document and other materials is intended only to be an indication of historical performance of certain TCBY
Stores and NOT of potential future financial performance.
4.
Except for any financial performance representation that may be included in our disclosure
document, we expressly disclaim the making of, and you acknowledge that you have not received or relied on,
any express or implied warranty or guarantee as to the revenues, profits or success of the business venture
contemplated by this Agreement.
5.
You acknowledge and understand that our officers, directors, employees and agents are acting
only in a representative and not a personal capacity in their dealings with you. You also acknowledge and
represent that you have not received or relied on any representations about us or our franchise program or policies
from us or our officers, directors, employees or agents that are contrary to the statements made in our disclosure
document or to the terms of this Agreement.
6.
You acknowledge and understand that the franchise granted under this Agreement is limited to
the right to operate one TCBY Store at the Premises, and does not include an exclusive area or protected territory
within which we or our Affiliates agree not to issue franchises or operate competing businesses. Further, you
acknowledge and understand that we and our Affiliates have the right to establish competing franchises, licenses
or businesses owned by us or our Affiliates, including TCBY Stores, at any locations we deem appropriate,
including locations near the Premises, and distribute TCBY Products and other competitive products and services
through alternative channels of distribution, all consistent with the terms of Section 2.2 of this Agreement.
7.
You represent to us, as an inducement to your entry into this Agreement, that you satisfy all
requirements to qualify as a franchisee that may be set forth in our disclosure document, and that all statements in
your application for the rights granted in this Agreement are accurate and complete and that you have made no
misrepresentations or material omissions in obtaining these rights.
TCBY FDD 03/2014
40
8.
You acknowledge that you received a copy of our disclosure document, as required under federal
and applicable state franchise disclosure law, at least fourteen (14) calendar days before signing this Agreement or
any other binding agreement, or paying any fees to us or our Affiliates. In addition, if we materially altered the
provisions of this Agreement, including any attachments relating thereto, or any related agreements attached to
our disclosure document (except as a result of negotiations you initiated), you acknowledge that you received a
copy of this Agreement or the related agreement at least seven (7) calendar days before signing it.
,
a
By:
Title:
Date Signed:
*All representations requiring prospective franchisee to assent to a release, estoppel or waiver of liability are not
intended to nor shall they act as a release, estoppel or waiver of any liability incurred under the Maryland
Franchise Registration and Disclosure Law.
TCBY FDD 03/2014
41
OWNERSHIP ADDENDUM TO TCBY®
FRANCHISE AGREEMENT
1.
Entity Owners. You represent and warrant to us that your Entity Owners are as follows:
NAME
ADDRESS
PERCENTAGE
OF INTEREST
____________________________
____________________________
______________
____________________________
____________________________
______________
____________________________
____________________________
______________
____________________________
____________________________
______________
____________________________
____________________________
______________
____________________________
____________________________
______________
____________________________
____________________________
______________
____________________________
____________________________
______________
____________________________
____________________________
______________
2.
Change. You agree to immediately notify us in writing of any change in the information contained
in this Addendum and, at our request, prepare and sign a new Addendum containing the correct information.
3.
Date of Addendum. The date of this Addendum is _______________________, 20__.
Your Initials
TCBY FDD 03/2014
Our Initials
42
GUARANTY
In consideration of, and as an inducement to, the execution by TCBY SYSTEMS, LLC (“Franchisor”) of
the
foregoing
TCBY®
Franchise
Agreement
(the
“Franchise
Agreement”)
with
__________________________________________ (“Franchisee”) dated ____________________, 20___, and
for other good and valuable consideration, each of the undersigned for themselves, their heirs, legal representatives,
successors and assigns (collectively the “Guarantors”) do hereby unconditionally, individually, jointly and severally
guarantee to Franchisor, and to its successors and assigns, the full, complete and timely payment and performance
of each and all of the terms, covenants and conditions of the Franchise Agreement (and any modification or
amendment to the Franchise Agreement) to be kept and performed by Franchisee during the term of the Franchise
Agreement, including without limitation the payment of all continuing license fees, marketing fees and all other
fees and charges accruing pursuant to the Franchise Agreement.
Each of the Guarantors further agrees as follows:
1.
The Guarantors, individually, jointly and severally, shall be personally bound by each and every
condition and term contained in the Franchise Agreement as though each of the Guarantors had executed a franchise
agreement containing the identical terms and conditions of the Franchise Agreement, including without limitation the
provisions of Section 10.8 and Article 11 relating to Confidential Information and covenants not to compete. This
Guaranty shall continue in favor of Franchisor notwithstanding any extension, modification, or alteration of the
Franchise Agreement, and notwithstanding any assignment of the Franchise Agreement, with or without the
Franchisor’s consent. No extension, modification, alteration or assignment of the Franchise Agreement shall in
any manner release or discharge the Guarantors, and each of the Guarantors consents to any such extension,
modification, alteration or assignment.
2.
This Guaranty will continue unchanged by the occurrence of any Insolvency Event, as defined in
the Franchise Agreement, with respect to Franchisee or any assignee or successor of Franchisee or by any
disaffirmance or abandonment of the Franchise Agreement by a trustee in bankruptcy of Franchisee. Each
Guarantor’s obligation to make payment or render performance in accordance with the terms of this Guaranty and
any remedy for the enforcement of this Guaranty will not be impaired, modified, changed, released or limited in
any manner whatsoever by any impairment, modification, change, release or limitation of the liability of
Franchisee or its estate in bankruptcy or of any remedy for the enforcement thereof, resulting from the operation
of any present or future provision of the U.S. Bankruptcy Act or other statute, or from the decision of any court or
agency.
3.
Each Guarantor’s liability under this Guaranty is primary and independent of the liability of
Franchisee and any other Guarantors. Each Guarantor waives any right to require Franchisor to proceed against
any other person or to proceed against or exhaust any security held by Franchisor at any time or to pursue any
right of action accruing to Franchisor under the Franchise Agreement. Franchisor may proceed against each
Guarantor and Franchisee, jointly and severally or may, at its option, proceed against each Guarantor without
having commenced any action, or having obtained any judgment, against Franchisee or any other Guarantor.
Each Guarantor waives the defense of the statute of limitations in any action under this Guaranty or for the
collection of any indebtedness or the performance of any obligation guaranteed pursuant to this Guaranty.
4.
The Guarantors unconditionally, individually, jointly and severally agree to pay all attorneys’ fees
and all costs and other expenses incurred in any collection or attempted collection of this Guaranty or in any
negotiations relative to the obligations guaranteed or in enforcing this Guaranty against Franchisee.
5.
Each Guarantor waives notice of any demand by Franchisor, any notice of default in the payment
of any amounts contained or reserved in the Franchise Agreement, or any other notice of default under the
Franchise Agreement. Each Guarantor expressly agrees that the validity of this Guaranty and its obligations shall
TCBY FDD 03/2014
43
in no way be terminated, affected or impaired by reason of any waiver by Franchisor, or its successors or assigns,
or the failure of Franchisor to enforce any of the terms, covenants or conditions of the Franchise Agreement or
this Guaranty, or the granting of any indulgence or extension of time to Franchisee, all of which may be given or
done without notice to the Guarantors.
6.
This Guaranty shall extend, in full force and effect, to any assignee or successor of Franchisor
and shall be binding upon the Guarantors and each of their respective successors and assigns.
7.
Until all obligations of Franchisee to Franchisor have been paid or satisfied in full, the Guarantors
have no remedy or right of subrogation and each Guarantor waives any right to enforce any remedy which
Franchisor has or may in the future have against Franchisee and any benefit of, and any right to participate in, and
security now or in the future held by Franchisor.
8.
All existing and future indebtedness of Franchisee to each Guarantor is hereby subordinated to all
indebtedness and other obligations guaranteed in this Guaranty and, without the prior written consent of
Franchisor, shall not be paid in whole or in part, nor will any Guarantor accept any payment of or on account of
any such indebtedness while this Guaranty is in effect.
9.
This Guaranty shall be construed in accordance with the laws of the State of Colorado, without
giving effect to its conflict of laws principles.
GUARANTOR(S)
STATE OF
COUNTY OF
)
) ss.
)
The foregoing instrument was acknowledged before me this _____ day of ____________, 20___ by
______________________________________________.
My Commission Expires:
______________________
NOTARY PUBLIC
Residing at
[Notary Seal]
TCBY FDD 03/2014
44
APPENDIX A
TO TCBY® FRANCHISE AGREEMENT
STORE PREMISES; START DATE
If at the time of signing this Agreement you have obtained our approval of and secured the Premises for your
Store, the Premises for your Store and your applicable Start Date are identified below. However, if at the time of
signing this Agreement you have not obtained our approval of and secured the Premises for your Store, we and
you will sign an Alternative Appendix A identifying the Premises of your Store and your applicable Start Date,
assuming you obtain our approval of and secure the Premises for your Store within the applicable 6-month period
described in Section 2.1(a) of this Agreement.
1.
Premises:
Premises. You and we agree that your Store will be located at and only at the following
2.
Start Date. You and we agree that the following is the Start Date described in Section 4.5 of the
Franchise Agreement:
TCBY FDD 03/2014
45
ALTERNATIVE APPENDIX A
TO TCBY® FRANCHISE AGREEMENT
STORE PREMISES; START DATE
This Exhibit, with a date of _______________, 20__, is attached to and is an integral part of the TCBY®
Franchise Agreement between you and us with a date of _______________, 20__ (the “Franchise Agreement”).
1.
Premises:
Premises. You and we agree that your Store will be located at and only at the following
2.
Start Date. You and we agree that the following is the Start Date described in Section 4.5 of the
Franchise Agreement:
3.
Defined Terms. All capitalized terms contained in this Exhibit and not defined in this Exhibit
will have the same meaning as provided in the Franchise Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Exhibit on the day and year first
written above.
TCBY SYSTEMS, LLC
______________________________________
By: _________________________________
Title: _______________________________
By: ___________________________________
Title: _________________________________
TCBY FDD 03/2014
46
APPENDIX B TO TCBY® FRANCHISE AGREEMENT
AUTHORIZATION AGREEMENT FOR PREARRANGED PAYMENTS
(DIRECT DEBITS)
[Important Instructions for Completing this Form: Before we can process your Franchise Agreement, you must sign and
return this authorization. If, at the time you sign your Franchise Agreement, you do not have your account set up, or if you
do not yet know your account information, please show that you agree to the terms of this authorization by signing this
form, leaving the account information blank, and returning the signed form with your Franchise Agreement. You can give
us your account information when you receive it, but we must have the information before you open your store. If you have
any questions about what this form means, you should get advice from your lawyer, your accountant or your bank.]
Your Name (or name of legal entity on Franchise Agreement):
Your Social Security Number (or legal entity Federal Tax ID Number):
Name on Bank Account (if different than above):
The undersigned (“ACCOUNT HOLDER”) hereby authorizes TCBY Systems, LLC (“COMPANY”) to initiate debit entries and/or
credit correction entries to ACCOUNT HOLDER’s checking and/or savings account(s) listed below at the bank, credit union or
other depository listed below (“BANK”) and to debit such account per COMPANY’s instructions for any and all amounts due to
COMPANY. The ACCOUNT HOLDER understands that all amounts debited from the account below will be credited to
COMPANY’s account. INSTEAD OF COMPLETING THE INFORMATION REQUIRED ON THE FOLLOWING FOUR
LINES, YOU MAY ATTACH A CANCELLED OR VOIDED CHECK TO THIS AUTHORIZATION, BECAUSE A
VOIDED CHECK INCLUDES ALL OF THIS INFORMATION.
NAME OF BANK
Branch
City
State
Telephone Number of Bank
Contact Person at Bank
Bank Transit/ABA Number
Account Number
Zip Code
This authority is to remain in effect until BANK has received joint written notice from COMPANY and ACCOUNT HOLDER of
the ACCOUNT HOLDER’s termination. Any termination notice must be given in a way as to give BANK a reasonable opportunity
to act on it. If a debit entry is initiated to ACCOUNT HOLDER’s account in error, ACCOUNT HOLDER shall have the right to
have the amount of the error credited to the account by BANK, if (a) within fifteen (15) calendar days following the date on which
BANK sent to ACCOUNT HOLDER a statement of account or a written notice regarding such entry or (b) forty-five (45) days after
posting, whichever occurs first, ACCOUNT HOLDER shall have sent to BANK a written notice identifying such entry, stating that
such entry was in error and requesting BANK to credit the amount thereof to such account. These rights are in addition to any
rights ACCOUNT HOLDER may have under federal and state banking laws.
ACCOUNT HOLDER
By:
Title:
Date:
TCBY FDD 03/2014
47
EXHIBIT C
OTHER CONCEPTS STORE ADDENDUM TO FRANCHISE AGREEMENT
TCBY FDD 03/2014
EXHIBIT C: Other Concepts Store Addendum
OTHER CONCEPTS STORE ADDENDUM TO TCBY®
FRANCHISE AGREEMENT
This is an addendum (the “OC Store Addendum”) to the TCBY® FRANCHISE AGREEMENT
between________________________________________________________ (“you” or the “Franchisee”) and
TCBY SYSTEMS, LLC (“us”, “we” or “TCBY”), dated __________________, 20__ (the “Agreement”) and
upon execution shall modify and be incorporated into that Agreement by reference. All capitalized terms used in
this OC Store Addendum but not defined herein shall have the same meanings ascribed to them in the Agreement.
“Agreement” as used therein shall refer to the Agreement as modified by this OC Store Addendum.
1.
Preambles. You have entered into the Agreement for the purpose of developing a TCBY Store to
be located at and operated in conjunction with the trademarks and service marks of another brand or concept,
known as __________________ (the “Host Concept”). This OC Store Addendum is required to modify certain
provisions of the Franchise Agreement to allow for such co-branded development and operation.
2.
Store; Grant of Franchise. The Agreement, including Sections 1.2(l) and 2.1 thereof, is amended
as necessary to accomplish the following: references to the “Store” or “TCBY Store” throughout this Agreement
shall refer only to that part of the Premises in and from which you shall operate the “TCBY” portion of your store.
Specifically excluded from the definition of the Store and TCBY Store are any and all areas of the Premises
which are not trade dressed as a “TCBY” store, and your activities at or in that portion of the Premises not
containing the Store shall not be subject to or controlled by this Agreement except as expressly set forth in this
OC Addendum. Operating the Host Concept at the Premises in accordance with the Lease and all other
agreements applicable thereto shall not violate the Agreement.
3.
Term of Franchise Agreement; Renewal. Sections 3.1 and 3.2 of the Agreement are hereby
amended to provide that the initial term of the Agreement will be 5 years, and you shall have the right to renew
the Agreement for one additional 5-year term, subject to the conditions set forth in 3.2.
4.
Addition of TCBY to Host Concept. Sections 4.1, 4.2 and 4.3 are deleted in their entirety and the
following is substituted in their place: “You must obtain our prior approval of the Premises and of the Host
Concept. By signing this OC Store Addendum, you represent and warrant that you have obtained all necessary
consents and approvals for the operation of the TCBY Store, including the written consent of the Host Concept.
We have the right to require you to provide us with copies of such consents before approving the Premises for
your Store. You must follow our plans and specifications for adding or incorporating the TCBY Store into and
with the Host Concept at the Premises, including our requirements for signage, fixtures, equipment, and design.
You agree to spend no less than $1,000 (which replaces the requirement to spend $10,000 set forth in Section 4.6
of the Agreement) on your grand opening of the TCBY Store.” Sections 4.3 through 4.7 are renumbered to
account for the deletion of Sections 4.1 through 4.3.
5.
Section 5 is intentionally omitted.
6.
Yogurt Formulation Charge (YFC) Reimbursement. Section 6.3 is deleted in its entirety and the
following is substituted in its place: “The parties acknowledge that we typically receive a formulation charge
from our designated manufacturers (“Manufacturers”) or distributors (“Distributors”) of certain TCBY
Products. The amount of the formulation charge that we receive is based on the purchases of such products by
franchisees and licensees from our designated Distributors. Some TCBY franchisees may receive a
reimbursement of a portion or all of the YFC collected for their stores. This program is not available for
franchisees of most TCBY Other Concepts Stores and will not be available or paid to you for your TCBY Store.”
TCBY FDD 03/2014
1
7.
Mid-Term Refresh. Section 7.1(c) is modified as necessary to provide that we may require you to
complete the Mid-Term Refresh during the period from 30 to 36 months from the date you open your TCBY
Store, and will establish a reasonable limit on the amount you are required to spend, not to exceed $7,500, based
on the nature of your Premises and the scope of your TCBY Store operations.
8.
System Standards. Notwithstanding our System Standards, the hours and days during which your
Store will be open for business will be consistent with those required by the Host Concept. Similarly, the general
appearance and demeanor of Store employees will be consistent with the standards of the Host Concept. Upon
request, we will consider granting you a waiver from following any System Standard that materially conflicts with
those of the Host Concept, except those that affect only the TCBY Store portion of the Premises. Our consent to
such waiver shall not be unreasonably withheld.
9.
Section 9 is intentionally omitted.
10.
In-Term Non-Compete. Section 11.1 of the Agreement is hereby deleted in its entirety and the
following is substituted in its place: “You will not operate, or to the best of your ability allow to be operated, any
Competing Business at or within the Premises where the Store is operated. For purposes of this Section, the Host
Concept shall not be considered a Competing Business. Further, you agree not to hire any employee who, within
the immediately preceding 6-month period, was employed by us or any TCBY Stores operated by us, our
Affiliates or another franchisee or licensee of us, without obtaining the prior written permission of us or the
franchisee or licensee.”
11.
Post-Term Non-Compete. Section 11.2 of the Agreement is hereby deleted in its entirety and the
following is substituted in its place: “Upon termination of this Agreement for any reason other than as a result of
our default, you agree that, for a period of 2 years commencing on the effective date of termination, no Restricted
Person will have any direct or indirect interest as an owner, investor, partner, director, officer, employee,
consultant, representative or agent or in any other capacity in any Competitive Business located or operating
within the Premises where the Store is operated.” Section 12.3(j) of the Agreement shall be deemed modified to
the extent necessary to provide for the same noncompete parameters as set forth in this paragraph 11.
12.
Transfers. In addition to the other conditions of transfer set forth in Article 12, you will be
required to submit to us a copy of the written approval of the Host Concept prior to completing any transfer of
your Store. Further, Sections 12.5 and 12.6 are hereby deleted in their entirety, and Section 12.7 is renumbered
accordingly.
13.
Termination. We have the additional right to terminate this Agreement upon 30 days prior
written notice if you lose the right to operate the Host concept at the Premises. Section 13.5 is hereby deleted in
its entirety. Our rights under Section 14.5 of the Agreement are subject to us obtaining the consent of the Host
Concept.
IN WITNESS WHEREOF, the parties have executed and delivered this OC Store Addendum to be
effective as of the date of the Agreement set forth above.
TCBY SYSTEMS, LLC
______________________________________
By:
By:
Title:
Title:
TCBY FDD 03/2014
2
EXHIBIT D
AREA DIRECTOR DISCLOSURE
TCBY FDD 03/2014
EXHIBIT D: Area Director Disclosures
Area Director – State of Washington and the Island of Oahu in the State of Hawaii – Green Bowl Time, Inc.
Owner, Director, CEO and President: Hyoungsoo Kim
Green Bowl Time, Inc., owned by Mr. Hyoungsoo Kim, is the Area Director for us and our Affiliate, TCBY, for
the entire State of Washington and the Island of Oahu in the State of Hawaii. Green Bowl Time, Inc. is a
Washington corporation organized in May 2009. Mr. Kim has been the owner, Director, CEO and President of
Green Bowl Time, Inc. since May 2009. He has been the President of Cell Towns Business Group, a Washington
corporation, since at least January 2006. An affiliate of Green Bowl Time, Inc., is a franchisee of the Mrs. Fields
and TCBY franchise systems and is currently developing Mrs. Fields and TCBY Stores in Washington State.
Contact Information: Green Bowl Time, Inc., Attn: Hyoungsoo Kim, 1000 2nd Avenue, Suite 1320, Seattle,
Washington 98104, Telephone (206) 774-3800.
Based on the information provided to us by this Area Director, which we have not independently verified, there
are no disclosures that need to be made about this Area Director consistent with the requirements of Items 3 and 4
This Area Director is not our Affiliate.
Area Director – Part of the state of Texas consisting of Dallas, Plano, Overland, Wichita Falls, Texarcana, Waco,
Fort Worth, Tyler, Austin, TCBY self-serve – Lone Star Yogurt, Inc.
President and Owner: David Weaver; Vice President and Owner: Jeff Worthen;
Secretary/Treasurer and Owner: Bryan Selden
Lone Star Yogurt, Inc., owned by Mr. Weaver, Mr. Worthen and Mr. Selden, is our Area Director for certain parts
of the state of Texas, TCBY self-serve. Lone Star Yogurt, Inc. is a Texas corporation organized in October 2010.
Since its incorporation, Mr. Weaver has served as its President, Mr. Worthen has served as its Vice President and
Mr. Selden has served as its Secretary/Treasurer. An affiliate of Lone Star Yogurt, Inc. is a franchisee of the
TCBY franchise system and is currently developing TCBY Stores in the State of Texas.
Contact Information: Lone Star Yogurt, Inc., Attn: David Weaver, 15488 FM 2493 Tyler, Texas 75703,
Telephone (903) 561-0860.
Area Director – Larimer, Weld and Boulder Counties in the State of Colorado, Laramie and Albany Counties in
the State of Wyoming, TCBY self-serve – Froyo Development Co., LLC
Manager and Owner: Steven L. Lauer
Froyo Development Co., LLC, owned by Mr. Lauer, is our Area Director for the Larimer and Weld Counties of
Colorado, TCBY self-serve. Froyo Development Co., LLC is a Colorado limited liability company organized in
TCBY FDD 03/2014
1
May 2011. Since its organization, Mr. Lauer has served as its Managing Member. An affiliate of Froyo
Development Co., LLC, is a franchisee of the TCBY franchise system and is currently developing TCBY Stores
in the State of Colorado.
Contact Information: Froyo Development Co., LLC, Attn: Steven L. Lauer, 1218 W. Ash St., Suite G, Windsor,
CO 80550, Telephone (970) 690-7070.
Area Director – Mecklenberg, Union and New Hanover Counties in the State of North Carolina and Charleston
and York Counties in the State of South Carolina, TCBY self-serve – Batt Enterprises VIII, LLC
Manager and Owner: Samuel Batt
Batt Enterprises VIII, LLC, owned by Mr. Batt, is our Area Director for the Mecklenberg, Union and Hanover
Counties of North Carolina and the Charleston and York Counties of South Carolina, TCBY self-serve. Batt
Enterprises VIII, LLC is a North Carolina limited liability company organized in September 2011. Since its
organization, Mr. Batt has served as its Manager. An affiliate of Batt Enterprises VIII, LLC is a franchisee of the
TCBY franchise system and is currently developing TCBY Stores in the States of North Carolina and South
Carolina.
Contact Information: Batt Enterprises VIII, LLC, Attn: Samuel Batt, 1037 Westbury Drive, Matthews, NC
28104, Telephone (610) 937-1792.
TCBY FDD 03/2014
2
EXHIBIT E
AREA DIRECTOR AGREEMENT
TCBY FDD 03/2014
EXHIBIT E: Area Director Agreement
TCBY SYSTEMS, LLC,
as “FRANCHISOR”
AREA DIRECTOR
TERRITORY (as further defined in Appendix A)
TCBY FDD 03/2014
i
TABLE OF CONTENTS
Section
Page
1. BACKGROUND AND PURPOSE ..................................................................................................... 1
2. DEFINITIONS ..................................................................................................................................... 1
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12
2.13
2.14
2.15
2.16
2.17
Affiliate .................................................................................................................................................... 1
Applicable Laws ....................................................................................................................................... 2
Bound Parties ........................................................................................................................................... 2
Business Entity ......................................................................................................................................... 2
Company-Owned Stores........................................................................................................................... 2
Controlling Interest .................................................................................................................................. 2
Development Period ................................................................................................................................. 2
Excluded Location.................................................................................................................................... 2
Existing Stores.......................................................................................................................................... 2
Franchise Agreement ................................................................................................................................ 2
Franchisee ................................................................................................................................................ 2
Manuals .................................................................................................................................................... 2
Other Concepts Store ............................................................................................................................... 2
Primary Owner ......................................................................................................................................... 3
Proprietary Products ................................................................................................................................. 3
Territory ................................................................................................................................................... 3
Territory Franchisee ................................................................................................................................. 3
3. SCOPE OF APPOINTMENT ............................................................................................................. 3
3.1
3.2
3.3
3.4
Appointment of Area Director/Scope of Operations ................................................................................ 3
Duty to Operate Stores ............................................................................................................................. 3
Rights and Limitations to Territory .......................................................................................................... 3
Reservation of Rights to Franchisor ......................................................................................................... 3
4. FRANCHISE SALES PROCEDURES .............................................................................................. 5
4.1
4.2
4.3
4.4
Development Quota.................................................................................................................................. 5
Franchise Registration and Disclosure ..................................................................................................... 5
Advertising, Recruiting, and Screening.................................................................................................... 5
Franchisor’s Approval of Prospective Franchisees .................................................................................. 6
5. PAYMENTS TO FRANCHISOR....................................................................................................... 6
5.1
Initial Territory Fee .................................................................................................................................. 6
6. PAYMENTS TO AREA DIRECTOR................................................................................................ 6
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
Sales Commissions and Conditions of Payment ...................................................................................... 6
Sales Commission Payments .................................................................................................................... 6
Commissions on Transfers of Franchises ................................................................................................. 7
Royalty Fees ............................................................................................................................................. 7
Internet/Catalog Sales Program ................................................................................................................ 7
Commissions After Termination .............................................................................................................. 7
Application of Payments .......................................................................................................................... 7
Setoffs ...................................................................................................................................................... 7
Payment Verification................................................................................................................................ 8
7. TRAINING ASSISTANCE ................................................................................................................. 8
7.1
7.2
7.3
7.4
Area Director Training ............................................................................................................................. 8
Length of Training ................................................................................................................................... 8
Additional Training .................................................................................................................................. 8
Seminars and Ongoing Training ............................................................................................................... 8
TCBY FDD 03/2014
ii
8. FRANCHISOR’S OPERATING ASSISTANCE .............................................................................. 9
8.1
8.2
Manuals .................................................................................................................................................... 9
Operating Assistance ................................................................................................................................ 9
9. AREA DIRECTOR’S OBLIGATIONS ............................................................................................. 9
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
Hiring and Training of Employees of Area Director ................................................................................ 9
Commencement of AD Business.............................................................................................................. 9
Sales Services ........................................................................................................................................... 9
Site Services ........................................................................................................................................... 10
Pre-Opening and Opening Support Services .......................................................................................... 10
Ongoing Support Services ...................................................................................................................... 10
Dealings with Franchisees ...................................................................................................................... 11
Area Director’s Inspections .................................................................................................................... 11
10. MARKS............................................................................................................................................... 11
10.1
10.2
10.3
10.4
Ownership and Goodwill of Marks ........................................................................................................ 11
Limitations on Use ................................................................................................................................. 11
Discontinuance of Use of Marks ............................................................................................................ 12
Notification of Infringements and Claims .............................................................................................. 12
11. CONFIDENTIAL INFORMATION ................................................................................................ 12
11.1
11.2
Confidential Information ........................................................................................................................ 12
Nondisclosure and Noncompetition Agreement ..................................................................................... 12
12. EXCLUSIVE RELATIONSHIP....................................................................................................... 13
12.1
Exclusive Relationship ........................................................................................................................... 13
13. OPERATING STANDARDS ............................................................................................................ 13
13.1
13.2
13.3
13.4
13.5
13.6
13.7
13.8
13.9
13.10
13.11
13.12
Standards of Service ............................................................................................................................... 13
Compliance with Laws and Good Business Practices ............................................................................ 13
Accuracy of Information ........................................................................................................................ 13
Notification of Litigation........................................................................................................................ 14
Ownership and Management of AD Business ........................................................................................ 14
Conflicting Interests ............................................................................................................................... 14
Insurance ................................................................................................................................................ 14
Proof of Insurance Coverage .................................................................................................................. 14
Advertising in Territory.......................................................................................................................... 14
Approval of Advertising ......................................................................................................................... 14
Accounting, Bookkeeping and Records ................................................................................................. 15
Reports ................................................................................................................................................... 15
14. INSPECTIONS AND AUDITS ......................................................................................................... 15
14.1
Inspections and Audits ........................................................................................................................... 15
15. TRANSFERS ...................................................................................................................................... 15
15.1
15.2
15.3
15.4
15.5
15.6
15.7
Transfers by Franchisor .......................................................................................................................... 15
Transfers by Area Director ..................................................................................................................... 15
Conditions for Approval of Transfer ...................................................................................................... 16
Transfer to an Entity ............................................................................................................................... 17
Franchisor’s Approval of Transfer ......................................................................................................... 17
Death or Disability of Area Director ...................................................................................................... 17
Right of First Refusal ............................................................................................................................. 17
16. TERM AND EXPIRATION ............................................................................................................. 18
16.1
16.2
16.3
16.4
16.5
Term ....................................................................................................................................................... 18
Renewal .................................................................................................................................................. 18
New Development Quota ....................................................................................................................... 18
Exercise of Renewal Option ................................................................................................................... 18
Conditions of Renewal ........................................................................................................................... 18
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16.5
Transfer at End of Term ......................................................................................................................... 18
17. TERMINATION ................................................................................................................................ 19
17.1
17.2
17.3
17.4
17.5
17.6
17.7
17.8
By Area Director .................................................................................................................................... 19
By Franchisor Upon AD’s Default ......................................................................................................... 19
Rights and Obligations of Area Director ................................................................................................ 20
Confidential Information ........................................................................................................................ 20
Covenant Not to Compete ...................................................................................................................... 20
No Further Right to Payment ................................................................................................................. 21
Continuing Obligations .......................................................................................................................... 21
Applicable Laws ..................................................................................................................................... 21
18. RELATIONSHIP OF THE PARTIES............................................................................................. 21
18.1
18.2
18.3
18.4
Relationship of the Parties ...................................................................................................................... 21
Payment of Third Party Obligations ....................................................................................................... 21
Independent Contractors......................................................................................................................... 22
Indemnification ...................................................................................................................................... 22
19. DISPUTES .......................................................................................................................................... 22
19.1
19.2
19.3
19.4
Non-binding Mediation ........................................................................................................................... 22
Governing Law/Consent to Venue and Jurisdiction ............................................................................... 22
Waiver of Jury Trial ............................................................................................................................... 23
Limitation of Claims .............................................................................................................................. 23
20. MISCELLANEOUS PROVISIONS................................................................................................. 23
20.1
Invalidity ................................................................................................................................................ 23
20.2
Modification ........................................................................................................................................... 23
20.3
Force Majeure ........................................................................................................................................ 23
20.4
Attorneys’ Fees. ..................................................................................................................................... 24
20.5
Interpretation of Rights and Obligations ................................................................................................ 24
20.6
Injunctive Relief ..................................................................................................................................... 24
20.7
No Waiver .............................................................................................................................................. 24
20.8
No Right to Set Off ................................................................................................................................ 24
20.9
Effective Date ......................................................................................................................................... 24
20.10
Review of Agreement ............................................................................................................................. 24
20.11
Entire Agreement ................................................................................................................................... 24
20.12
Notices.................................................................................................................................................... 25
20.13 Acknowledgment ........................................................................................................................................... 25
APPENDICES
Appendix A - Rider to ADA (Territory, Quota, Existing Stores)
Appendix B - Guaranty and Assumption of Area Director’s Obligations
Appendix C - Statement of Ownership
Appendix D - Acknowledgment Addendum
TCBY FDD 03/2014
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TCBY SYSTEMS, LLC
AREA DIRECTOR:
ADDRESS:
EFFECTIVE DATE:
THIS AREA DIRECTOR AGREEMENT (the “Agreement”) is made and entered into between TCBY
Systems, LLC, a Delaware limited liability company (“TCBY”), sometimes referred to herein as the
“Franchisor,” and the Area Director listed above (“Area Director” or “AD”), who agree as follows:
1.
BACKGROUND AND PURPOSE
1.1
TCBY is the franchisor of the TCBY franchise system (the “System”). TCBY and its Affiliates
have developed methods for establishing, operating, and promoting retail outlets (“Stores”) featuring a variety of
fresh and frozen yogurt, sorbets, shakes, sundaes, toppings, and other frozen desserts, products and beverages.
These methods feature the use and license of the trademark and service mark “TCBY®” and related trademarks
and service marks (collectively, the “Marks”) owned by TCBY, as well as TCBY’s distinctive plans for
franchising, establishing, operating, and promoting TCBY Stores and related licensed methods of doing business
(the “Licensed Methods”).
1.2
Franchisor is in the business of granting to qualified individuals, or to entities with which such
individuals are affiliated, the right and license to develop and operate Stores using the Marks and Licensed
Methods.
1.3
AD desires to own and operate its own business acting as a special agent for Franchisor within
certain geographic areas, enabling AD to assist Franchisor in identifying prospective franchisees to purchase
franchises for Stores from Franchisor, and to develop, support, and provide certain services to, Stores within such
geographic areas under the terms and conditions contained in this Agreement (“AD Business”).
1.4
Franchisor is willing to grant AD the right to operate the AD Business and serve as an area
director, enabling AD to assist Franchisor in identifying prospective franchisees to purchase franchises for Stores
from Franchisor, and to develop, support, and provide certain services to, Stores within certain geographic areas
under the terms and conditions contained in this Agreement.
2.
DEFINITIONS
In addition to capitalized terms in this Agreement which are defined elsewhere, the following terms are
assigned these definitions:
2.1
“Affiliate” includes each and every entity that controls, is controlled by, or is under common
control with, the applicable party.
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2.2
“Applicable Laws” means and includes applicable common law and all applicable statutes, laws,
rules, regulations, ordinances, policies and procedures established by any governmental authority, governing the
development or operation of a Store, including all franchise, immigration, labor, disability, food and drug laws,
health and safety regulations, as in effect on the Effective Date hereof, and as may be amended, supplemented or
enacted from time to time.
2.3
“Bound Parties” mean each of the following persons: (i) the Business Entity executing this
Agreement as Area Director; (ii) each officer, director, shareholder, member, manager, trustee or general partner
of Area Director and each one of Area Director’s Affiliates; and (iii) each member of Area Director’s or any of
the foregoing individuals’ immediate family.
2.4
“Business Entity” means any limited liability company or partnership, and any association,
corporation or other entity which is not an individual.
2.5
“Company-Owned Stores” shall mean Stores within the Territory owned and operated by a
Franchisor or its Affiliates.
2.6
“Controlling Interest” means the possession, directly or indirectly, of power to direct, or cause a
change in the direction of, the management and policies of a Business Entity. Franchisor shall consider whether a
transfer, either alone or together with all other previous, simultaneous or proposed transfers, would have the effect
of transferring, in the aggregate, a sufficient number of the equity or voting interests of a Business Entity to
enable the purchaser or transferee to direct, or cause a change in the direction of, the management and policies of
the Business Entity. For purposes of this Agreement, any person who qualifies as Primary Owner shall be
deemed to own a Controlling Interest.
2.7
“Development Period” means each 12-fiscal-month period during the term of this Agreement,
commencing with the Effective Date hereof.
2.8
“Excluded Location” has the meaning set forth in Section 3.4(f) below.
2.9
“Existing Stores” are Stores open and operating within the Territory as of the Effective Date,
which are listed on Appendix A.
2.10
“Franchise Agreement” means the forms of agreements (including franchise agreement and any
appendices, exhibits, riders, collateral assignments of lease or sublease, and personal guarantees) used by
Franchisor from time to time in granting franchises for the ownership and operation of Stores. Area Director
acknowledges that Area Director will use Franchisor’s then-current forms of Franchise Agreement and Franchise
Disclosure Document (“FDD”) in conducting any franchise selling activities authorized or requested by
Franchisor hereunder, and that Franchisor may from time to time modify or amend in any respect the forms of
FDD, Franchise Agreement and related agreements, including modifying or waiving fees paid by Franchisees.
2.11
“Franchisee” means any person or Business Entity who has entered into a Franchise Agreement
with Franchisor, including Area Director.
2.12
“Manuals” means Franchisor’s operations and training manuals, training software, online
programs and related manuals and materials now or hereafter created by Franchisor for use in connection with the
operation of a Store, as the same may be amended and revised from time to time, including all bulletins,
supplements and ancillary manuals. The Manuals also may include materials that will be specific to an AD
Business.
2.13
“Other Concepts Store” means a TCBY retail outlet that serves Proprietary Products or other
products and services bearing the Marks, which are co-branded and operated at or within locations of any brands
TCBY FDD 03/2014
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or concepts other than those offered by Franchisor, such as (without limitation) Starbucks®, Subway®,
Quiznos®, Schlotzsky’s®, Wal-Mart®, Blockbuster® or Build-a-Bear®. Except as expressly excluded or
modified in this Agreement, Other Concepts Stores shall be considered Stores for purposes of this Agreement.
2.14
“Primary Owner” refers to any person who owns at least 10% of the ownership interests of an
Area Director that is a Business Entity.
2.15
“Proprietary Products” refers to all products and merchandise (i) manufactured by, or for,
Franchisor or Franchisor’s Affiliates in accordance with proprietary recipes, specifications or formulas, or (ii)
bearing packaging or labels displaying any of the Proprietary Marks and promoted as a Store brand item.
2.16
“Territory” is the geographical area described in the attached Appendix A.
2.17
“Territory Franchisee” means any approved Franchisee of Franchisor, other than Area Director,
that enters into a Franchise Agreement for the development and operation of a Store in the Territory, including
Franchisees of TCBY who have entered into Franchise Agreements for Existing Stores.
3.
SCOPE OF APPOINTMENT
3.1
Appointment of Area Director/Scope of Operations. Franchisor hereby appoints Area Director,
and Area Director hereby accepts appointment, as a special agent of Franchisor in accordance with the terms and
conditions of this Agreement, and only within the Territory, to: (1) solicit prospective franchisees for Stores to be
located in the Territory and assist Franchisor in completing franchise sales as requested by Franchisor (“Sales
Services”); (2) perform certain site acquisition and development services (“Site Services”); and (3) render
compliance and enforcement services for and on behalf of Franchisor and support to Territory Franchisees,
including marketing and operational services (“Support Services”) to Stores located within the Territory all on
the further terms and conditions of this Agreement. Area Director agrees that, during the term of this Agreement,
it will at all times faithfully, honestly and diligently perform its obligations hereunder in accordance with all
Applicable Laws, and will continuously exert its best efforts to promote and enhance the development and
operation of Stores within the Territory.
3.2
Duty to Operate Stores. At all times from and after the second Development Period, Area
Director is required to own and operate a minimum of __ Stores in the Territory as a condition of Area Director’s
appointment. Such stores shall be located within the Territory as set forth on Appendix A. Area Director must
sign Franchisor’s then-current Franchise Agreement for each Store it owns and operates.
3.3
Rights and Limitations to Territory. During this Agreement’s term, Franchisor and its Affiliates
will not establish and license any other individual or Business Entity to act as area directors, master franchisees or
special agents to perform Sales Services or to render Site Services or Support Services to Franchisees within the
Territory; provided, however, that Franchisor and its Affiliates shall retain such rights in the Territory as
described in Section 3.4.
3.4
Reservation of Rights to Franchisor. AD acknowledges that the rights granted by this Agreement
are, except as set forth in Section 3.3 above, nonexclusive, and Franchisor (and its employees, Affiliates and
designees) retains the right (without compensation or obligation whatsoever to AD unless specifically set forth
herein):
(a)
to use, and to license others to use, the Marks and Licensed Methods for the operation of
Stores, AD Businesses, the sale of Proprietary Products, or any other business or endeavor at any location outside
the Territory;
TCBY FDD 03/2014
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(b)
to solicit prospective Franchisees, and to grant others franchises to operate Stores, at such
locations outside of the Territory and on such terms and conditions as Franchisor deems appropriate;
(c)
to solicit prospective Franchisees, with or without the involvement of the AD, and to
grant others franchises to operate Stores at locations within the Territory (excluding, for all purposes of this
subsection (c) any Company-Owned Stores, Other Concepts Stores and, for clarity, Excluded Locations, which
will be subject to subsections (d), (e) and (f) below); provided that (i) any site for such new Store to be located
within the Territory will be offered first to AD for development by AD or its qualified applicant that is approved
by Franchisor; (ii) such new Stores opened within the Territory during the term shall be counted toward
determining whether AD has met its Development Quota, and (iii) AD shall provide the services and support for
such Stores as set forth in this Agreement and shall receive its Sales Commission and Royalty Fees for any such
new Stores;
(d)
to itself own and operate for its own benefit Company-Owned Stores within the Territory
without applying such Company-Owned Stores toward AD’s Development Quota or paying AD any Sales
Commissions or Royalty Fees in connection with such Stores;
(e)
to grant franchises or licenses to others to open and operate Other Concepts Stores within
the Territory; provided that at Franchisor’s written request only, AD shall perform the services and support for
Other Concepts Stores within the Territory and shall receive its Royalty Fees therefor, but shall not receive credit
toward its Development Quota or Sales Commissions on Other Concepts Stores opened by Franchisees and
licensees other than AD or AD’s qualified applicant that is approved by Franchisor;
(f)
to grant franchises or licenses to others to open TCBY retail outlets or serve Proprietary
Products or other products and services bearing the Marks, at locations within or outside the Territory to which
such Franchisee or licensee has premium, priority or exclusive access, such as (without limitation) a grant to a
disadvantaged business entity (DBE), master concessionaire, or master franchisee or operator who is awarded a
bid to operate stores or food outlets at an airport, commercial or corporate park, school, hospital, food service
court, stadium, toll stop or rest area, outlet or factory stores, or master concessionaire mall (each an “Excluded
Location” which, for purposes of this Agreement, shall NOT be considered a Store and shall fall outside the
entire scope of this Agreement);
(g)
to have the option, but not the obligation, to provide Sales Services, Site Services and
Support Services for franchised Stores within the Territory (but with no adjustment or reduction in Royalty Fees
payable to AD as a result of rendering such services, unless AD is in default under this Agreement);
(h)
to use and license the use of proprietary marks or methods (other than the Marks and
Licensed Methods) in connection with the operation of retail outlets or business featuring products the same as,
similar to or different from the Proprietary Products but that do not bear the Marks, other food products, and
related services, in any channel of distribution or at any location and within any territory (including the Territory),
which businesses may be the same as, similar to, or different from that of the Stores; and
(i)
other than as set forth in Section 3.3 of this Agreement, to use the Marks and Licensed
Methods in connection with any or all of the same products and services offered by Stores, or other or different
services and products, promotional and marketing efforts or related items, in any channel of distribution other than
Stores, including without limitation, the Internet and other e-commerce, catalog or wholesale distribution, or
branded and non-branded retail channels such as grocery, drug, club or convenience stores, at any location and
within any territory (including the Territory).
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4.
FRANCHISE SALES PROCEDURES
4.1
Development Quota. AD agrees to comply with the development quota set forth in Appendix A
to this Agreement (“Development Quota”) with respect to each Development Period. The determination as to
whether AD has met its development obligations under this Agreement shall be made based on the number of
Stores sold, and the number of Stores open and operating, at the end of a Development Period as described on
Appendix A. For purposes of the Development Quota, a Store, to be “sold,” must have a fully signed and
effective Franchise Agreement and a fully paid initial franchise fee; and to be considered “open and operating,”
must be operating in compliance with the applicable Franchise Agreement.
4.2
Franchise Registration and Disclosure. Neither AD nor any employee or representative of AD
shall solicit prospective Franchisees for Stores until Franchisor has registered its current FDD in applicable
jurisdictions and has provided AD with the requisite documents, or at any time when Franchisor notifies AD that
its registration is not then in effect or its documents are not then in compliance with Applicable Laws. Franchisor
shall bear its costs of preparing and registering its FDD. AD’s costs associated with the following obligations
shall be borne by AD. In particular, AD shall:
(a)
prepare and forward to Franchisor verified financial statements of AD in such form and
for such periods as shall be designated by Franchisor, including audited financial statements, if necessary and
appropriate to comply with applicable legal disclosure, filing, or other legal requirements;
(b)
promptly provide all information required by Franchisor to prepare all requisite
disclosure documents and ancillary documents for the offering of franchises throughout the Territory;
(c)
execute all documents required by Franchisor for the purpose of registering AD as a
representative of Franchisor to offer franchises throughout the Territory; and
(d)
pay to Franchisor, or its designee, upon demand, the costs of preparing and registering
those portions of disclosure documents and ancillary documents which are applicable only to AD.
AD agrees to review all information pertaining to AD prepared to comply with Applicable Laws for
selling franchises in the Territory and verify its accuracy if so requested by Franchisor. AD acknowledges that
Franchisor and its Affiliates and designees shall not be liable to AD for any form of damages, errors, omissions,
or delays which occur in the preparation of such materials.
4.3
Advertising, Recruiting, and Screening. AD shall be responsible for advertising for, recruiting,
screening, pre-qualifying and, at Franchisor’s request, interviewing prospective Franchisees within the Territory.
AD shall provide prospective Franchisees with any written information designated and approved by Franchisor or
communicate information regarding Store franchises via the telephone, face-to-face meetings, or visits at other
Stores within the Territory. Unless otherwise agreed to in writing by Franchisor, AD shall submit each prescreened applicant (“Applicant”) for a Store franchise to Franchisor for proper and timely disclosure with
Franchisor’s then-current FDD, and all Applicants shall be subject to final approval by Franchisor. AD further
agrees that all Applicants submitted to Franchisor by AD, if an individual, or the Entity Owners (as defined in the
Franchise Agreement) of the Applicant, if the Applicant is not an individual, shall to AD’s knowledge be
individuals who are of good character, have adequate financial resources, and meet Franchisor’s criteria for
Franchisees or Entity Owners of Franchisees. Each application for a franchise received by AD shall be submitted
to Franchisor with all information respecting the Applicant, the Principal Owner of the Applicant, if applicable,
the Applicant’s proposed franchise location, if known, and all other information then customarily required by
Franchisor concerning Applicants, including such financial statements and other information as Franchisor may
require. AD shall assist the Applicant in preparing such financial reports and other information.
TCBY FDD 03/2014
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4.4
Franchisor’s Approval of Prospective Franchisees. By delivery of written notice to AD,
Franchisor, in its sole discretion, shall approve or disapprove Applicants to become Store Franchisees. AD shall
have NO AUTHORITY OR ABILITY TO OFFER OR SELL A FRANCHISE, OR GRANT, SELL,
NEGOTIATE OR EXECUTE any Franchise Agreement on behalf of Franchisor. Franchisor agrees to exert its
best efforts to deliver such notification to AD within 14 days after the later of: (a) receipt by Franchisor of a
signed FDD receipt, complete application, financial statement, and other materials regarding the Applicant
requested by Franchisor; or (b) the interview of Applicant by Franchisor, if any. Franchisor, in its sole discretion,
shall determine whether the Applicant possesses sufficient financial and managerial capability and meets the other
criteria then utilized by Franchisor in the grant of franchises. Franchisor may refuse to grant a franchise to an
Applicant if it so chooses. The grant of the franchise shall be effected only upon the full execution of the thencurrent Franchise Agreement by Franchisor and the Applicant and Applicant’s successful completion of
Franchisor’s training program. AD understands and agrees that Franchisor’s trainers have the right in their sole
discretion to reject any Applicant trainee.
5.
PAYMENTS TO FRANCHISOR
5.1
Initial Territory Fee. The initial territory fee (“Initial Fee”) payable to Franchisor by AD in
consideration for AD’s appointment as AD within the Territory shall be ____________________________
($____). The Initial Fee is fully earned by Franchisor upon execution of this Agreement and is nonrefundable
once paid. The Initial Fee shall be paid to Franchisor in immediately available funds upon execution of this
Agreement.
6.
PAYMENTS TO AREA DIRECTOR
6.1
Sales Commissions and Conditions of Payment. In consideration of the Sales Services and Site
Services rendered during the term of this Agreement, AD shall be paid a commission equal to ____% of the initial
franchise fees paid by each Franchisee (including AD) for the purchase of franchises for Stores to be located
within the Territory (“Sales Commissions”), subject to and upon fulfillment of the following conditions
(“Franchise Sales Conditions”):
(a)
Franchisee executes a Franchise Agreement with Franchisor and the Store opens for
business;
(b)
AD or its authorized representative attends the Store opening, collects the initial franchise
fee from Franchisee, promptly remits 100% of the initial franchise fee (without set off or deduction) to Franchisor,
and Franchisor has actually received the initial franchise fee (Franchisor shall not be deemed to have received any
fees paid into escrow, if applicable, until such fees actually have been remitted to Franchisor);
(c)
The sale for which the initial franchise fee has been paid is not a resale of any existing
Store or any interest in such Store, or paid in connection with the relocation of any Store; and
(d)
AD has complied with all of its other obligations under this Agreement with respect to
such sale and has verified the same to Franchisor in writing in a form prescribed by Franchisor, which shall
acknowledge the completion of the items in sections 6.1(a), (b) and (c) hereof.
6.2
Sales Commission Payments. Sales Commissions shall be payable to AD within 30 days after the
Franchise Sales Conditions have been fulfilled. AD shall not receive any Sales Commissions for or with respect
to (a) Existing Stores; (b) Company-Owned Stores; (c) Other Concepts Stores operated by Franchisees other than
AD or AD’s qualified applicant approved by Franchisor, as described in Section 3.4(e); or (d) Excluded
Locations.
TCBY FDD 03/2014
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6.3
Commissions on Transfers of Franchises. If, during the term of this Agreement, (a) a Store
located within the Territory or an interest in the Store is resold to a different Franchisee and the sale results in the
execution of a Franchise Agreement or Assignment and Assumption Agreement and the payment of a transfer fee
to Franchisor, and (b) Franchisor asks AD to perform services in connection with the Transfer, including without
limitation, pre-approval or interview of transferee, site inspection or advice related to any required remodel; then
AD will be paid a commission in the amount of ____% of the transfer fee paid and actually received by
Franchisor, payable within 30 days after the completion of the transfer, provided that AD has timely performed all
services requested by Franchisor. Franchisor shall not be deemed to have received any fees paid into escrow, if
applicable, until such fees actually have been remitted to Franchisor. Franchisor may opt to conduct the transfer
without assistance from AD, or may waive the transfer fee, in which case no commission shall be due to AD in
connection therewith.
6.4
Royalty Fees. In consideration of the Support Services, Franchisor shall pay to AD, within 10
business days after the end of each 4- or 5-week fiscal month determined by Franchisor’s fiscal calendar, _____%
of the royalty fees (which excludes advertising fees) actually received by Franchisor from each Store located in
the Territory (including Existing Stores, approved Other Concepts Stores and other Stores owned and operated by
AD and Territory Franchisees, but excluding Company-Owned Stores and, for clarity, excluding Excluded
Locations,) during the applicable period pursuant to their Franchise Agreement (“Royalty Fees”).
Notwithstanding the foregoing, if AD has failed to conduct the periodic inspections described in Section 9.6 and
to file a written report, or failed to perform in any material respect, with respect to one or more Franchisees
located in the Territory, the other services described in Section 9 to be provided to Franchisees located in the
Territory during any applicable fiscal month, AD shall not be entitled to receive Royalty Fees with respect to such
Franchisees for the period during which reports or services were not provided. For clarity, all advertising fund
contributions received from Stores within the Territory shall be paid to Franchisor’s applicable advertising funds
and used and applied as provided in the Franchise Agreement, and AD shall receive no fees, commissions, credits
or payments in respect thereto.
6.5
Internet/Catalog Sales Program. AD shall have the right to participate on the same basis and
upon the same terms as any other of Franchisor’s franchisees, in any internet/catalog sales program it makes
generally available its franchisees.
6.6
Commissions After Termination. All payments under this Section 6 shall immediately and
permanently cease after the expiration or termination of this Agreement, except as set forth in Section 17.6.
Further, AD shall receive all amounts which have accrued to AD as of the effective date of expiration or
termination.
6.7
Application of Payments. Franchisor’s payments to AD shall be based on amounts actually
collected from Franchisees, not on payments accrued, due, or owing. Further, in the event of termination of a
Franchise Agreement for a Store within the Territory under circumstances entitling Franchisee to the return of all
or part of the initial franchise fee or Royalty Fees (or in the event that Franchisor becomes legally obligated or
decides to return part or all of the initial franchise fee or Royalty Fees), Franchisor may deduct the portion of the
amount to be returned to Franchisee in the same proportion as AD shared in the initial franchise fee or Royalty
Fees from any future amounts owed AD. Franchisor shall apply any payments received from a Franchisee to any
past due indebtedness of that Franchisee for Royalty Fees, advertising contributions, purchases from Franchisor or
its Affiliates, interest, or any other indebtedness of that Franchisee to Franchisor or its Affiliates. To the extent
that such payments are applied to a Franchisee’s overdue Royalty Fee payments, AD shall be entitled to its pro
rata share of such payments, less its pro rata share of the costs of collection paid to third parties.
6.8
Setoffs. AD shall not be allowed to set off amounts owed to Franchisor for fees or other amounts
due under this Agreement against any monies owed to AD by Franchisor, which right of set off is hereby
TCBY FDD 03/2014
7
expressly waived by AD. Franchisor shall be allowed to set off against amounts owed to AD for Sales
Commissions, Royalty Fees, or other amounts due under this Agreement any monies owed to Franchisor by AD.
6.9
Payment Verification. AD shall, upon 10 days prior written notice to Franchisor, have access to
Franchisor’s books and records relating to the calculation and payment of any amounts due to AD hereunder. If
AD’s inspection of such records shall reveal any material discrepancy or failure to pay AD the proper amounts
due under this Agreement, AD shall promptly notify Franchisor of the same. Franchisor shall then have 30 days to
review AD’s findings in good faith and, if it concurs that an adjustment is due, shall make any necessary
adjustment to the next payment paid to AD.
7.
TRAINING ASSISTANCE
7.1
Area Director Training. Franchisor shall furnish, and AD (or, if AD is a Business Entity, a
Primary Owner of AD and who has been approved and designated by Franchisor as AD’s “Managing Owner”)
shall attend, and complete to Franchisor’s satisfaction, an initial training program consisting of the training
program applicable to Franchisor’s Store franchisees and such further training as Franchisor deems advisable,
which may include topics such as marketing, franchise sales, franchise law compliance, site selection, and Store
operations, furnished at such place and time as Franchisor designates, prior to the opening of the first franchised
Store in the Territory after the Effective Date. The AD may also designate one additional member of the AD’s
management staff (the “Operations Manager”), who may attend initial training at no additional charge to the
AD. Training must be completed prior to AD’s provision of services to franchisees or prospective franchisees.
7.2
Length of Training. Franchisor shall determine the appropriate length of the AD training
program. Other than any portion of the Initial Fee that Franchisor may consider to be earned for training AD, no
tuition or fee shall be charged for the initial training. However, AD shall be responsible for all travel and living
expenses incurred in connection with attendance at all training sessions offered or required by Franchisor.
AD or its Managing Owner may request additional training during the initial training program, to be
provided at no additional charge, if AD or its Managing Owner does not feel completely trained in the operation
of an AD Business: However, if AD or its Managing Owner satisfactorily completes Franchisor’s initial training
program, and does not inform Franchisor in writing at the end of the initial training program that AD or its
Managing Owner does not feel completely trained, then AD will be deemed to have been trained sufficiently to
operate the AD Business.
7.3
Additional Training. The initial training program will be made available to replacement or
additional Operations Managers and other management personnel of AD during the term of this Agreement. AD
agrees that it shall have at least one person who has satisfactorily completed the AD training program on staff at
all times during the term of this Agreement. Franchisor reserves the right to charge a tuition fee in advance of
such training. AD will be responsible for all travel and living expenses incurred by its personnel in connection
with attendance at the training program. Further, the availability of the training programs will be subject to space
considerations and prior commitments to new Franchisees and ADs.
7.4
Seminars and Ongoing Training. From time to time, Franchisor may present seminars,
conventions, or continuing development programs for the benefit of AD. AD or its Managing Owner and its
Operations Manager shall, at AD’s expense, be required to attend any ongoing mandatory seminars, industry
conventions, or programs offered by Franchisor. If AD fails to attend a mandatory seminar, convention, or
program without obtaining Franchisor’s prior written approval and fails to arrange for attendance at an alternate
time, AD shall be required to make up the missed program at a time and place designated by Franchisor and may
be charged a reasonable fee of not to exceed $1,000 for each program missed. Franchisor shall give AD at least
30 days prior written notice of any seminar, convention, or program that is deemed mandatory. Franchisor will
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not require that AD attend any ongoing training more often than 2 times per calendar year. AD will be
responsible for all travel and living expenses associated with attendance at any ongoing training programs.
8.
FRANCHISOR’S OPERATING ASSISTANCE
8.1
Manuals. Franchisor shall, in addition to the AD training program, loan to AD during the term of
this Agreement 1 copy of its Manuals to assist AD and its employees in conducting the AD Business. Franchisor
may prescribe mandatory and suggested standards and operating procedures for AD in the Manuals, which may
be modified from time to time by Franchisor. AD shall keep its copy of the Manuals current. In the event of a
dispute relating to the Manuals, Franchisor’s master copy controls. AD may not at any time copy any part of the
Manuals unless approved in writing by Franchisor. In the event AD’s copy of the Manuals is lost, destroyed, or
damaged, AD shall be obligated to obtain from Franchisor, at no charge to AD, a replacement copy of the
Manuals. The Manuals and other writings physically or electronically communicated to AD shall constitute
material provisions of this Agreement as if fully set forth within its text.
8.2
Operating Assistance. Franchisor will make available the following services during the term of
this Agreement:
(a)
Upon the reasonable request of AD, telephone consultation regarding advice related to
franchise sales, Franchisee support, and assistance;
(b)
Access to any franchise sales advertising and promotional materials that Franchisor may
(but is not required to) develop, the actual cost of which may be passed on to AD at Franchisor’s option; and
(c)
Access to Franchisor’s point-of-sale, product promotions, coupons, and other marketing
materials generally made available to Stores within Franchisor’s franchised system, at the same cost (if any) that
is charged to other franchisees.
9.
AREA DIRECTOR’S OBLIGATIONS
9.1
Hiring and Training of Employees of Area Director. AD shall be solely responsible for hiring all
of AD’s employees and shall be exclusively responsible for supervising such employees and for the terms and
conditions of their employment and compensation. AD shall be responsible for training its employees to enable
AD to operate its AD Business.
9.2
Commencement of AD Business. Unless otherwise agreed to in writing by Franchisor and AD,
AD has 60 days from the Effective Date of this Agreement within which to complete the first part of its initial
training and commence operation of its AD Business. Franchisor will extend the time within which AD must
commence operations for a reasonable period of time, in the event that factors beyond AD’s reasonable control
prevent AD from meeting this schedule, so long as AD has made reasonable and continuing efforts to comply and
AD requests in writing an extension of time in which to have its AD Business established before the period
lapses. The obligations of AD shall commence at the earlier to occur of the date AD or its Managing Owner has
satisfactorily completed Franchisor’s initial training program, or 60 days from the Effective Date of this
Agreement; provided, however, that AD shall not commence its Sales Services until Franchisor has registered its
FDD in accordance with Applicable Laws within the Territory. AD will also, at AD’s expense, purchase or
otherwise obtain for use in connection with the AD Business (a) computer hardware and computer software that
comply with the standards and specifications of Franchisor; (b) an office space serviced by a minimum of one
dedicated telephone line with 24-hour professional answering service or voice mail; (c) a facsimile machine with
its own dedicated telephone line; and (d) business cards and stationery.
9.3
Sales Services. AD shall conduct the Sales Services as described in Section 3.1 and 4.3 above,
including advertising for, identifying and pre-qualifying prospective Territory Franchisees, providing sales
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assistance to Franchisor’s sales agents, and seeking to obtain prospects by networking and conducting franchise
sales promotional activities within the Territory. AD is not authorized, and Sales Services do not include the
right, to approve prospects as TCBY franchisees, offer or sell franchises, or negotiate or sign Franchise
Agreements on behalf of Franchisor.
9.4
Site Services. AD shall perform the following Site Services on behalf of Franchisor with respect
to Territory Franchisees:
(a)
Assist with Store location selection, which shall consist of providing each Franchisee
with Franchisor’s criteria for a Store site (which shall be approved by Franchisor in its sole discretion) and
assisting each Franchisee in completing a site submittal package (containing such demographic, commercial, and
other information as Franchisor may require in its Franchise Agreement) for each location at which Franchisee
proposes to establish and operate a Store, assist in negotiating lease terms, and coordinate the work of contractors
and architects with respect to the development of each Store in the Territory;
(b)
Deliver to franchisees the standards and specifications for the build out, interior design,
layout, floor plan, signs, designs, color, and decor of the Store that Franchisor prescribes and provides to AD
from time to time; and
(c)
Submit completed forms and reports to Franchisor as prescribed by Franchisor from time
to time.
9.5
Pre-Opening and Opening Support Services. With respect to Territory Franchisees, AD shall
perform the following pre-opening and opening Support Services on behalf of Franchisor: AD shall assume and
perform any and all of Franchisor’s obligations, as set forth in the Franchise Agreement, to provide assistance to
Territory Franchisees pertaining to the timely opening of their Stores, including, without limitation, consultation,
as the AD deems appropriate, with the Territory Franchisee about hiring employees, preparing for and conducting
the grand opening promotion, pre-opening advertisement and promotion, purchasing required products, including
Proprietary Products as set forth in the Franchise Agreement, and adopting and complying with Franchisor’s
system standards for opening the new Store. Additionally, one of AD’s agents or employees shall attend the
grand opening of each new Store in the Territory.
9.6
Ongoing Support Services. With respect to Franchisees of Stores located in the Territory, AD
shall perform the following ongoing Support Services on behalf of Franchisor:
(a)
Upon the reasonable request of Franchisee, provide telephone consultation regarding the
continuing operation and management of the Store and advice regarding Store services, product quality control,
menu items, and customer relations issues;
(b)
Provide on-going updates of information and programs regarding menu items and their
preparation, the Store business, and related Licensed Methods, including, without limitation, information about
special or new services of Franchisor,
(c)
Provide advice and assistance to Territory Franchisees in connection with developing and
improving Franchisee’s Store;
(d)
Conduct the following site inspections in the manner required by Franchisor periodically,
said inspections to be verified by written reports in a form acceptable to Franchisor: (i) for the first three months
following a new Store’s opening in the Territory, at least 1 quality assurance inspection (or reinspection in the
case of a failed first inspection) of such Store every month; and (ii) for all other Stores in the Territory, at least 1
quality assurance inspection or reinspection each calendar quarter;
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(e)
At Franchisor’s written request, establish an advertising cooperative for all
located in the Territory using forms and procedures supplied by Franchisor; and
Stores
(f)
Submit periodic reports to Franchisor on activities in the Territory using procedures and
forms prescribed by Franchisor.
9.7
Dealings with Franchisees. AD acknowledges that it is being delegated certain responsibilities of
Franchisor under the Franchise Agreement to Franchisees in the Territory. The responsibilities to Franchisees are
to be performed by AD as described in this Agreement or as set forth in the Manuals or other reasonable standards
and specifications provided by Franchisor from time to time, and the responsibilities to Franchisees will not
materially change during the term of this Agreement. In providing services to Territory Franchisees, AD shall in
all respects comply with the terms and conditions of any Franchise Agreement or other agreement in effect
between Franchisee and Franchisor. AD understands, however, that its rights as an Area Director are only
derived and exist by virtue of this Agreement and that it is not in any manner a party, third party beneficiary, or
holder of any other right or title to or interest in any Franchise Agreement. Similarly, no Franchisee is a third
party beneficiary of this Agreement or any other agreement between Franchisor and AD. AD agrees that other
than as set forth herein, it may not under any circumstances sell any products or other items to, or collect any
money for any reason from, Franchisees without Franchisor’s prior written consent.
9.8
Area Director’s Inspections. AD shall ascertain through field audits, reviews, and inspections
that each Franchisee in the Territory has complied satisfactorily with all of the terms and conditions of the
Franchise Agreement, specifications, standards, operating procedures, and the Franchisee’s Operations Manual
and shall promptly notify Franchisee in writing, with a copy and evaluation report to Franchisor, of any
deficiencies; provided, however, AD understands and acknowledges that its inspections and reports are advisory
only and that Franchisor shall have: (a) all of the rights to inspect and ascertain compliance of all Franchisees as
if this Agreement were not in effect; (b) the sole right to send notices of default to Franchisee; (c) the sole right to
terminate a Franchise Agreement for failure to cure such defaults (if an opportunity to cure is granted); and (d) the
sole right to take any legal action with respect to any violation of a Franchise Agreement. If AD believes that any
Franchisee in the Territory has breached a Franchise Agreement with Franchisor, AD shall document in writing
all facts related to the alleged breach and request in writing that Franchisor investigate such alleged breach. If, as
a result of Franchisor’s investigation, Franchisor determines that there is a breach by Franchisee of its Franchise
Agreement with Franchisor, Franchisor may take such action as it deems appropriate.
10.
MARKS
10.1
Ownership and Goodwill of Marks. AD acknowledges that its right to use the Marks is derived
solely from this Agreement (unless and to the extent such rights are granted under a separate Franchise
Agreement or other written agreement with Franchisor) and is limited to use in operating as an AD pursuant to
and in compliance with this Agreement. Any unauthorized use of the Marks by AD shall constitute a breach of
this Agreement and an infringement of Franchisor’s and its Affiliates’ rights in and to the Marks. AD
acknowledges and agrees that its usage of the Marks and any goodwill established by that use shall inure to
Franchisor’s and its Affiliates’ exclusive benefit and that this Agreement does not confer any goodwill or other
interests in the Marks upon AD.
10.2
Limitations on Use. AD shall not use any Mark (a) with any prefix, suffix, or other modifying
words, terms, designs, or symbols (other than logos licensed to AD under this Agreement), (b) in connection with
unauthorized services or products, (c) as part of any domain name or electronic address maintained on the
Internet, the World Wide Web, or any other similar proprietary or common carrier electronic delivery system, (d)
in any legal name of a Business Entity used to conduct the AD Business; or (e) in any other manner not expressly
authorized in writing by Franchisor. AD agrees to give such notices of trademark and service mark registration as
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Franchisor specifies and to use and obtain such fictitious or assumed name registrations required by Franchisor or
under applicable law.
10.3
Discontinuance of Use of Marks. If it becomes advisable at any time for Franchisor to modify or
discontinue use of any Mark by AD or to require AD to use one or more additional or substitute trade or service
marks, AD agrees to comply, at its own expense, with Franchisor’s directions to do so within a reasonable time
after receiving notice. Franchisor need not reimburse AD for its direct expenses of doing so, for any loss of
revenue due to any modified or discontinued Mark, or for AD’s expenses of promoting a modified or substitute
trademark or service mark.
10.4
Notification of Infringements and Claims. AD shall immediately notify Franchisor of any
apparent infringement of or challenge to AD’s use of any Mark, or claim by any person of any rights in any Mark,
and AD shall not communicate with any person other than Franchisor or its counsel in connection with any such
matter. AD may not settle any claim without Franchisor’s and its Affiliates’ prior written consent. Franchisor
and its Affiliates may take such action as they deem appropriate and control exclusively any litigation, U.S. Patent
and Trademark Office proceeding, or other administrative proceeding arising out of any such infringement,
challenge, or claim or otherwise relating to any Mark. AD agrees to execute any and all instruments and
documents, render such assistance, and perform such acts as, in the opinion of Franchisor’s and its Affiliates’
counsel, are necessary or advisable to protect and maintain Franchisor’s and its Affiliates’ interests in the Marks.
11.
CONFIDENTIAL INFORMATION
11.1
Confidential Information. Franchisor and its Affiliates possess certain proprietary confidential
information consisting of the methods, techniques, formats, specifications, procedures, information, systems,
methods of business management, sales and promotion techniques, and knowledge of and experience in operating
and franchising Stores (the “Confidential Information”). Franchisor may disclose the Confidential Information
to AD in the training program, the Manuals, and in guidance furnished to AD during this Agreement’s term. AD
will not acquire any interest in the Confidential Information, other than the right to utilize it in the Territory in
performing its duties during the term of this Agreement, and AD acknowledges that the use or duplication of the
Confidential Information in any other business venture would constitute an unfair method of competition. AD
acknowledges and agrees that the Confidential Information is proprietary, includes trade secrets of Franchisor and
its Affiliates, and is disclosed to AD solely on the condition that AD agrees, and AD (and its shareholders,
partners, members, and managers, if AD is a Business Entity) does hereby agree that AD: (a) shall not use the
Confidential Information in any other business or capacity; (b) shall maintain the absolute confidentiality of the
Confidential Information during and after the term of this Agreement; (c) shall not make unauthorized copies of
any portion of the Confidential Information disclosed in written or other tangible form; and (d) shall adopt and
implement all procedures prescribed from time to time by Franchisor to prevent unauthorized use or disclosure of
the Confidential Information. All ideas, concepts, techniques, or materials concerning a Store or AD Business,
whether or not protectable intellectual property and whether created by or for AD or its owners or employees,
must be promptly disclosed to Franchisor and will be deemed Franchisor’s and its Affiliates’ sole and exclusive
property, part of the Licensed Methods and Franchisor’s franchise system, and works made-for-hire for
Franchisor and its Affiliates. To the extent any item does not qualify as a “work made-for-hire” for Franchisor
and its Affiliates, AD assigns ownership of that item, and all related rights to that item, to Franchisor and its
Affiliates and must sign whatever assignment or other documents Franchisor and its Affiliates request to show
ownership or to help Franchisor and its Affiliates obtain intellectual property rights in the item.
11.2
Nondisclosure and Noncompetition Agreement. Franchisor reserves the right to require AD to
have each of its owners, officers, directors, partners, employees, members, and managers, and, if AD is an
individual, AD’s spouse, execute a Nondisclosure and Noncompetition Agreement in a form approved by
Franchisor.
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12.
EXCLUSIVE RELATIONSHIP
12.1
Exclusive Relationship. Franchisor has entered into this Agreement with AD on the condition
that AD will deal exclusively with Franchisor. AD acknowledges and agrees that Franchisor would be unable to
protect its and its Affiliates’ Confidential Information or to encourage a free exchange of ideas and information
among area directors and Franchisor if area directors were permitted to hold interests in any Competitive
Business, as defined below. AD therefore agrees that, during this Agreement’s term, neither AD, AD’s
shareholders, members, owners, or partners who participate in the management of AD, nor, if applicable, the
Managing Owner, nor any spouse of any of the foregoing, shall:
(a)
have any direct or indirect interest as a disclosed or beneficial owner in a “Competitive
Business,” wherever located or operating, defined as a business operating, or granting franchises or licenses to
others to operate, a store, retail outlet or other food service business deriving more than 10% of its gross receipts
from the sale of products the same as or similar to Proprietary Products or other principal goods and services sold
at the Stores (excluding Stores operated under franchise agreements with Franchisor and its Affiliates, and any
existing businesses of AD as disclosed in writing to Franchisor prior to the Effective Date);
(b)
perform services as a director, officer, manager, employee, consultant, representative,
agent, or otherwise for a Competitive Business, wherever located or operating;
(c)
divert or attempt to divert any business related to, or any customer or account of, the AD
Business, Franchisor’s business, or any other of its area director’s or Franchisee’s business, by direct inducement
or otherwise, or divert or attempt to divert the employment of any employee of Franchisor, its Affiliates, or
another area director or Franchisee to any Competitive Business; or
(d)
directly or indirectly solicit or employ any person who is employed by Franchisor or its
Affiliates.
Notwithstanding the foregoing, (i) AD shall not be prohibited from owning securities in a Competitive
Business if such securities are listed on a stock exchange or traded on the over-the- counter market and represent
5% or less of that class of securities issued and outstanding.
13.
OPERATING STANDARDS
13.1
Standards of Service. AD shall at all times give prompt, courteous, and efficient service to
Territory Franchisees. AD shall, in all dealings conducted hereunder or on behalf of Franchisor, adhere to the
highest standards of honesty, integrity, fair dealing, and ethical conduct.
13.2
Compliance with Laws and Good Business Practices. AD shall secure and maintain in force all
required licenses, permits, and certificates relating to AD’s activities under this Agreement and operate in full
compliance with all Applicable Laws.
13.3
Accuracy of Information. Before it conducts any Sales Services, AD shall take reasonable steps
to confirm that the information contained in any written materials, agreements, and other documents related
thereto is true, correct, and not misleading, and will not be contrary to Applicable Laws. Franchisor shall provide
AD with information regarding the status of its FDD, any changes to its FDD and other agreements on a timely
basis and, upon request, provide AD with confirmation that the information contained in any written materials,
agreements, or documents being used by AD is true, correct, and not misleading, except for information
specifically relating to disclosures regarding AD. If AD notifies Franchisor of an error in any information in
Franchisor’s documents, Franchisor shall have a reasonable period of time to attempt to correct any deficiencies,
misrepresentations, or omissions in such information.
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13.4
Notification of Litigation. AD shall notify Franchisor in writing within 5 days after the
commencement of any action, suit, arbitration, proceeding, or investigation, or the issuance of any order, writ,
injunction, award, or decree, by any court, agency, or other governmental instrumentality, which names AD or its
Managing Owner or otherwise, concerns the operation or financial condition of AD, AD’s Business, or any
Territory Franchisee.
13.5
Ownership and Management of AD Business. The AD Business shall at all times be under the
direct, day-to-day, full-time supervision of AD or the Managing Owner. AD shall at all times during the term of
this Agreement own and control the AD Business. Upon the request of Franchisor, AD shall promptly provide
satisfactory proof of such ownership. AD represents that the Statement of Ownership, attached to this Agreement
as Appendix C is true, complete, and not misleading. AD shall promptly provide Franchisor with written
notification if the information contained in the Statement of Ownership changes at any time during the term of
this Agreement and comply with the applicable transfer provision contained in Section 15. If AD is a Business
Entity, an individual or individuals designated by Franchisor shall execute the Guaranty and Assumption of AD’s
Obligations attached hereto as Appendix B and incorporated in this Agreement by this reference.
13.6
Conflicting Interests. AD shall at all times faithfully, honestly, and diligently perform its
obligations under this Agreement and continuously exert its best efforts to promote, enhance, and service Stores
in the Territory. AD shall not engage in any other business or activity, directly or indirectly, that requires any
significant management responsibility or time commitments, or otherwise may conflict with AD’s obligations
under this Agreement, without the prior written approval of Franchisor.
13.7
Insurance. AD shall at all times during the term of this Agreement maintain in force, at AD’s
sole expense, comprehensive general liability insurance with minimum limits of $1,000,000 per occurrence and
$2,000,000 aggregate, or other amounts, and with such terms and conditions as Franchisor may from time to time
prescribe in the Manuals or otherwise. All of the required insurance policies shall name Franchisor and Affiliates
designated by Franchisor as additional insureds, contain a waiver of the insurance company’s right of subrogation
against Franchisor and the designated Affiliates, and provide that Franchisor will receive thirty (30) days’ prior
written notice, of termination, expiration, cancellation, or modification of any such policy.
13.8
Proof of Insurance Coverage. AD will provide proof of insurance to Franchisor before beginning
operations of its AD Business. This proof will show that the insurer has been authorized to inform Franchisor in
the event any policies lapse or are canceled or modified. Franchisor has the right to change the types, amounts,
and terms of insurance that AD is required to maintain by giving AD prior notice. Noncompliance with these
insurance provisions shall be deemed a material breach of this Agreement; and, in the event of any lapse in
insurance coverage, Franchisor shall have the right, in addition to all other remedies, to demand that AD cease
operations of its AD Business until coverage is reinstated or, in the alternative, to pay any delinquencies in
premium payments and charge the same back to AD.
13.9
Advertising in Territory. In order to advertise for prospective Franchisees in the Territory, AD is
required to spend an amount equal to $______________ during each calendar quarter, commencing with the first
full calendar quarter hereunder, during the term of this Agreement. AD shall submit to Franchisor an accounting
of the amounts spent on advertising for its AD Business within 60 days following the end of each quarter during
the term of this Agreement.
13.10 Approval of Advertising. Prior to their use by AD, samples of all advertising and promotional
materials not prepared or previously approved by Franchisor shall be submitted to Franchisor for approval, which
may be withheld for any reason or no reason. AD shall not use any advertising or promotional materials that
Franchisor has not approved or has disapproved. AD acknowledges and understands that certain states require the
filing of franchise sales advertising materials with the appropriate state agency prior to dissemination. AD agrees
fully and timely to comply with such filing requirements at AD’s own expense unless such advertising has been
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previously filed with the state by Franchisor. Franchisor may charge AD for the actual, out-of-pocket costs
incurred by Franchisor in printing large quantities of advertising and marketing materials supplied by Franchisor
to AD at AD’s request.
13.11 Accounting, Bookkeeping and Records. AD shall maintain at its business premises in the
Territory all original invoices, receipts, checks, contracts, licenses, acknowledgment of receipt forms, and
bookkeeping and business records related to the AD Business that Franchisor requires from time to time. AD
shall furnish to Franchisor, within 120 days after the end of AD’s fiscal year, a balance sheet and profit and loss
statement for such year for its AD Business (or monthly or quarterly statement if required by Franchisor, in which
case such statements also shall reflect year-to-date information). In addition, upon request of Franchisor, within
30 days after such returns are filed, exact copies of federal and state income, sales, and any other tax returns and
such other forms, records, books, and other information as Franchisor periodically requires regarding the AD
Business shall be furnished to Franchisor. AD shall maintain all records and reports of the business conducted
pursuant to this Agreement for at least 1 year after the date of termination or expiration of this Agreement. The
recordkeeping provisions of this Agreement, including this Section 13.11, shall apply only to the AD Business
conducted by AD hereunder, and shall not be deemed to give Franchisor access to any tax returns, records, or
other financial or business information of AD that is not related to the AD Business.
13.12 Reports. AD shall, as often as required by Franchisor, deliver to Franchisor a written report of its
AD Business activities during such period required in Sections 9.4, 9.6 and 9.8, in such form and detail as
Franchisor may from time to time specify, including information about efforts to solicit prospective Franchisees,
the status of pending real estate transactions related to the AD Business, and the status of the Stores in the
Territory. AD shall, as often as required by Franchisor during the term of this Agreement, deliver to Franchisor
the other quality assurance inspection reports required in Section 9 for each Franchisee in the Territory in such
form and detail as Franchisor may from time to time specify, and timely deliver any other reports or information
that Franchisor may request.
14.
INSPECTIONS AND AUDITS
14.1
Inspections and Audits. To determine whether AD is complying with this Agreement, Franchisor
or its designee shall have the right at any time during normal business hours, upon 72 hours prior notice to AD, to
enter the premises in which AD is then keeping its records pertaining to the AD Business, and inspect, and
conduct an audit of, the business records, bookkeeping and accounting records, invoices, payroll records, time
cards, check stubs, bank deposits, receipts, sales tax records and returns, and other business records and
documents pertaining to the AD Business. AD and its employees shall fully cooperate with representatives of
Franchisor making, conducting, supervising, or observing any such inspection or audit.
15.
TRANSFERS
15.1
Transfers by Franchisor. AD acknowledges that Franchisor maintains a staff to manage and
operate its franchise system and that staff members can change from time to time. AD represents that it has not
signed this Agreement in reliance on any shareholder, director, officer, or employee remaining with Franchisor in
that capacity. Franchisor may change its ownership or form and/or assign this Agreement or any of its rights,
interests and obligations herein and hereunder without restriction.
15.2
Transfers by Area Director. AD agrees that the rights and duties created by this Agreement are
personal to AD (or its Primary Owners, if AD is a Business Entity) and that Franchisor has entered into this
Agreement in reliance upon AD’s representations about and Franchisor’s perceptions of the individual or
collective character, skill, aptitude, attitude, business ability, and financial capacity of AD (or its Primary
Owners). Accordingly, without the prior written consent of Franchisor, which consent may be withheld for any
reason or no reason, neither this Agreement or any interest herein nor any part or all of any of the Primary
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Ownership of AD may be transferred. Any unauthorized transfer shall constitute a breach of this Agreement and
be void and of no effect. As used in this Agreement, the term “transfer” shall mean and include the voluntary,
involuntary, direct, or indirect assignment, sale, subfranchise, gift, or other disposition by AD (or any of its
owners) of any interest in: (1) this Agreement; (2) the ownership of AD; (3) the Stores operated by AD; or (4)
the assets of the AD Business. It also includes an assignment of day-to-day operational responsibilities for the
AD Business pursuant to an operating agreement or otherwise.
15.3
Conditions for Approval of Transfer. Franchisor shall not be obligated to approve a proposed
transfer unless AD (and its Primary Owners) are in full compliance with this Agreement. Franchisor shall not
unreasonably withhold its approval of a proposed transfer that meets all the applicable requirements of this
Section. The proposed transferee and its owners must be individuals of good moral character and otherwise meet
Franchisor’s then applicable standards for area directors. If the transfer is of this Agreement and the AD
Business, or a Controlling Interest in AD, or is one of a series of transfers (regardless of the time period over
which such transfers occur) which in the aggregate transfer this Agreement and the AD Business or a Controlling
Interest in AD, all of the following conditions must be met before or concurrently with the effective date of the
transfer:
(a)
The transferee has sufficient business experience, aptitude, and financial resources to act
as an area director, agrees to be bound by all of the terms and conditions of this Agreement (unless Franchisor
exercises its option under subparagraph (e) below to require the transferee to sign its then current form of
agreement), and, with its Managing Owner, must have completed Franchisor’s training program to Franchisor’s
satisfaction and paid to Franchisor a reasonable training fee (plus cover its own expenses for attending the training
program);
(b)
AD has paid all amounts owed to Franchisor or its Affiliates and third party creditors and
submitted to Franchisor all required reports and statements;
(c)
AD or the transferee has paid Franchisor a transfer fee in the amount needed to defray
expenses Franchisor incurs in connection with the transfer (not to exceed Franchisor’s transfer fee for a Store as
disclosed in its then-current FDD;
(d)
AD (and its transferring owners) executes a general release, in form satisfactory to
Franchisor, of any and all claims against Franchisor and its Affiliates and their respective shareholders, officers,
directors, employees, and agents;
(e)
The transferee signs an express written assumption of AD’s obligations pursuant to this
Agreement or, at the option of Franchisor, executes an Area Director Agreement in the form then-currently
offered by Franchisor, the duration of which will end on the expiration date of this Agreement and the terms of
which may differ materially from any and all of the terms contained in this Agreement, and which shall supersede
this Agreement in all respects;
(f)
Franchisor approves the material terms and conditions of such transfer, including, without
limitation, that the price and terms of payment are not so burdensome as to affect adversely the transferee’s
business as an area director of Franchisor;
(g)
If AD (and the transferring owners) finances any part of the sale price of the transferred
interest, AD and its owners agree that all obligations of the transferee under any promissory notes, agreements, or
security interests shall be subordinate to the transferee’s obligation to pay fees and other amounts due to
Franchisor and its Affiliates and otherwise to comply with this Agreement; and
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(h)
AD (and its transferring owners) executes a noncompetition covenant in favor of
Franchisor and the transferee with terms the same as those set forth in Section 17.6.
15.4
Transfer to an Entity. If AD is in full compliance with this Agreement, AD may transfer this
Agreement with Franchisor’s prior written approval, which approval may be withheld for any reason or no reason,
to a Business Entity of which AD owns not less than two-thirds of the ownership interest. The transfer fee
described in Section 15.3(c) will be waived by Franchisor, and all owners of such Business Entity must sign a
Guaranty and Assumption of AD’s Obligations attached as Appendix B.
15.5
Franchisor’s Approval of Transfer. Franchisor has 30 days from the date of the written notice to
approve or disapprove in writing AD’s proposed transfer. Written notice shall mean and include all
documentation necessary to evaluate the transferee. AD acknowledges that the proposed transferee shall be
evaluated for approval by Franchisor based on the same criteria as are currently being used to assess new area
directors of Franchisor and that such proposed transferee shall be provided, if appropriate, with such disclosures
required by state or federal law. Franchisor may review all information regarding the AD Business that AD gives
the transferee and give the transferee copies of any reports that AD has given Franchisor or Franchisor has made
regarding the AD Business.
15.6
Death or Disability of Area Director. Upon the death or permanent disability of AD (or a
Managing Owner of AD), the personal representative of such person shall transfer his or her interest in this
Agreement or such interest in AD to an approved third party. Such disposition of this Agreement or such interest
(including, without limitation, transfer by bequest or inheritance) shall be completed within a reasonable time, not
to exceed 6 months from the date of death or permanent disability (unless extended by probate proceedings), and
be subject to all the terms and conditions applicable to transfers contained in this Section. Failure to transfer the
interest in this Agreement or such interest in AD within said period of time shall constitute a breach of this
Agreement. The term “permanent disability” means a mental or physical disability, impairment, or condition that
prevents AD or the Managing Owner from performing the essential functions of AD.
15.7
Right of First Refusal. In the event AD (or, if applicable, an owner) wishes to sell, transfer, gift,
assign, or otherwise dispose of any interest in this Agreement or in AD, or all or a substantial portion of the assets
of the AD Business, AD agrees to grant to Franchisor a 30 day right of first refusal to purchase such rights,
interest, or assets on the same terms and conditions as are contained in the written offer to purchase submitted to
AD by a bona fide proposed purchaser; provided, however, the following additional terms and conditions shall
apply:
(a)
AD shall notify Franchisor of such offer by sending a written notice to Franchisor
enclosing a copy of the written offer signed by the bona fide proposed purchaser;
(b)
The 30 day right of first refusal period will run concurrently with the period in which
Franchisor has to approve or disapprove the proposed transferee;
(c)
Such right of first refusal arises for each proposed transfer, and any material change in the
terms or conditions of the proposed transfer, even if to the same bona fide proposed purchaser, shall be deemed a
separate offer for which a new 30 day right of first refusal shall be given to Franchisor;
(d)
If Franchisor chooses not to exercise its right of first refusal, Franchisee shall be free to
complete the sale, transfer, or assignment, subject to compliance with the applicable provisions of Section 15.
Absence of a reply to AD’s notice of a proposed sale within the 30 day period is deemed a waiver of such right of
first refusal but not a waiver of the required compliance with Section 15; and
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(e)
Franchisor has the unrestricted right to assign this right of first refusal to a third party,
who then will have the rights described in this Section.
16.
TERM AND EXPIRATION
16.1
Term. The initial term of this Agreement is for a period of 5 years from the Effective Date,
unless sooner terminated as provided herein.
16.2
Renewal. At the end of the initial term, AD shall have the option to renew its area director rights
for one additional 5-year renewal term, so long as AD complies with the following requirements during the initial
term of this Agreement:
(a)
At least 60 days prior to expiration of the initial term, AD executes the form of Area
Director Agreement then in use by Franchisor, which agreement may contain terms materially different from
those in this Agreement or in the form of Area Director Agreement under which AD then is operating, including
without limitation a new Initial Fee; provided that any such Initial Fee cannot exceed the fee paid for the initial
term hereunder, and commission percentages and definition of the Territory will not be altered;
(b)
AD has complied with all provisions of this Agreement during its term, including the
payment on a timely basis of all fees due. “Compliance” shall mean, at a minimum, that AD has not received any
written notification from Franchisor of a breach of the Agreement more than 3 times during the initial term;
(c)
AD is not in default or under notification of breach of this Agreement at the time it gives
notice under Section 16.4;
(d)
AD executes a general release, in a form satisfactory to Franchisor, of any and all claims
against Franchisor and its Affiliates, and their respective shareholders, officers, directors, employees, and agents,
arising out of or relating to this Agreement; and
(e)
with Section 16.3.
AD has agreed on a new Development Quota (if any) for the renewal term in accordance
16.3
New Development Quota. AD’s area director rights may be renewed only if AD and Franchisor
have agreed on a new Development Quota (if any) for the renewal term at least 90 days prior to expiration of the
initial term of this Agreement. If AD and Franchisor do not agree on a new Development Quota for the renewal
term within this timeframe, AD may only renew its area director rights upon agreeing to the same Development
Quota applicable during the initial term.
16.4
Exercise of Renewal Option. AD may exercise its option to renew by giving written notice of
such exercise to Franchisor not more than 180 days nor less than 90 days prior to the expiration of the initial term
of this Agreement.
16.5
Conditions of Renewal. Franchisor shall not be obligated to offer AD renewal upon the
expiration of this Agreement if AD fails to comply with any of the above conditions of renewal. In such event,
except for failure to execute the then-current Area Director Agreement, Franchisor shall give AD notice of
expiration at least 60 days prior to the expiration of the initial term, and such notice shall set forth the reasons for
such refusal to offer renewal. Upon the expiration of this Agreement, AD shall comply with the provisions of
Section 17.
16.6
Transfer at End of Term. If AD is not in breach or under notification of default of this
Agreement, AD may transfer its rights and obligations under this Agreement to another, at the conclusion of the
initial or any renewal term, provided that: (1) AD and the proposed transferee meet all requirements of Section 15
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and (2) AD provides not more than 180 days nor less than 90 days’ notice of its intent to transfer. Franchisor
may, at its sole option, extend the term of this Agreement or the Area Director Agreement under which AD then
is operating for a reasonable period (not to exceed 90 days) to facilitate an end-of-term transfer, if Franchisor
believes that AD is close to completing a transfer and is acting in good faith.
17.
TERMINATION
17.1
By Area Director. AD may terminate this Agreement upon 90 days advance written notice if
Franchisor is unable to provide registered and effective FDDs or offer or sell franchises within the Territory for a
period of more than 90 consecutive days within any Development Period. Further, AD may terminate this
Agreement if Franchisor fails to comply with any other provision of this Agreement and does not correct such
failure within 90 days after written notice of such failure to comply is delivered to Franchisor. AD must comply
with all post-term obligations in the event it elects to terminate the Agreement.
17.2
By Franchisor Upon AD’s Default. Franchisor shall have the right to terminate this Agreement,
effective upon delivery of written notice of termination to AD, unless otherwise noted below (subject to any state
laws to the contrary, in which case state law shall prevail), if AD (or any of its shareholders, members, owners,
managers, or partners or the Managing Owner):
(a)
Fails to satisfactorily complete the training program as provided in Section 7.1;
(b)
Has intentionally made any material misrepresentation or omission in its application to be
an area director or in operating as an area director;
(c)
Fails to comply with any requirements under the federal and state franchise laws,
including, but not limited to, communicating in written, verbal, or other form to any prospective Franchisee any
information or presentation which states or suggests a specific level or range of potential or actual sales, income,
gross or net profits, unless that information or presentation is identical to that contained in Franchisor’s FDDs and
other disclosure documents;
(d)
Fails to meet the Development Quota set forth in Appendix A and does not correct such
failure within 90 days after written notice of such failure to comply is delivered to AD if the default is for Stores
sold or 180 days if the default is for the cumulative number of Stores to be open and in operation in the Territory;
(e)
Fails to comply with any other provision of this Agreement or any mandatory
specification, standard, or operating procedure prescribed by Franchisor and does not correct such failure within
30 days after written notice of such failure to comply is delivered to AD;
(f)
Surrenders, transfers control of, or makes an unauthorized transfer of this Agreement or
an Ownership interest in AD or abandons or fails actively to operate the AD Business;
(g)
Is convicted by a trial court of or pleads no contest to a felony or any other crime or
offense that is, in the opinion of Franchisor, likely to affect adversely the goodwill associated with the Marks or
engages in any conduct which might adversely affect the reputation of the Stores or the goodwill associated with
the Marks;
(h)
To the extent enforceable under federal bankruptcy law, 11 U.S.C. § 101, is declared
bankrupt or insolvent, voluntarily institutes a bankruptcy proceeding under the Bankruptcy Code, or is adjudicated
bankrupt as a result of an involuntary petition in bankruptcy being filed against it;
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(i)
Abandons or ceases to operate the AD Business for a period of 30 consecutive days,
unless precluded from doing so by an event beyond AD’s reasonable control (other than for financial reasons), or
abandons any Store owned by AD;
(j)
Has received 3 notices of default from Franchisor within a 12 month period under any
agreement between Franchisor and AD, regardless of whether the defaults were cured by AD; or
(k)
Fails to pay any amounts due Franchisor or its Affiliates within 30 days after receiving
notice that such fees or amounts are overdue.
17.3
Rights and Obligations of Area Director. Upon termination of this Agreement, whether pursuant
to Section 17.1 or 17.2 or upon expiration without renewal of this Agreement pursuant to Section 16, AD agrees:
(a)
To pay Franchisor within 15 days after the effective date of termination or expiration of
this Agreement, or such later date that the amounts due to Franchisor are determined, such fees, amounts owed for
purchases by AD from Franchisor or its Affiliates, interest due on any of the foregoing, and all other amounts
owed to Franchisor or its Affiliates which are then unpaid;
(b)
To refrain from, directly or indirectly, at any time or in any manner (except with respect
to Store franchises owned and operated by AD), identifying itself or any business as a current area director or
authorized agent of Franchisor or its Affiliates, using any Mark, any colorable imitation thereof, or other indicia of
a Store in any manner or for any purpose, or utilizing for any purpose any trade name, trademark or service mark,
or other commercial symbol that suggests or indicates a connection or association with Franchisor or its Affiliates;
(c)
To immediately deliver to Franchisor all past and present franchise sales leads and
records and all contracts, acknowledgments of receipt, and other information and records related to Franchisees of
Franchisor in the Territory;
(d)
To immediately deliver to Franchisor all advertising materials, the Manuals, and all other
manuals, forms, FDDs, franchise sales brochures, and other materials containing any Mark or otherwise
identifying or relating to the sale or service of Stores;
(e)
To refrain from communicating in any manner with Franchisees concerning Franchisor or
obligations arising from this Agreement or the Franchise Agreement, except as expressly authorized by
Franchisor;
(f)
To take such action required to cancel all fictitious or assumed name or equivalent
registrations relating to AD’s use of any Mark; and
(g)
Furnish Franchisor, within 30 days after the effective date of termination or expiration,
with evidence satisfactory to Franchisor of AD’s compliance with the foregoing obligations.
17.4
Confidential Information. AD agrees that, upon termination or expiration of this Agreement, AD
shall immediately cease to use any Confidential Information disclosed pursuant to this Agreement or as a result of
its relationship with Franchisor in any business or otherwise (except in connection with the operation of a Store
pursuant to a Franchise Agreement with Franchisor) and return to Franchisor all copies of the Manuals and any
other confidential materials loaned to AD by Franchisor.
17.5
Covenant Not to Compete. Upon termination or expiration of this Agreement, AD (and its
shareholders, officers, directors, owners, members, managers, or partners, and the spouses of these individuals
and AD (collectively, “Bound Parties”)) agrees that, for 2 years commencing on the later of the effective date of
termination or expiration or the date on which AD and all Bound Parties begin to comply with this Section,
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neither AD nor any Bound Party shall have any direct or indirect interest (through an immediate family member
of AD or any Bound Party or otherwise) as a disclosed or beneficial owner, investor, partner, director, officer,
employee, consultant, representative, agent, or in any other capacity in any Competitive Business located in any
territory in which Franchisor or its Affiliates or area directors conduct business at the later of the time of
termination or expiration or the date on which AD and all Bound Parties begin to comply with this Section. The
restrictions of this Section shall not apply to the ownership of shares of a class of securities listed on a stock
exchange or traded on the over-the-counter market that represent 5% or less of the number of shares of that class
of securities issued and outstanding. AD and each Bound Party expressly acknowledge that they possess skills
and abilities of a general nature and have other opportunities for exploiting such skills. Consequently,
enforcement of the covenants made in this Section will not deprive them of their personal goodwill or ability to
earn a living.
17.6
No Further Right to Payment. Upon expiration or termination of this Agreement, AD forfeits all
fees paid to Franchisor and remains liable to Franchisor for all amounts then due to Franchisor. AD shall have no
further right to receive payment of Sales Commissions, Royalty Fees or other amounts from Franchisor, except
for those commissions or Royalty Fees which have been fully earned by AD up through the date of expiration or
termination. For purposes of this Agreement, “fully earned” commissions shall mean commissions due on
franchise sales for which all conditions described in Section 6.1 have been fulfilled by AD for the purchase of a
franchise for a Store to be located within the Territory. “Fully earned” Royalty Fees shall mean those Royalty
Fees which accrue up through the date of expiration or termination which are otherwise owed to AD. Franchisor
shall have the right immediately to assume control of and manage all franchise sales in the Territory and to
receive all Royalty Fees from Franchisees in the Territory. Any fully earned commissions or Royalty Fees which
are due to AD will be paid in accordance with the provisions of Section 6.
17.7
Continuing Obligations. All obligations of Franchisor and AD and the Bound Parties that
expressly or by their nature survive the expiration or termination of this Agreement shall continue in full force
and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied or by their
nature expire.
17.8
Applicable Laws. The parties acknowledge that, in the event the terms of this Agreement
regarding termination or expiration are inconsistent with Applicable Laws, such law shall govern AD’s rights
regarding termination or expiration of this Agreement.
18.
RELATIONSHIP OF THE PARTIES
18.1
Relationship of the Parties. It is understood and agreed by the parties that this Agreement does
not create a fiduciary relationship between them, that the parties are independent contractors, that Franchisor
appoints AD as its special agent for a particular purpose, and that nothing in this Agreement is intended to make
either party a general agent, subsidiary, joint venturer, partner, employee, or servant of the other for any purpose.
AD acknowledges that Franchisor is in the business of granting franchises and licenses to Franchisees and Area
Directors for the operation of Stores and AD Businesses, and notwithstanding the fact that Franchisor may engage
in activities similar to the Sales Services, Site Services and Support Services, Franchisor does not operate an AD
Business and is not in the same business as AD. AD shall conspicuously identify itself in all dealings with
Franchisees, prospective Franchisees, lessors, contractors, suppliers, public officials, and others as the owner of
its own AD Business under an Area Director Agreement with Franchisor and shall place the notices of
independent ownership required by Franchisor on signs, forms, stationery, advertising, and other materials.
18.2
Payment of Third Party Obligations. Neither Franchisor nor AD shall make any express or
implied agreements, guaranties, or representations, or incur any debt, in the name or on behalf of the other or
represent that their relationship is other than franchisor and special agent; neither Franchisor nor AD shall be
obligated by or have any liability under any agreements or representations made by the other that are not
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expressly authorized under this Agreement; nor shall Franchisor be obligated for any damages to any person or
property directly or indirectly arising out of the operation of the AD Business.
18.3
Independent Contractors. AD may delegate its duties under this Agreement to independent
contractors provided that AD first receives written approval from Franchisor and complies with all state laws
which require broker or other registrations for such persons. Franchisor reserves the right at any time to withdraw
the approval of any independent contractor engaged by AD to fulfill its duties and obligations under this
Agreement.
18.4
Indemnification. AD agrees to indemnify and reimburse Franchisor and its Affiliates, and their
respective stockholders, directors, officers, employees, agents, and assignees (the “Indemnified Parties”), for, and
hold the Indemnified Parties harmless against, any loss, liability, taxes, or damages (actual or consequential) and
all reasonable costs and expenses of defending any claim brought against any of them or any action in which any
of them is named as a party (including, without limitation, reasonable accountants’, attorneys’, and expert witness
fees, costs of investigation and proof of facts, court costs, other litigation expenses, and travel and living
expenses), which any of them may suffer, sustain, or incur by reason of, arising from, or in connection with any
acts, omissions, or activities of AD or any of its employees or independent contractors, unless (and then only to
the extent that) the loss, liability, taxes, damages, and reasonable costs and expenses are determined to be caused
solely by the Indemnified Party’s negligence or willful misconduct in a final, unappealable ruling issued by a
court or arbitrator with competent jurisdiction. Each Indemnified Party shall have the right to defend any such
claim against it at AD’s expense and agree to settlements or take any other remedial, corrective, or other actions.
This indemnity shall continue in full force and effect subsequent to and notwithstanding the expiration or
termination of this Agreement.
19.
DISPUTES
The following provisions apply with respect to dispute resolution:
19.1
Non-binding Mediation. Before the filing of any legal proceeding or claim, the parties agree to
mediate any dispute that does not include injunctive relief or specific performance actions, provided that the party
seeking mediation notify the other party of its intent to mediate prior to the termination of this Agreement.
Mediation will be conducted by a mediator or mediation program agreed to by all parties. Persons authorized to
settle the dispute must attend any mediation session. The parties agree to participate in the mediation proceedings
in good faith with the intention of resolving the dispute if at all possible within 30 days of the notice from the
party seeking to initiate the mediation procedures. If not resolved within 30 days, the parties are free to pursue
legal action. Mediation is a compromise negotiation for purposes of the federal and state rules of evidence, and
the entire process is confidential and shall be non-binding.
19.2
Governing Law/Consent to Venue and Jurisdiction. Except to the extent governed by the United
States Trademark Act of 1946 (Lanham Act, 15 U.S.C. § 1051) or other federal law, this Agreement shall be
interpreted under the laws of the state of Colorado, and any dispute between the parties, whether arising under this
Agreement or from any other aspect of the parties’ relationship, shall be governed by and determined in
accordance with the substantive laws of that state, which laws shall prevail in the event of any conflict of law.
AD and Franchisor have negotiated regarding a forum in which to resolve any disputes arising between them and
have agreed to select a forum in order to promote stability in their relationship. Therefore, if a claim is asserted in
any legal proceeding involving the AD or any Bound Party and Franchisor, the parties agree that the exclusive
venue for disputes between them shall be in the County of Broomfield, State of Colorado, or the Federal District
Court for the Tenth District, and each party waives any objection it might have to the personal jurisdiction of or
venue in such courts.
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19.3
Waiver of Jury Trial. Franchisor, AD, and the Bound Parties each waive their right to a trial
by jury. AD, the Bound Parties, and Franchisor acknowledge that the parties’ waiver of jury trial rights provides
the parties with the mutual benefit of uniform interpretation of this Agreement and resolution of any dispute
arising out of this Agreement or any aspect of the parties’ relationship. AD, the Bound Parties, and Franchisor
further acknowledge the receipt and sufficiency of mutual consideration for such benefit. BY INITIALING
HERE:
_________ [AD TO INITIAL HERE]
AD ACKNOWLEDGES AND AGREES THAT AD HAS READ THIS SECTION, UNDERSTANDS ITS
PROVISIONS, and that Franchisor has accorded AD ample time and opportunity to consult with financial and
legal advisors of AD’s own choosing about the effect of these provisions on AD’s rights under this Agreement.
19.4
Limitation of Claims. AD and the Bound Parties agree not to bring any claim asserting that any
of the Marks are generic or otherwise invalid. Except with regard to AD’s obligation to pay Franchisor and its
Affiliates amounts due pursuant to this Agreement or otherwise, any claims between the parties must be
commenced within 1 year from the date on which the party asserting the claim knew or should have known of the
facts giving rise to the claim, or such claim shall be barred. The parties understand that such time limit might be
shorter than otherwise allowed by law. AD and the Bound Parties agree that their sole recourse for claims arising
between the parties shall be against Franchisor or its successors and assigns. AD and the Bound Parties agree that
the shareholders, directors, officers, employees, and agents of Franchisor and its Affiliates (other than AD) shall
not be personally liable nor named as a party in any action between Franchisor and AD or any Bound Party. The
parties further agree that, in connection with any such proceeding, each must submit or file any claim which
would constitute a compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil Procedure)
within the same proceeding as the claim to which it relates. Any such claim which is not submitted or filed as
described above will be forever barred. The parties agree that any proceeding will be conducted on an individual,
not a class-wide, basis, and that a proceeding between Franchisor and AD or the Bound Parties may not be
consolidated with any other proceeding between Franchisor and any other person or entity. No party will be
entitled to an award of punitive or exemplary damages (provided that this limitation shall not apply to statutory
penalties such as those set forth in 15 U.S.C. § 1117(a)). No previous course of dealing shall be admissible to
explain, modify, or contradict the terms of this Agreement. No implied covenant of good faith and fair dealing
shall be used to alter the express terms of this Agreement.
20.
MISCELLANEOUS PROVISIONS
20.1
Invalidity. If any provision of this Agreement is held invalid by any tribunal in a final decision
from which no appeal is or can be taken, such provision shall be deemed modified to eliminate the invalid
element, and, as so modified, such provision shall be deemed a part of this Agreement as though originally
included. The remaining provisions of this Agreement shall not be affected by such modification.
20.2
Modification. No amendment, waiver, or modification of this Agreement shall be effective
unless it is in writing and signed by the party or parties against whom such amendment or waiver is to be
enforced. AD acknowledges that Franchisor may modify its standards and specifications and operating and
marketing techniques set forth in the Manuals unilaterally under any conditions and to the extent to which
Franchisor deems necessary to protect, promote, or improve the Marks and the quality of the Licensed Methods.
20.3
Force Majeure. In the event any party fails of perform any obligation under this Agreement, the
same shall not be deemed a breach of this Agreement if it arose from a cause beyond the control of and without
the negligence of said party. Such causes include, but are not limited to, acts of God, actions of the elements,
lockouts, strikes, wars, riots, civil commotion, and acts of government except as may be specifically provided for
elsewhere in this Agreement.
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20.4
Attorneys’ Fees. In the event of any default on the part of either party to this Agreement, in
addition to all other remedies, the party in default will pay the prevailing party (as determined by the decisionmaker in the proceeding) all amounts due and all damages, costs, and expenses, including reasonable attorneys’
fees, incurred by the prevailing party in any legal action or other proceeding as a result of such default, plus
interest at the lesser of 2% per month or the highest commercial contract interest rate allowable by law accruing
from the date of such default.
20.5
Interpretation of Rights and Obligations. The following provisions apply to and govern the
interpretation of this Agreement, the parties’ rights under this Agreement, and the relationship between the
parties:
(a)
Franchisor’s Rights. Whenever this Agreement provides that Franchisor has a certain
right, that right is absolute and the parties intend that Franchisor’s exercise of that right will not be subject to any
limitation or review. Franchisor has the right to operate, administrate, develop, and change its Licensed Method
and franchise system in any manner that is not specifically precluded by the provisions of this Agreement.
(b)
Franchisor’s Reasonable Business Judgment. Whenever Franchisor reserves discretion in
a particular area or where Franchisor agrees to exercise its rights reasonably or in good faith, Franchisor will
satisfy its obligations whenever Franchisor exercises Reasonable Business Judgment in making its decision or
exercising our rights. Franchisor’s decisions or actions will be deemed to be the result of Reasonable Business
Judgment, even if other reasonable or even arguably preferable alternatives are available, if its decision or action
is intended, in whole or significant part, to promote or benefit its franchise System generally even if the decision
or action also promotes Franchisor’s financial or other individual interest. Examples of items that will promote or
benefit the system include enhancing the value of the Proprietary Marks, improving customer service and
satisfaction, improving product quality, improving uniformity, enhancing or encouraging modernization and
improving the competitive position of the System.
20.6
Injunctive Relief. Nothing herein shall prevent Franchisor or AD from seeking injunctive relief
in appropriate cases to prevent irreparable harm.
20.7
No Waiver. No waiver of any condition or covenant contained in this Agreement, or failure to
exercise a right or remedy, by AD or Franchisor shall be considered to imply or constitute a further waiver by
Franchisor or AD of the same or any other condition, covenant, right, or remedy.
20.8
No Right to Set Off. AD shall not be allowed to set off amounts owed to Franchisor for fees or
other amounts due against any monies owed to AD, which right of set off is hereby expressly waived by AD.
20.9
Effective Date. Regardless of the date first written above, this Agreement shall not be effective
until executed by Franchisor, as evidenced by dating and signing by an officer of Franchisor.
20.10 Review of Agreement. AD acknowledges that, where required by Applicable Laws, it has had a
copy of Franchisor’s FDD in its possession for not less than 14 full calendar days, and this Agreement in its
possession for not less than 7 full calendar days, during which time AD has had the opportunity to submit the
same for review and advice by a professional of AD’s choosing before freely executing this Agreement. Where
such disclosure is not required by Applicable Laws, any FDD or other disclosure AD has received pertaining to
such jurisdiction shall be deemed a courtesy disclosure by Franchisor.
20.11 Entire Agreement. This Agreement (which includes the attachments and Appendices expressly
incorporated) contains the entire agreement between the parties and supersedes any and all prior agreements
concerning the subject matter covered by this Agreement. AD agrees and understands that Franchisor shall not be
liable or obligated for any oral representations or commitments made prior to this Agreement’s execution or for
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claims of negligent or fraudulent misrepresentation and that no modifications of this Agreement shall be effective
except those in writing signed by both parties. Franchisor does not authorize and will not be bound by any
representation of any nature other than those expressed in this Agreement. However, nothing in this Agreement or
any related agreement is intended to disclaim the representations made in the disclosure document that was
provided to AD. AD further acknowledges and agrees that no representations have been made to it by Franchisor
regarding projected sales volumes, market potential, revenues, profits of the AD Business, or operational
assistance other than as stated in this Agreement or in the FDD provided in connection with this Agreement. AD
acknowledges and agrees that any delegation of Franchisor’s duties and obligations to area directors does not
assign or confer any rights under any Franchise Agreement (unless entered into between AD and Franchisor)
upon AD and that AD is not a third party beneficiary of any Franchise Agreement between Franchisor and a
Franchisee who is not also AD. This Agreement shall not modify, affect or amend any Franchise Agreement
entered into between AD and Franchisor. Any policies that Franchisor adopts and implements from time to time
to guide it in its decision-making are subject to change, are not a part of this Agreement, and are not binding on
Franchisor.
20.12 Notices. All notices required to be given under this Agreement shall be given in writing, by
certified mail, return receipt requested, or by any delivery service providing documentation of receipt, to
addresses set forth in the first paragraph of this Agreement or, with respect to notices to AD, to the address of the
AD Business, or at such other addresses as Franchisor or AD may designate from time to time, and shall be
deemed delivered (a) on the date shown on the return receipt or in the courier’s records as the date of delivery or
(b) on the date of first attempted delivery, if actual delivery cannot for any reason be made.
20.13 Acknowledgment. BEFORE SIGNING THIS AGREEMENT, AD SHOULD READ IT
CAREFULLY WITH THE ASSISTANCE OF LEGAL COUNSEL. AD ACKNOWLEDGES THAT:
(A)
THE SUCCESS OF THE AD BUSINESS VENTURE INVOLVES SUBSTANTIAL
RISKS AND DEPENDS UPON AD’S ABILITY AS AN INDEPENDENT BUSINESS PERSON AND ITS
ACTIVE PARTICIPATION IN THE DAILY AFFAIRS OF THE AD BUSINESS, AND
(B)
NO ASSURANCE OR WARRANTY, EXPRESS OR IMPLIED, HAS BEEN GIVEN
AS TO THE POTENTIAL SUCCESS OF SUCH AD BUSINESS VENTURE OR THE EARNINGS LIKELY
TO BE ACHIEVED, AND
(C)
NO STATEMENT, REPRESENTATION, OR OTHER ACT, EVENT, OR
COMMUNICATION, EXCEPT AS SET FORTH IN THIS DOCUMENT AND IN ANY DISCLOSURE
DOCUMENT SUPPLIED TO AD, IS BINDING ON FRANCHISOR IN CONNECTION WITH THE SUBJECT
MATTER OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed, sealed, and delivered this Agreement in
counterparts on the date first mentioned above.
TCBY SYSTEMS, LLC
AREA DIRECTOR
By:
By:
Its:
Its:
Date:
Date:
TCBY FDD 03/2014
25
APPENDIX A
RIDER
TO AREA DIRECTOR AGREEMENT
DATED ___________
1.
Territory. The Territory referred to in Section 2.14 of the Agreement shall be the
following geographic area:
_____________________________________________________________.
2.
Existing Stores. The following Stores are Existing Stores by virtue of being opened and
operated by Franchisees within the Territory as of the Effective Date:
[list Existing TCBY Stores]
3.
Development Quota.
AD shall meet the following Development Quota by the last day of each
Development Period during the term of this Agreement (to be completed before the execution of
this Agreement):
(a)
Development
Period
Number of New Stores
to be Opened by AD in
Territory or Sold to Territory
Franchisees
Cumulative Number of
Stores (Excluding CompanyOwned Stores, Existing Stores,
Excluded Locations and any
other Stores or outlets
excluded or retained by
Franchisor pursuant to this
Agreement*)
to be Open and in
Operation in the Territory**
1
2
3
4
5
*Of the new Stores opened and operating within the Territory, AD must, at the end of each Development Period
from and after the second Development Period, own at least __ Stores in the Territory. See Section 3.2 for further
information.
**Provided that Franchisor has given its prior written approval for the development of such location, each
“Limited Services Location” or Other Concepts Store operated within the Territory by AD or AD’s qualified
applicant approved by Franchisor will count as 1/3 of 1 Store for purposes of determining whether AD has met its
Development Quota. In other words, AD must open 3 approved Limited Services Locations or Other Concepts
Stores to receive credit for 1 Store under the Development Quota. For purposes of this paragraph, a “Limited
Services Location” is a limited menu TCBY-branded presence (such as a single yogurt machine) located outside a
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traditional or Other Concepts Store presence, such as within a gas station retail area. AD ACKNOWLEDGES
AND AGREES THAT IT MAY NOT PURSUE A LIMITED SERVICES LOCATION OR OTHER CONCEPTS
STORE OPPORTUNITY WITHOUT THE PRIOR WRITTEN CONSENT OF FRANCHISOR, WHICH MAY
BE GRANTED OR WITHHELD FOR ANY REASON OR NO REASON, and that Other Concepts Stores and
Limited Services Locations may, at Franchisor’s sole discretion, be considered Excluded Locations hereunder.
(b)
The Development Quota that AD must satisfy during any renewal term of this
Agreement shall be determined in the manner and within the timeframe specified in Section 16.3
of this Agreement. AD and Franchisor shall revise this Appendix or its counterpart in the form
of Area Director Agreement that is executed by the parties, to reflect the new Development
Quota for any renewal term.
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APPENDIX B
GUARANTY AND ASSUMPTION OF
AREA DIRECTOR’S OBLIGATIONS
In consideration of, and as an inducement to, the execution of the above Area Director Agreement (the
“Agreement”) by __________________ (“Franchisor”), each of the undersigned (“Guarantors”) personally and
unconditionally (I) guarantees to Franchisor and its Affiliates and their successors and assigns, for the term of the
Agreement and thereafter as provided in the Agreement, that Area Director defined in the Agreement (“AD”)
shall punctually pay and perform each and every undertaking, agreement, and covenant set forth in the Agreement
and (2) agrees personally to be bound by, and personally liable for the breach of, each and every provision in the
Agreement, including, but not limited to, those specifically identified below.
1.
Waiver. Each of the undersigned waives:
(a)
undertakings;
acceptance and notice of acceptance by Franchisor and its Affiliates of the foregoing
(b)
notice of demand for payment of any indebtedness or nonperformance of any obligations
hereby guaranteed;
(c)
protest and notice of default to any party with respect to the indebtedness or
nonperformance of any obligations hereby guaranteed; and
(d)
any right he or she may have to require that an action be brought against AD or any other
person as a condition of liability.
2.
Consents. Each of the undersigned consents and agrees that:
(a)
his or her direct and immediate liability under this guaranty shall be joint and several;
(b)
he or she shall render any payment or performance required under the Agreement upon
demand if AD fails or refuses punctually to do so;
(c)
such liability shall not be contingent or conditioned upon pursuit by Franchisor or its
Affiliates of any remedies against AD or any other person;
(d)
such liability shall not be diminished, relieved, or otherwise affected by any extension of
time, credit, or other indulgence which Franchisor or its Affiliates may from time to time grant to AD or
to any other person, including, without limitation, the acceptance of any partial payment or performance
or the compromise or release of any claims, none of which shall in any way modify or amend this
guaranty, which shall be continuing and irrevocable during the term of the Agreement; and
(e)
he or she shall be bound by the restrictive covenants, confidentiality provisions, and
indemnification provisions contained in Sections 11, 12, 17.4, 17.5, and 18.4 of the Agreement; and
(f)
the provisions contained in Section 19, and the costs and attorneys’ fees provision
contained in Section 20.4, of the Agreement shall govern this Guaranty, and such provisions are
incorporated into this Guaranty by this reference.
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IN WITNESS WHEREOF, each of the undersigned has affixed his or her signature, effective as of the
____ day of _____________________.
PERCENTAGE OF OWNERSHIP
INTERESTS IN AREA DIRECTOR
GUARANTOR(S)
(Print Name)
(Signature)
Address
(Telephone)
(Print Name)
(Signature)
Address
(Telephone)
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APPENDIX C
STATEMENT OF OWNERSHIP
Area Director: _______________________________________________
Trade name (if different from above): ______________________
Form of Ownership
(Check One)
_____ Individual
_____ Partnership
_____ Corporation
_____ Limited Liability Company
_____ Other (List):
If a Partnership, provide name and address of each partner showing percentage owned, whether active in
management, and indicate the state in which the partnership was formed.
If a Corporation, give the state and date of incorporation, the names and addresses of each officer and
director and list the names and addresses of every shareholder showing what percentage of stock is owned by
each.
If a Limited Liability Company, give the state and date of formation, the name and address of the
manager, and list the names and addresses of every member and the percentage of membership interest held by
each member.
AD acknowledges that this Statement of Ownership applies to the __________________ AD Business
authorized under the Area Director Agreement. Use additional sheets if necessary. Any and all changes to the
above information must be reported to (and in some cases first approved by) Franchisor in writing.
Date:
Name
AREA DIRECTOR
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APPENDIX D
ACKNOWLEDGMENT ADDENDUM TO
TCBY® AREA DIRECTOR AGREEMENT
As you know, you and we are entering into an Area Director Agreement for the operation of a TCBY® area
director franchise. The purpose of this Acknowledgment Addendum is to determine whether any statements or
promises were made to you that we have not authorized or that may be untrue, inaccurate or misleading, and to be
certain that you understand the limitations on claims that may be made by you by reason of the offer and sale of
the franchise and operation of your area director business. Please review each of the following questions carefully
and provide honest responses to each question.
Acknowledgments and Representations*
1. Except as exempted under Applicable Laws, did you receive a copy of our Disclosure Document (and all
exhibits and attachments) at least 14 calendar days prior to signing the Area Director Agreement? Check one:
( ) Yes ( ) No. If no, please comment:
2. Have you studied and reviewed carefully our Disclosure Document and Area Director Agreement? Check
one: ( ) Yes ( ) No. If no, please comment:
3. Except as exempted under Applicable Laws, did you receive a copy of the Area Director Agreement at least 7
calendar days prior to the date on which the Area Director Agreement was executed? Check one: ( ) Yes (
) No. If no, please comment:
4. If you answered no to question 3, but answered yes to question 1, were all of the changes to the Area Director
Agreement
made
as
a
result
of
negotiations
that
you
initiated
with
us?
Check one: ( ) Yes ( ) No. If no, please comment:
5. Did you understand all the information contained in both the Disclosure Document and Area Director
Agreement? Check one: ( ) Yes ( ) No. If no, please comment:
6. Was any oral, written or visual claim or representation made to you which contradicted the disclosures in the
Disclosure Document? Check one: ( ) Yes ( ) No. If yes, please comment:
7. Did any employee or other person speaking on behalf of Franchisor make any oral, written or visual
representation, claim, statement or promise to you that stated, suggested, predicted or projected financial
performance, sales, revenues, earnings, income or profit levels for any AD Business or Store location, or the
likelihood of success of your franchised business? Check one: ( ) Yes ( ) No. If yes, please state in detail
the oral, written or visual representation:
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8. Do you understand that that the franchise granted is for the right to operate in the Territory, as stated in
Subparagraph 3.3 of the Area Director Agreement, but that we and our Affiliates have the right to issue area
director franchises outside of your Territory and the right to issue Store franchises, operate company-owned
Stores, and provide services to Store franchisees both inside and outside of your Territory, as described in
Subparagraph 3.4?
Check one: ( ) Yes ( ) No. If no, please comment:
9. Do you understand that the Area Director Agreement contains the entire agreement between you and us
concerning your franchise, meaning that any prior oral or written statements not set out in the Area Director
Agreement will not be binding? Check one: ( ) Yes ( ) No. If no, please comment:
10. Do you understand that the success or failure of your business will depend in large part upon your skills and
experience, your business acumen, your location, the market for Stores and products in your Territory, interest
rates, the economy, inflation, the number of employees you hire and their compensation, competition and
other economic and business factors? Further, do you understand that the economic and business factors that
exist at the time you begin operations may change? Check one: ( ) Yes ( ) No. If no, please comment:
YOU UNDERSTAND THAT YOUR ANSWERS ARE IMPORTANT TO US AND THAT WE WILL
RELY ON THEM. BY SIGNING THIS ADDENDUM, YOU ARE REPRESENTING THAT YOU HAVE
CONSIDERED EACH QUESTION CAREFULLY AND RESPONDED TRUTHFULLY TO THE ABOVE
QUESTIONS. IF MORE SPACE IS NEEDED FOR ANY ANSWER, CONTINUE ON A SEPARATE
SHEET AND ATTACH.
NOTE: IF THE RECIPIENT IS A CORPORATION, PARTNERSHIP, LIMITED LIABILITY
COMPANY OR OTHER ENTITY, EACH OF ITS PRINCIPAL OWNERS MUST EXECUTE THIS
ACKNOWLEDGMENT.
*Such representations are not intended to nor shall they act as a release, estoppel or waiver of any liability
incurred under the Territory’s Franchise Disclosure Act, Franchise Registration and Disclosure Law and other
Applicable Laws.
[Signatures on following page.]
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AREA DIRECTOR
AREA DIRECTOR
By:
By:
(signature)
(signature)
(Print Name)
(Print Name)
(Date)
(Date)
APPROVED ON BEHALF OF
__________________
By:
(signature)
(Print Name)
(Date)
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EXHIBIT F
TERM PURCHASE ADDENDUM
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EXHIBIT F: Term Purchase Addendum
TERM PURCHASE ADDENDUM TO
FRANCHISE AGREEMENT
This is a Term Purchase Addendum (the “Addendum”) to the Franchise Agreement between the parties
described as follows:
Franchise
Renewal
Agreement
dated
___________________,
20__
between
_______________________________ (“you” or the “Franchisee”) and TCBY SYSTEMS, LLC (“us”,
“we” or “Franchisor”), dated __________________, 20__ (the “Franchise Agreement”)
This Addendum is considered to be part of the Franchise Agreement. All capitalized terms used in this
Addendum but not defined herein shall have the same the meaning as ascribed to them in the Franchise
Agreement. The Preambles set forth below are an integral part of this Addendum.
1.
Preambles. You own and operate a franchised location (the “Store”) under and by virtue of the
Franchise Agreement. The current (renewal) term (the “Term”) of the Franchise Agreement will expire on
_______________ (the “Expiration Date”). Prior to the Expiration Date, you wish to transfer or relocate your
Store, or extend the Term of the Franchise Agreement (the “Transaction”). You are required by the Franchise
Agreement to obtain our consent to the Transaction. We have evaluated the Transaction and have determined that
as a condition to providing our consent, you or your transferee (as the case may be, the “Term Purchaser”) must
purchase additional term for the operation of the Store beyond the Expiration Date. You acknowledge that there
may be other conditions to our consent, and that this Addendum is not itself evidence of our consent to the
Transaction. Its purpose is to allow you or your transferee, as the Term Purchaser, to purchase at our standard
term purchase rates as of the date of this Addendum, additional term for operation of the Store beyond the
Expiration Date, subject to completion and final closing of the Transaction and pursuant to the other provisions of
this Addendum.
2.
Term Purchase. No later than the date that we sign this Addendum, the Term Purchaser will pay
to us the amount of $__________________ (the “Purchase Price”). In consideration of full payment of the
Purchase Price, we hereby grant the Term Purchaser the right to extend the Franchise Agreement for a period of
[_____] months (the “Extended Term”) following the Expiration Date without payment of any additional term
purchase fee. Notwithstanding the foregoing, however, Term Purchaser’s right to operate the Store for the
Extended Term is subject to the Term Purchaser, no later than the Expiration Date: (a) complying with all of our
conditions of renewal as set forth in our then-current Franchise Disclosure Document and then-current Franchise
Agreement as of the Expiration Date (except payment of any renewal fee); and (b) signing our then-current form
of Franchise Agreement, modified as necessary to reflect that it is an extension agreement only, and does not
grant additional term or renewal rights upon expiration of the Extended Term.
3.
Other Provisions. Our execution of this Addendum and/or our consent to the Transaction
does not constitute an express or implied representation or warranty by us of the successful operation or
profitability of the Store at its current or any relocated premises during the Term, the Extended Term or
any other period of operation, or the success or viability of the Transaction. This Addendum may be
signed in counterparts and/or by facsimile signature. The Franchise Agreement shall remain in full force
and effect according to its terms, as modified by this Addendum.
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1
set forth below their signatures, to be effective as of the date the Franchisor signs below.
FRANCHISOR:
TERM PURCHASER:
a Delaware limited liability company
By:
By:
Its:
Its:
Date: _____________________________
Date: _______________________________
===========================================================================
To be completed by Franchisor:
Term Purchase in connection with:
______ Transfer;
______ Relocation; or
______ Approved Extension of Franchise Agreement
Term Purchaser is:
______ Current Franchisee; or
______ Transferee
Extended Term Expiration Date has been recorded in
Franchise Development Database by _________(initial)
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2
EXHIBIT G
SUBLEASE AGREEMENT;
ASSIGNMENT AND ASSUMPTION OF SUBLEASE
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EXHIBIT G: Sublease Agreement
SUBLEASE AGREEMENT
THIS SUBLEASE (the “Sublease”) is between _________________________ [INSERT
APPROPRIATE AFFILIATE OF TCBY SYSTEMS, LLC], a _________________ corporation, with its principal
business address at 8001 Arista Place, Suite 600, Broomfield, Colorado 80021 (referred to in this Sublease as
“Sublessor” and like terms) and
,a
with its principal business address at
(referred to in this Sublease as “you” and like terms).
SUBLESSOR’S AGREEMENT WITH YOU: By signing this Sublease, you and Sublessor agree to all
of the terms and provisions in this Sublease and in the Exhibits to this Sublease. By signing this Agreement, you
are also affirming that you understand and accept the Statement of Facts, Fundamental Terms, and
Acknowledgements in Article 1 of this Agreement.
ARTICLE 1
STATEMENT OF FACTS; FUNDAMENTAL TERMS; AND ACKNOWLEDGMENTS
1.1
Date of Sublease. The date of this Sublease is _______________, 20___.
1.2
Franchise Agreement. Sublessor’s Affiliate, TCBY Systems, LLC (“TCBY”), a Delaware
limited liability company, is the franchisor of the TCBY franchise system. TCBY, as franchisor, and you, as
franchisee, entered into a Franchise Agreement, dated __________, 20___ (the “Franchise Agreement”), for a
TCBY Store located at
(the “Premises”);
1.3
The Master Lease. Sublessor, as tenant, and __________________________________, a
_____________________, as landlord (the “Master Landlord”), entered into a lease for the Premises, dated
____________, _____ (the “Master Lease”). A copy of the Master Lease is attached to this Sublease as
Exhibit A.
1.4
Certain Fundamental Provisions.
(a)
Base Rent. “Base Rent” means the minimum monthly rental amount payable by the
tenant pursuant to Section ____ of the Master Lease, as that amount may be adjusted from time to time.
(b)
Percentage Rent. “Percentage Rent” means the percentage rent payable by the tenant
pursuant to Section ___ of the Master Lease.
(c)
Security Deposit. “Security Deposit” means the sum of $______________, to be
deposited with Sublessor as required by Section 5.1 of this Sublease.
1.5
Acknowledgment. You acknowledge that you have read the Master Lease and understand that
the Master Lease contains duties and obligations in addition to the duties and obligations of this Sublease and that
you are liable to perform the duties and obligations of the tenant in the Master Lease.
ARTICLE 2
SUBLEASE OF PREMISES
2.1
Sublease of Premises to you. Sublessor is subleasing the Premises to you and you are subleasing
the Premises from Sublessor on the terms and conditions set forth in this Sublease.
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2.2
Acceptance of Premises; Possession.
(a)
Inspection and Acceptance. Prior to entering into this Sublease, you acknowledge that
you made a full and complete inspection of the Premises. You agree that you are subleasing the Premises
and that you accept the Premises, “AS IS, WHERE IS”, with all defects (patent, latent or otherwise) and
with no representations or warranties by Sublessor as to the fitness, suitability, habitability, or usability of
the Premises, as to compliance of the Premises with any laws, regulations, or ordinances, or as to the
presence or absence of any Hazardous Materials (as defined in Section 6.8) on, about or adjacent to the
Premises. In addition, the Premises are subleased subject to current taxes and assessments, reservations in
patents and all rights-of-way, easements, covenants, conditions, restrictions, obligations, liens,
encumbrances, and liabilities of record as of the date of this Sublease, and to all zoning and building code
requirements and other governmental laws, rules, and regulations.
(b)
Sublease.
Possession. Possession of the Premises will be delivered to you on the date of this
2.3
Sublease Subject to Master Lease. Your rights and interests under this Sublease are subject and
subordinate to the Master Lease and to all renewals, replacements and extensions of the Master Lease.
2.4
Duties of the Master Landlord under the Master Lease. It is expressly understood and agreed that
Sublessor does not assume and will not have any of the obligations or liabilities of the Master Landlord under the
Master Lease and that Sublessor is not making any of the representations or warranties made by the Master
Landlord in the Master Lease. With respect to work, services, repairs and restoration or the performance of other
obligations required of the Master Landlord under the Master Lease, Sublessor’s sole obligation with respect to
such obligations is to request the same from the Master Landlord upon written request from you and to use
reasonable efforts to obtain the same from the Master Landlord. Sublessor is not liable in damages, nor will rent
abate under this Sublease, on account of any failure by the Master Landlord to perform the obligations and duties
imposed on the Master Landlord under the Master Lease. Nothing contained in this Sublease will be construed to
create privity of estate or contract between you and the Master Landlord.
2.5
Assumption of Duties under Master Lease.
(a)
Your Duties. As between you and Sublessor, you hereby assume and agree to be bound
by all of the covenants, obligations, and agreements of the tenant set forth in the Master Lease and by any
terms and limitations imposed upon the tenant under the Master Lease, except as otherwise provided in
Section 2.5(b) below. You agree to indemnify, defend (with counsel acceptable to Sublessor), and hold
Sublessor and its Affiliates (as this term is defined in the Franchise Agreement), and Sublessor’s and its
Affiliates’ Related Parties (as defined below) harmless for, from and against any and all claims, demands,
liabilities, obligations, damages, penalties, causes of action, costs and expenses, including attorneys’ fees
and expenses, imposed upon, incurred by or asserted against Sublessor or its Affiliates, or any of
Sublessor’s or its Affiliates’ Related Parties which arise out of any violations under the Master Lease
occurring as a result of your acts or omissions or the acts or omissions of any of your Related Parties or
any violations by you or any of your Related Parties of this Sublease or which may arise out of or are in
any manner connected with your or any of your Related Parties’ use and occupancy of the Premises
pursuant to this Sublease, a breach by you of this Sublease or a breach by you of the provisions of the
Master Lease. You agree that (a) the terms of this Sublease do not grant you any rights of first refusal,
any options to purchase, or any extensions or renewal rights with respect to the Master Lease; and (b) you
will not use or occupy the Premises in a manner contrary to or inconsistent with any of the provisions of
the Master Lease. You agree that Sublessor may deliver to the Master Landlord any and all submissions,
notices, or other information received by Sublessor from you under this Sublease or the Franchise
Agreement. As used in this Sublease, “Related Parties” means the officers, directors, shareholders,
employees, agents, successors, assigns, contractors, and invitees of the particular person or entity.
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(b)
Sublessor’s Duties. Sublessor is to timely make all Rent payments due to the Master
Landlord under the Master Lease, but only to the extent that you first make those payments to Sublessor,
as required under Article 4 of this Sublease.
2.6
Sublessor’s Access to Premises. Sublessor and its agents will have free and full access to the
Premises at all reasonable times for the purpose of examining or inspecting the condition of the Premises, for the
purpose of determining if you are complying with this Sublease, for the purpose of performing Sublessor’s
obligations under this Sublease, and for the purpose of posting such reasonable notices as Sublessor may desire to
protect its rights.
2.7
Quiet Enjoyment. Conditioned upon your payment of the Rent as provided for in this Sublease
and performing and fulfilling all the covenants, agreements, conditions, and provisions in this Sublease to be kept,
observed or performed by you, you may at all times during the Term, peaceably, quietly, and exclusively have,
hold, and enjoy the Premises, subject to the terms and conditions of this Sublease and the Master Lease.
ARTICLE 3
TERM
3.1
Term of Sublease.
(a)
Term of Sublease. The term of this Sublease (the “Term”) will commence on the date of
this Sublease and will end on the earlier of (i) the date of expiration (without renewal) of the Franchise
Agreement or (ii) that day which is one day prior to the expiration of the Master Lease. However, the
Sublease Term may be ended earlier as provided in Sections 8.8, 8.9 and 12.2 of this Sublease.
(b)
Extension of Master Lease. If the Master Lease term would expire before expiration of
the term of the Franchise Agreement and the Master Lease contains renewal options, at your written
request and if no Event of Default has occurred and is continuing under this Sublease, Sublessor will
cooperate with you to extend or replace the Master Lease; provided, however, that any such extension or
replacement lease must be in your name and release Sublessor from all liability therefrom from the
original date of expiration of the Master Lease. Sublessor gives you no assurance that you will be able to
obtain such an extension or replacement lease.
3.2
Surrender of Premises. Upon termination of this Sublease, you must immediately surrender to
Sublessor peaceable possession of the Premises, and all buildings, improvements and fixtures then located on the
Premises (ordinary depreciation, reasonable wear and tear, and casualty loss insured under the casualty insurance
required by Article 8 excepted), subject, however, to your rights of removal as provided in Section 3.3. All keys
will be returned to Sublessor upon surrender. If you do not return all keys, you must pay all necessary costs in
changing the locks to the Premises.
3.3
Removal of Personal Property and Fixtures. You may, if not in default under any of the terms of
this Sublease or the Master Lease and on or before the date of termination, remove from the Premises any and all
of your personal property, including furniture, equipment, and fixtures belonging to you. However, you must
repair any damage to any improvements on the Premises caused by such removal.
3.4
Holding Over. If the Premises are not surrendered at the end of the Term, you will indemnify
Sublessor and its Affiliates, and Sublessor’s and its Affiliates’ Related Parties for, from and against any loss or
liability resulting from delay by you in surrendering the Premises, including any claims made by the Master
Landlord or any succeeding tenant based on your delay. If you or any of your Related Parties should remain in
possession of the Premises after the expiration of the Term without executing a new lease, then such holding over
will be construed as a tenancy at will, subject to all the covenants, terms, provisions and obligations of this
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Sublease except that the Base Rent (as defined below) during any holdover tenancy will be equal to 200% of the
original Base Rent. Nothing contained in this Sublease will be construed as Sublessor’s permission for you to
hold over or as limiting Sublessor’s remedies against you as a holdover tenant.
ARTICLE 4
RENT
4.1
Base Rent. You agree to pay the Base Rent to Sublessor. Base Rent will be prorated for any
calendar month of the Term which consists of only a portion of the month. Base Rent will adjust and be payable
in accordance with the terms of Section 4.4 below and otherwise in accordance with the terms of Section 4.4
below and otherwise in accordance with the terms and conditions set forth in the Master Lease.
4.2
Percentage Rent. You agree to pay the Percentage Rent to Sublessor. Any Percentage Rent due
and owing under this Sublease shall be determined, computed, and shall be payable in accordance with the terms
of Section 4.4 below and otherwise in accordance with the terms and conditions set forth in the Master Lease.
4.3
Additional Rent and Charges. You also agree to pay to Sublessor all additional rent and other
charges which may be payable by the tenant under the Master Lease, including taxes, insurance, deposits,
common area maintenance charges, association dues, marketing fees, and utility charges (all of which are
collectively referred to in this Sublease as “Additional Rent”). As used in this Sublease, the term “Rent” means
Base Rent, Percentage Rent, Additional Rent and all other amounts otherwise due and payable by you to
Sublessor under this Sublease.
4.4
Payment Date. You agree to pay the Base Rent and all Additional Rent at least 30 days in
advance of the date on which any of those payments are due to the Master Landlord under the Master Lease. You
agree to pay Percentage Rent at least 10 days in advance of the date on which any payment of Percentage Rent is
due to the Master Landlord under the Master Lease. All other Rent payments shall be made at the times specified
in this Sublease.
4.5
No Offsets. All Rent will be paid without further notice or demand and without any deduction,
abatement, counterclaim or set-off.
ARTICLE 5
SECURITY DEPOSIT
5.1
Security Deposit. Upon the execution of this Sublease, you will deposit the Security Deposit with
Sublessor, as security for the full performance by you of your obligations under this Sublease. If an Event of
Default occurs, Sublessor will be entitled, at Sublessor’s option, to apply or retain all or any part of the Security
Deposit for the payment of any rent or other sum in default, any other amount which Sublessor may spend or
become obligated to spend because of your default, or to compensate Sublessor for any other loss or damage
which Sublessor may suffer because of your default. If any portion of the Security Deposit is so used or applied,
you will, within five days after written demand from Sublessor, deposit cash with Sublessor in an amount
sufficient to restore the Security Deposit to its original amount. The Security Deposit is not a prepayment of any
Rent or other amounts payable by you under this Sublease. Sublessor is not required to keep the Security Deposit
separate from Sublessor’s and its Affiliates’ general funds, and you will not be entitled to interest on the Security
Deposit. If you fully and faithfully perform every provision of this Sublease, then within 30 days after your
surrender of the Premises, Sublessor will return the Security Deposit, or any remaining balance, together with a
written explanation of the application of the funds, to you. If Sublessor terminates its interest in this Sublease,
Sublessor will transfer the Security Deposit to its successor in interest, giving notice to you. You agree that, upon
a transfer of the Security Deposit, Sublessor will have no further liability to return or account for it. Sublessor’s
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4
rights with respect to the Security Deposit are in addition to and will not preclude concurrent, alternative or
successive exercise of any other rights or remedies available to Sublessor.
ARTICLE 6
USE; CONSTRUCTION; MAINTENANCE AND REPAIR
6.1
Permitted Use. You agree that the Premises will be used exclusively for the purpose of operating
a franchised TCBY Store in accordance with the Franchise Agreement (the “Permitted Use”) and for no other
purpose. In addition, at all times, you will use the Premises in accordance with the terms of the Master Lease and
all applicable laws, rules, codes, regulations and ordinances.
6.2
Continuous Occupancy and Operation. You acknowledge that your continued occupancy of the
Premises and the regular conduct of your business in the Premises are of utmost importance to the other tenants at
the property of which the Premises are a part and to the Master Landlord for the efficient and economic supply of
services and utilities at such property and for the maintenance of Percentage Rent. Accordingly, you agree that
throughout the Term you will continuously and uninterruptedly occupy, use and operate the entire Premises as a
TCBY Store. You acknowledge that Sublessor is executing the Sublease in reliance on this agreement, and that
your agreement of continuous occupancy and operation is a material element inducing Sublessor to execute this
Sublease. You also agree to use your best efforts to maximize sales at the Premises.
6.3
No Waste; Compliance with Law. You agree not to commit or permit any waste of the Premises.
You agree to comply with all laws, ordinances, regulations, building permits, governmental stipulations and
conditions, covenants, conditions and restrictions, public or private, affecting the Premises and not to suffer or
permit any act to be done in or about the Premises in violation thereof.
6.4
Alterations and Improvements. Any alterations or improvements to the Premises will be at your
expense and in full compliance with all of the terms and conditions of the Master Lease and the Franchise
Agreement. All such work will conform to all applicable building codes, zoning and other governmental
regulations and restrictions and will be undertaken and completed diligently, in a good and workmanlike manner.
6.5
Maintenance, Repair, Construction and Restoration Obligations. During the Term, you, at your
sole cost and expense, will observe and perform all maintenance, repair, construction, and restoration obligations
imposed on the tenant by the Master Lease. All such work will conform to all applicable building codes, zoning
and other governmental regulations and restrictions, to the requirements of the Franchise Agreement, and will be
undertaken and completed diligently, in a good and workmanlike manner.
6.6
Mechanics’ Liens. The parties agree, and notice is hereby given, that you are not Sublessor’s
agent for the construction, alteration, maintenance, or repair of any improvements on the Premises, the same
being done at your sole direction and expense. All contractors, materialmen, mechanics, and laborers are advised
that they must look only to you for the payment of any charge for work done or material furnished on the
Premises during the Term. You have no right, authority, or power to bind Sublessor or its interest in the Premises
for the payment of any claim for labor or material, or for any charge or expense, incurred by you as to
improvements, alterations, maintenance, or repairs on or to the Premises, and you will post notices on the
Premises during all such work that Sublessor is not responsible for any material and labor used on the Premises.
6.7
Indemnification Provisions. You will hold harmless and indemnify Sublessor and its Affiliates,
and Sublessor’s and its Affiliates’ Related Parties for, from and against any costs, expenses and liabilities for any
mechanics’, laborers’ or materialmen’s liens which may be filed against the Premises during the Term. You also
agree to indemnify and hold Sublessor and its Affiliates, and Sublessor’s and its Affiliates’ Related Parties
harmless for, from and against any and all claims for damages on the part of the owners, tenants, or occupants of
adjacent lands, buildings, or space arising from the uses of the Premises by or activities of you or any of your
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Related Parties pursuant to this Article 6, and you agree to take all necessary, prudent and proper measures to
protect the land, improvements, and space of such adjacent owners, tenants and occupants from injury of any
nature arising from any such use or activity.
6.8
Environmental Compliance. You agree to comply with all environmental and industrial hygiene
laws, rules, and regulations relating to or affecting the Premises or any operations or improvement on the
Premises. You agree that you will not use, generate, manufacture, store or dispose of, in, under or about the
Premises or transport to or from the Premises any Hazardous Materials, other than in compliance with all
applicable law and after any and all necessary permits and licenses have been obtained and are in force. For
purposes of this Sublease, “Hazardous Materials” include (i) flammable, explosive, or radioactive materials,
hazardous wastes, toxic substances, or related materials and (ii) all substances defined as “hazardous substances,”
“hazardous materials,” or “toxic substances” in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, 42 U.S.C. § 9601, et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. §1901, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §6901, et seq; the regulations
promulgated thereunder and in corresponding provisions of state law.
6.9
Environmental Indemnity. You will be solely responsible for, and will indemnify and hold
harmless Sublessor and its Affiliates, and Sublessor’s and its Affiliates’ Related Parties for, from and against any
loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, or disposal by you or any of your Related Parties of Hazardous
Materials on, under or about the Premises arising subsequent to the date on which this Sublease was executed,
including without limitation: (a) all consequential and incidental damages; (b) the costs of any required or
necessary repairs, cleanup or detoxification of the Premises, and the preparation and implementation of any
closure, remedial or other required plans; and (c) all reasonable costs and expenses in connection with clauses (a)
and (b), including but not limited to attorneys’ fees.
ARTICLE 7
LIENS AND ENCUMBRANCES
7.1
Encumbering the Premises. During the Term, you will not cause or permit any lien, claim, charge
or encumbrance of any nature or description whatsoever to attach to or encumber your interest in this Sublease,
the Premises or any part thereof.
7.2
Subordination.
(a)
Subordination. This Sublease, at Sublessor’s option, will be subordinate to any mortgage,
deed of trust, or any other hypothecation or security now or in the future placed by Sublessor upon its
interest in the Premises and to any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof. If any mortgagee or trustee elects to
have this Sublease prior to the lien of its mortgage or deed of trust, and gives written notice of that
election to you, this Sublease will be deemed prior to such mortgage or deed of trust, whether this
Sublease is dated prior or subsequent to the date of said mortgage or deed of trust or the date of recording
of that mortgage or deed of trust.
(b)
Execution of Certain Documents. You agree to execute any documents required to
effectuate an attornment or a subordination or to make this Sublease prior to the lien of any mortgage or
deed of trust, as the case may be. If you fail to execute such documents within ten days after written
demand, Sublessor may execute such documents on your behalf as your attorney-in-fact. You hereby
make, constitute and irrevocably appoint Sublessor as your attorney-in-fact and in your name, place and
stead, to execute such documents in accordance with this Section 7.2(b).
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ARTICLE 8
GENERAL INDEMNITY; INSURANCE; CASUALTY; CONDEMNATION
8.1
Non-Liability and General Indemnity Provisions. You agree that Sublessor and its Affiliates, and
Sublessor’s and its Affiliates’ Related Parties are not liable for, are released from, and you agree to indemnify and
hold Sublessor and its Affiliates, and Sublessor’s and its Affiliates’ Related Parties entirely harmless for, from
and against each and every claim, demand, liability, loss, cost, damage and expense, including attorneys’ fees and
court costs, arising out of any accident or other occurrence causing injury to or death of persons or damage to
property by reason of construction or maintenance of any improvements on the Premises, of any additions,
alterations or renovations thereto, or due to the condition of the Premises, or the use or neglect thereof by you or
any of your Related Parties, or any other person, or otherwise occurring upon the Premises. You further agree to
indemnify and hold Sublessor and its Affiliates, and Sublessor’s and its Affiliates’ Related Parties and Sublessor’s
respective interests in the Premises entirely harmless for, from and against all claims, demands, liabilities,
damages and penalties arising out of any failure of you to comply with any of your obligations under this
Sublease, including attorneys’ fees and court costs. These provisions, as well as all other indemnity provisions in
this Sublease, will survive the expiration of this Sublease or the earlier termination thereof.
8.2
Casualty Insurance. You will, at all times during the Term and at your sole cost and expense,
keep all of your goods, fixtures, furniture, equipment, and other personal property on the Premises insured to the
extent of 100% of the full replacement cost against loss or damage from fire and other risks normally insured
against in extended risk coverage.
8.3
Liability Insurance. You will, at all times during the Term and at your sole cost and expense,
maintain in force an insurance policy or policies which will name Sublessor and its Affiliates, and you as
insureds, and the Master Landlord as an additional insured, insuring against all liability resulting from injury or
death occurring to persons in or about the Premises, the liability under such insurance to be not less than
$_________ for one person injured, $___________ for any one accident, and $_________ for property damage.
The original of such policy or policies will remain in your possession. However, Sublessor will have the right to
receive from you, upon written demand, a duplicate policy or policies of any such insurance.
8.4
Workmens’ Compensation Insurance. You will also maintain and keep in force all employees’
and workmens’ compensation insurance on your employees as required under the applicable workmen’s
compensation laws of the state in which the Premises are located.
8.5
Other Insurance. You agree, at your sole cost and expense and at all times during the Term, to
maintain in force such other and additional insurance policies as are required under the Master Lease, the
Franchise Agreement, or as a prudent tenant in your position would maintain, or as Sublessor may reasonably
require from time to time.
8.6
Insurance Policy Requirements. All insurance policies required under this Article will contain
provisions to the effect that the insurance will not be canceled or modified without at least thirty days prior
written notice to Sublessor and that no modification will be effective unless approved in writing by Sublessor. All
such policies will be issued by a company or companies rated “A-XII” or better by Best’s Insurance Guide and
authorized to do business in the state in which the Premises are located.
8.7
Mutual Waiver of Subrogation Rights. You and Sublessor each hereby release and relieve the
other and the Related Parties of the other, and waive their entire right of recovery against the other and the
Related Parties of the other, for loss or damage arising out of or incident to the perils insured against under this
Article 8, which perils occur in, on or about the Premises, whether due to the negligence of Sublessor, its
Affiliates or you or the respective Related Parties of Sublessor, its Affiliates or you but only to the extent of
insurance proceeds actually paid. You will, upon obtaining the policies of insurance required hereunder, give
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notice to and obtain waiver of subrogation agreements or endorsements from the insurance carrier or carriers
concerning the foregoing mutual waiver of subrogation.
8.8
Fire and Other Casualty. If the improvements constituting part of the Premises are damaged or
destroyed, in whole or in part, by fire or other casualty at any time during the Term, Rent shall be abated and this
Sublease terminated only to the extent that Rent is abated under the Master Lease or the Master Lease is
terminated in such circumstances. Sublessor does not have any repair or restoration obligations in such
circumstances and you will be required to rely exclusively on the obligations of the Master Landlord under the
Master Lease.
8.9
Condemnation. If the whole or any part of the Premises are taken or condemned under the right
of eminent domain (or agreement in lieu thereof), Rent shall be abated and this Sublease terminated only to the
extent that Rent is abated under the Master Lease or the Master Lease is terminated in such circumstances.
Sublessor does not have any repair or restoration obligations in such circumstances and you will be required to
rely exclusively on the obligations of the Master Landlord under the Master Lease.
8.10
Compensation Awards. All compensation or damages awarded for any taking will belong to and
be the property of Sublessor and the Master Landlord, except for any specific award to you for fixtures and
improvements installed by you at your sole cost and expense.
ARTICLE 9
UTILITIES
9.1
Adequacy of Utility Services. You acknowledge that you have inspected the Premises and the
available utility services and have determined that the available utility services are adequate for your purposes.
9.2
Utility Charges. You agree to pay when due and prior to delinquency any and all charges for
water, gas, electricity, telephone service, sewage service, garbage service and any other utilities used in or upon
the Premises during the Term and agree not to permit any charges of any kind to accumulate or become a lien
against the Premises.
ARTICLE 10
TAXES AND ASSESSMENTS
10.1
Sales Taxes. You will pay to Sublessor, at the same time as any other Rent payment is made to
Sublessor, an amount equal to the amount of all gross proceeds taxes, transaction privilege taxes, sales taxes, or
like taxes now or hereafter levied or assessed by the United States, the state in which the Premises are located, or
any municipal corporation or political subdivision upon such Rent, or the payment or receipt thereof, or which
Sublessor will be caused to pay as a result of the receipt thereof, except that you will not be obligated to pay to
Sublessor any amount on account of its income taxes.
10.2
Ad Valorem Taxes. In addition to all other sums payable pursuant to this Sublease, you will pay
during the entire Term all ad valorem taxes, assessments, and charges and other governmental levies and charges,
general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind, which are assessed or
imposed upon your trade fixtures, equipment, and other property located on the Premises (the “Personal
Property Taxes”). You agree to pay the Personal Property Taxes when due and prior to any delinquency.
10.3
Other Taxes. You agree to pay any and all other governmental taxes, license fees, assessments,
or charges imposed on the business conducted by you on or from the Premises.
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ARTICLE 11
ASSIGNMENT AND SUBLETTING; SALE OF LEASEHOLD BY SUBLESSOR
11.1
Assignments. You may not assign all or part of this Sublease without Sublessor’s prior written
consent, which consent will be at Sublessor’s sole and absolute discretion. Any attempted assignment will be null
and void, will constitute an immediate default under this Sublease (without any cure period), and will, at
Sublessor’s election, result in the immediate termination of this Sublease. Your interest in this Sublease is not
assignable by operation of law. Any transfer of a “Controlling Interest” in you, as that term is defined in the
Franchise Agreement, will be deemed to be an assignment of this Sublease within the meaning of this
Section 11.1. Any assignment permitted by this 11.1 will not release you from your obligation to continue to
perform all covenants contained in this Sublease after such assignment, and you and the assignee will be required
to sign an Assignment of Sublease in a form acceptable to Sublessor and Master Landlord.
11.2
Subleases. You may not further sublet all or any portion or portions of the Premises without first
having obtained Sublessor’s written consent, which consent will be at Sublessor’s sole and absolute discretion.
Any attempted sublease will be null and void, will constitute an immediate default under this Sublease (without
any cure period), and will, at Sublessor’s election, result in the immediate termination of this Sublease. Any such
permitted sublease will not release you from your obligation to perform all covenants contained in this Sublease,
and you and your subtenant will be required to sign a sublease in a form acceptable to Sublessor and Master
Landlord.
11.3
Sale of Leasehold by Sublessor. Sublessor may sell, transfer, assign or otherwise dispose of all or
any portion of Sublessor’s interest in the Premises or this Sublease without your consent. Upon any such sale,
transfer, assignment or disposal and assumption by the transferee of Sublessor’s obligations under this Sublease,
Sublessor will be automatically relieved of all obligations under this Sublease after the date of transfer. This
Sublease will not be affected by any such sale, transfer, assignment or disposal of Sublessor’s interest, and you
agree to attorn to Sublessor’s purchaser or assignee.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1
Events of Default. You will be in default under this Sublease if any of the following occur (an
“Event of Default”):
(a)
Failure to Pay Monetary Amounts. You fail to fully and timely pay any Rental or other
monetary amount due under this Sublease and such failure continues for a period of 10 days beyond the
due date for such payment;
(b)
Non-Monetary Breaches. You fail to fully and timely comply with any other provision of
this Sublease and, except as otherwise provided in Sections 11.1 and 11.2 or in this Section 12.1, such
failure continues for a period of 15 days after written notice of the failure is delivered to you;
(c)
Breach of Master Lease. An act or event occurs which would constitute a default by the
tenant under the Master Lease (unless the default occurs as a result of Sublessor’s breach of the
provisions of Section 2.5(b) of this Sublease), regardless of any notice or cure period or of whether or not
the Master Landlord seeks to enforce the applicable default provision of the Master Lease;
(d)
Breach of Franchise and Other Agreements. You are in default under any of the
provisions of the Franchise Agreement or any other notes or agreements between you and Sublessor,
TCBY or any of Sublessor’s other Affiliates;
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(e)
Repeated Breaches. If on two or more occasions during any twelve month period or on
five occasions during the term of this Sublease, you fail to fully and timely pay any required amounts
when due, without regard to any cure period provided in this Sublease;
(f)
Bankruptcy. You file a petition in bankruptcy or for reorganization or for an arrangement
pursuant to any federal or state bankruptcy law or any similar federal or state law, or are adjudicated a
bankrupt or make an assignment for the benefit of creditors or admit in writing your inability to pay your
debts generally as they become due, or if a petition or answer proposing the adjudication of you as a
bankrupt or your reorganization pursuant to any federal or state bankruptcy law or any similar federal or
state law is filed in any court and you consent to or acquiesce in the filing thereof or such petition or
answer is not discharged or denied within 60 days after the occurrence of any of the foregoing;
(g)
Other Insolvency Events. If a receiver, trustee or liquidator of you or of all or
substantially all of your assets or your leasehold interest in the Premises is appointed in any proceeding
brought by you, or if any such receiver, trustee or liquidator is appointed in any proceeding brought
against you and is not discharged within 60 days after the occurrence thereof, or if you consent to or
acquiesce in such appointment (with any event described in this Section 12.1(g) and 12.1(f) above being
referred to as an “Insolvency Event”);
(h)
Abandonment or Failure to Continuously Operate. You abandon the Premises or
otherwise fail to continuously operate your business at the Premises, with your absence from the Premises
for a period for three consecutive days to be conclusive evidence that the Premises have been abandoned
and that you have breached the covenant of continuous operation and occupancy, unless the Premises
have been closed for a purpose approved by Sublessor in advance, in writing, or because of fire, flood, or
other casualty or government order.
12.2
Remedies. Upon the occurrence of an Event of Default, Sublessor may, at its option, re-enter the
Premises and repossess and enjoy the same and all the improvements thereon free of any claims or interest of you
whatsoever, with or without terminating this Sublease. In addition, Sublessor will be entitled to avail itself of
whatever remedies it may have at law or in equity for the collection of any unpaid Rent, past and future, or for any
damages that Sublessor may have sustained by reason of the breach by you of the terms and conditions of this
Sublease. No termination of this Sublease by forfeiture nor taking or recovering possession of the Premises will
deprive Sublessor of any other action, right, or remedy against you.
12.3
Interest on Late Payments. All Rent not paid when due will bear interest from the due date until
paid at a rate equal to the lesser of the highest applicable legal rate for open account business credit, or 1.5% per
month. Interest is due and payable when the late payment is made.
12.4
Late Fees. To compensate Sublessor for the increased administrative expense of handling late
payments, you agree to pay a $100 late charge for each delinquent payment, such late charge to be paid when the
delinquent payment is made. This late charge is in addition to interest and other collection costs and expenses.
12.5
Sublessor’s Right to Take Certain Actions. If you fail to comply with any of the terms of this
Sublease, Sublessor, in its sole judgment, but without any obligation to do so, may do any or all things required of
you by any of the provisions of this Sublease or the Master Lease and incur and pay expenses in connection with
its actions. Any amounts expended by Sublessor pursuant to this Section will be immediately due and payable by
you to Sublessor and will bear interest at a rate equal to the lesser of the highest applicable legal rate for open
account business credit, or 1.5% per month. Interest is due and payable when the payment is made. Any action
by Sublessor under this Section will not constitute a waiver of any default by you and will be in addition to any
other right or remedy available to Sublessor pursuant to this Sublease or at law or in equity.
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12.6
Waiver of Breach. No waiver by Sublessor or you of the breach of any provision of this Sublease
will be construed as a waiver of any preceding or succeeding breach of the same or any other provision of this
Sublease, nor will the acceptance of a Rent payment by Sublessor during any period of time in which you are in
default in any respect other than payment of that Rent be deemed to be a waiver of such default. Only full
payment of any amount, together with any applicable interest and late charges, will satisfy your payment
obligations with respect to the amount due. No endorsement or statement on any check or any letter
accompanying any check or payment made hereunder shall be deemed or construed as an accord and satisfaction
of the full amount due, and Sublessor may accept such check or payment without prejudice to its right to recover
the balance of such amount or pursue any remedy which would otherwise be available.
ARTICLE 13
GENERAL PROVISIONS
13.1
Notices. Notices will be in writing and will be given by personal delivery, by deposit in the
United States mail, certified mail, return receipt requested, postage prepaid, or by express delivery service, freight
prepaid. Notices will be delivered or addressed to Sublessor and you at the addresses set forth on the first page of
this Sublease or at such other address as a party may designate in writing. The date notice is deemed to have been
given, received and become effective will be the date on which the notice is delivered, if notice is given by
personal delivery, or the date of actual receipt, if the notice is sent through the United States mail or by express
delivery service or by facsimile transmission.
13.2
Attorneys’ Fees. If any action is brought by any party to this Sublease in respect of its rights
under this Sublease, the prevailing party will be entitled to reasonable attorneys’ fees and court costs as
determined by the court. In the event that any person who is not be a party to this Sublease institutes an action
against you in which Sublessor are involuntarily and without cause joined as a party, you will reimburse
Sublessor for all attorneys’ fees incurred by it in connection therewith.
13.3
Estoppel Certificates.
(a)
Agreement to Provide Estoppel Certificate. You will at any time upon 10 days’ prior
written notice from Sublessor execute, acknowledge and deliver to Sublessor a statement in writing (i)
certifying that this Sublease is unmodified and in full force and effect (or, if modified, stating the nature
of such modifications and certifying that this Sublease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any; (ii) acknowledging that there are not,
to your knowledge, any uncured defaults on Sublessor’s part under this Sublease, or specifying such
defaults if any are claimed; and (iii) acknowledging that you have unconditionally accepted the Premises,
are in possession thereof, and no defense to enforcement of the Sublease exists. Any such statement may
be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises.
(b)
Your Failure to Provide Certificate. At Sublessor’s option, Sublessor may treat your
failure to deliver such statement as conclusive evidence (i) that this Sublease is in full force and effect,
without modification, except as may be represented by Sublessor; (ii) that there are no uncured defaults in
Sublessor’s performance; (iii) that not more than one month’s rent has been paid in advance; (iv) that you
are in possession of the Premises; and (v) that no defenses exist to the enforcement of the Sublease.
13.4
Severability. The invalidity of any provision of this Sublease, as determined by a court of
competent jurisdiction, will in no way affect the validity of any other provision of this Sublease.
13.5
Recording. Neither this Sublease nor any memorandum of this Sublease will be recorded or filed
without Sublessor’s prior written consent, which may be given or withheld by Sublessor in its sole and absolute
discretion.
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13.6
Cumulative Remedies. No remedy or election hereunder will be deemed exclusive but will,
wherever possible, be cumulative with all other remedies under this Sublease or at law or in equity.
13.7
Construction. The titles which are used following the number of each Section are so used only
for convenience in locating various provisions of this Sublease and will not be deemed to affect the interpretation
or construction of such provisions. This Sublease will not be construed for or against Sublessor or you.
References in this Sublease to “Articles” and “Sections” refers to the Articles and Sections of this Sublease,
unless otherwise noted.
13.8
Successors. Subject to the restrictions contained in Article 11, this Sublease and all of provisions
hereof will be binding upon and inure to the benefit of the successors and assigns of Sublessor and you.
13.9
Governing Law. The terms, conditions, covenants, and agreements herein contained will be
governed, construed, and controlled according to the laws of the state in which the Premises are located.
13.10 Broker’s Commission. You and Sublessor represent and warrant to each other that there are no
claims for brokerage commissions or finder’s fees in connection with this Sublease and each agrees to indemnify
the other for, from and against all liabilities arising from any claims, including any attorneys’ fees connected
therewith, relating to claims arising out of the other’s actions.
13.11 Time is of the Essence. Time is of the essence of this Sublease and in the performance of all of
the covenants and conditions hereof.
13.12 Survival. All obligations of Sublessor and you which expressly or by their nature survive the
termination of this Sublease will continue in full force and effect subsequent to the termination until they are
satisfied in full or by their nature expire. Included in the obligations that will survive the termination of this Lease
are the indemnity provisions of Sections 2.5(a), 3.4, 6.7, 6.9 and 8.1.
13.13 Entire Agreement. This Sublease sets forth all the promises, inducements, agreements,
conditions, and understandings between Sublessor and you relative to the Premises, and there are no promises,
agreements, conditions, or understandings, either oral or written, express or implied, between Sublessor and you
other than as set forth in this Sublease. No subsequent alteration, amendment, change, or addition to this Sublease
will be binding upon Sublessor or you unless in writing and signed by both Sublessor and you. Parol evidence
will never be admissible in any court, tribunal, arbitration or governmental agency to modify, amend or vary the
terms of this Sublease.
IN WITNESS WHEREOF, you and Sublessor have executed this Sublease as of the day and year
written above.
SUBLESSOR:
SUBLESSEE:
__________________________________,
a _________________________________
_____________________________________.
a ____________________________________
By:
Its:
By:
Its:
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STATE OF ____________
COUNTY OF ___________
)
: ss.
)
The foregoing instrument was acknowledged before me this _____ day of ____________, 20___, by
____________________, the _______________ of ____________________, a _______________, on behalf of
the ____________________.
______________________
__________________________________________
NOTARY PUBLIC
Residing at_________________________________
STATE OF ________________ )
: ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me this _____ day of ____________, 20___, by
____________________, the _______________ of ____________________, a _______________, on behalf of
the ____________________.
______________________
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__________________________________________
NOTARY PUBLIC
Residing at_________________________________
13
EXHIBIT A TO SUBLEASE AGREEMENT
PRIME LEASE
[To be attached]
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EXHIBIT B TO SUBLEASE AGREEMENT
GUARANTY
In consideration of, and as an inducement to, the execution by _________________________ [INSERT
APPROPRIATE AFFILIATE OF TCBY SYSTEMS, LLC] (“Sublessor”) of the foregoing Sublease Agreement
(the
“Sublease
Agreement”)
with
________________________________
________________________________ (“Sublessee”) dated _________, 20___, and for other good and valuable
consideration, each of the undersigned for themselves, their heirs, legal representatives, successors and assigns
(collectively the “Guarantors”) do hereby unconditionally, individually, jointly and severally guarantee to Sublessor,
and to its successors and assigns, the full, complete and timely payment and performance of each and all of the
terms, covenants and conditions of the Sublease Agreement (and any modification or amendment to the Sublease
Agreement) to be kept and performed by Sublessee during the term of the Sublease Agreement, including without
limitation the payment of all rents and other fees and charges accruing pursuant to the Sublease Agreement.
Each of the Guarantors further agrees as follows:
1.
The Guarantors, individually, jointly and severally, shall be personally bound by each and every
condition and term contained in the Sublease Agreement as though each of the Guarantors had executed a sublease
agreement containing the identical terms and conditions of the Sublease Agreement. This Guaranty shall continue in
favor of Sublessor notwithstanding any extension, modification, or alteration of the Sublease Agreement, and
notwithstanding any assignment of the Sublease Agreement, with or without the Sublessor’s consent. No
extension, modification, alteration or assignment of the Sublease Agreement shall in any manner release or
discharge the Guarantors, and each of the Guarantors consents to any such extension, modification, alteration or
assignment.
2.
This Guaranty will continue unchanged by the occurrence of any Insolvency Event, as defined in
the Sublease Agreement, with respect to Sublessee or any assignee or successor of Sublessee or by any
disaffirmance or abandonment of the Sublease Agreement by a trustee in bankruptcy of Sublessee. Each
Guarantor’s obligation to make payment or render performance in accordance with the terms of this Guaranty and
any remedy for the enforcement of this Guaranty will not be impaired, modified, changed, released or limited in
any manner whatsoever by any impairment, modification, change, release or limitation of the liability of
Sublessee or its estate in bankruptcy or of any remedy for the enforcement thereof, resulting from the operation of
any present or future provision of the U.S. Bankruptcy Act or other statute, or from the decision of any court or
agency.
3.
Each Guarantor’s liability under this Guaranty is primary and independent of the liability of
Sublessee and any other Guarantors. Each Guarantor waives any right to require Sublessor to proceed against any
other person or to proceed against or exhaust any security held by Sublessor at any time or to pursue any right of
action accruing to Sublessor under the Sublease Agreement. Sublessor may proceed against each Guarantor and
Sublessee, jointly and severally or may, at its option, proceed against each Guarantor without having commenced
any action, or having obtained any judgment, against Sublessee or any other Guarantor. Each Guarantor waives
the defense of the statute of limitations in any action under this Guaranty or for the collection of any indebtedness
or the performance of any obligation guaranteed pursuant to this Guaranty.
4.
The Guarantors unconditionally, individually, jointly and severally agree to pay all attorneys’ fees
and all costs and other expenses incurred in any collection or attempted collection of this Guaranty or in any
negotiations relative to the obligations guaranteed or in enforcing this Guaranty against Sublessee.
5.
Each Guarantor waives notice of any demand by Sublessor, any notice of default in the payment
of rents or any other any amounts contained or reserved in the Sublease Agreement, or any other notice of default
TCBY FDD 03/2014
15
under the Sublease Agreement. Each Guarantor expressly agrees that the validity of this Guaranty and its
obligations shall in no way be terminated, affected or impaired by reason of any waiver by Sublessor, or its
successors or assigns, or the failure of Sublessor to enforce any of the terms, covenants or conditions of the
Sublease Agreement or this Guaranty, or the granting of any indulgence or extension of time to Sublessee, all of
which may be given or done without notice to the Guarantors.
6.
This Guaranty shall extend, in full force and effect, to any assignee or successor of Sublessor and
shall be binding upon the Guarantors and each of their respective successors and assigns.
7.
Until all obligations of Sublessee to Sublessor have been paid or satisfied in full, the Guarantors
have no remedy or right of subrogation and each Guarantor waives any right to enforce any remedy which
Sublessor has or may in the future have against Sublessee and any benefit of, and any right to participate in, and
security now or in the future held by Sublessor.
8.
All existing and future indebtedness of Sublessee to each Guarantor is hereby subordinated to all
indebtedness and other obligations guaranteed in this Guaranty and, without the prior written consent of
Sublessor, shall not be paid in whole or in part, nor will any Guarantor accept any payment of or on account of
any such indebtedness while this Guaranty is in effect.
9.
This Guaranty shall be construed in accordance with the laws of the State of Colorado, without
giving effect to its conflict of laws principles.
GUARANTOR(S)
STATE OF
COUNTY OF
)
) ss.
)
The foregoing instrument was acknowledged before me this _____ day of ____________, 20___ by
______________________________________________.
NOTARY PUBLIC
______________________
Residing at
TCBY FDD 03/2014
16
ASSIGNMENT AND ASSUMPTION
OF SUBLEASE AGREEMENT
THIS ASSIGNMENT AGREEMENT is made and entered into as of ________________, 20__, by and
among Mrs. Fields’ Original Cookies, Inc., a Delaware corporation (“Lessor”), having a principal place of
business at 8001 Arista Place, Suite 600, Broomfield, Colorado 80021, ___________________________, a
__________________________
(“Assignor”),
having
a
principal
place
of
business
at
___________________________________,
and
_____________________________,
a____________________________, (“Assignee”), having a principal place of business at
__________________________________________. Lessor, Assignor and Assignee are sometimes referred to
herein as the “parties.”
In exchange for the mutual covenants, consideration, warranties, and representations herein set forth, the
parties agree as follows:
1.
Assignment and Assumption. Assignor shall assign and Assignee shall assume all right, title,
interest, duties, covenants, and obligations under that certain Sublease Agreement between Lessor and Assignor
dated __________________________ (“Sublease”) and pertaining to the premises located at
, referred to as Space # _______, containing approximately _______ square feet, along
with Storage Area Space # _______, containing approximately _______ square feet (collectively, the
“Premises”).
2.
Effective Date. The effective date of this Assignment Agreement shall be the closing of the
purchase of the franchised concepts at the Premises by Assignee from Assignor and the approval of the purchase
by Lessor.
3.
Acceptance of Premises. Upon assignment hereunder, Assignee shall accept the Premises on an
“AS IS, WHERE IS” basis provided the condition of the Premises is consistent with the terms of the Sublease.
4.
Representations and Warranties. Both Lessor and Assignor, each for itself, hereby represent and
warranty to Assignee that (a) there are no defaults under the Master Lease (as defined in the Sublease) that are
known to them or that have been declared by either of them under the Lease, (b) except for the current rent due to
Lessor under the Sublease, which will be paid on or before execution of this Assignment Agreement, there are no
defaults, performance, or payments past due under the Sublease, (c) the document attached hereto is the actual and
complete Sublease Agreement evidencing the agreement between the parties, (d) the monthly minimum rent paid
by Assignor to Lessor each month is currently $_________, and, (e) the Master Lease commenced on
____________ and will expire ___________. Further, Assignee acknowledges that Lessor’s current policy is to
require payment of the base rent on or before the 25th day of each month, in advance for the following month.
5.
Successors and Assigns. The terms and conditions of this Assignment Agreement shall be
binding upon and inure to the benefit of any and all of the parties’ successors, assigns, heirs, executors,
administrators, affiliates, controlled corporations, subsidiaries, parent corporations, directors, officers,
shareholders, or employees, as the case may be, but may not be assigned by Assignor or Assignee without
Lessor’s prior written consent.
6.
Lessor’s Consent to Assignment; Assignor’s Guarantee in Event of Default. Lessor hereby
consents to this assignment and assumption; provided, however: (a) effective as of the date of this Assignment
Agreement, Assignee will fully perform under, observe and remain in compliance with each of the terms of the
Sublease and the Master Lease as tenant thereunder; and (b) for a period of ____ months from the date hereof (the
“Guarantee Period”), Assignor will fully and unconditionally guarantee Assignee’s full performance under the
TCBY FDD 03/2014
17
Sublease, including, without limitation, prompt payment of all amounts due to Lessor thereunder and the
obligation to operate the franchised concepts at the Premises in accordance with the franchise agreements
applicable thereto. Lessor agrees to give Assignor the same notice of default that Lessor provides to Assignee
under the Sublease during the Guarantee Period, and provide Assignor with an additional 10 days beyond any
cure period provided to Assignee in such notice to cure or cause Assignee to cure any such default. At the end of
the Guarantee Period, provided that Assignee is then in material compliance under the Sublease, that certain
Guaranty dated ____________, signed by Assignor’s principals in favor of Lessor pertaining to the Sublease,
shall automatically terminate.
7.
Security Deposit. Assignor releases all claims to any security deposit paid by Lessor or Assignor
on the Premises, and any such deposit shall be accounted for pursuant to the Sublease.
8.
Survival of Obligations. All obligations of the parties herein set forth, which by their nature
survive the closing of the transactions herein contemplated, shall continue in full force with full effect until they
are satisfied or by the nature expire.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed this
Assignment Agreement in three (3) counterparts as of the date first above written.
ASSIGNEE:
LESSOR:
_______________________________,
MRS. FIELDS’ ORIGINAL COOKIES, INC.,
a _____________________________
a Delaware corporation
By:
Title:
By:
Title:
ASSIGNOR:
____________________________________,
a ___________________________
By:
Title:
By:
Title:
TCBY FDD 03/2014
18
EXHIBIT H
LEASE ADDENDUM
TCBY FDD 03/2014
EXHIBIT H: Lease Addendum
LEASE ADDENDUM – FRANCHISEE LEASE
FOR VALUE RECEIVED, the undersigned (“Assignor”) assigns, transfers and sets over to TCBY
SYSTEMS, LLC, a wholly-owned subsidiary of MRS. FIELDS FAMOUS BRANDS, LLC, a Delaware limited
liability company (“Assignee”), all of Assignor’s right and title to and interest in that certain lease, a copy of which is
attached
as
Appendix A
(the
“Lease”),
respecting
premises
commonly
known
as
______________________________. This assignment is for collateral purposes only, and, except as specified in this
document, Assignee will have no liability or obligation of any kind whatsoever arising from or in connection with this
assignment or the Lease unless and until Assignee takes possession of the premises the Lease demises according to
the terms of this document and assumes Assignor’s obligations under the Lease.
Assignor represents and warrants to Assignee that it has full power and authority to assign the Lease and that
Assignor has not previously assigned or transferred, and is not otherwise obligated to assign or transfer, any of its
interest in the Lease or the premises it demises.
Upon Assignor’s default under the Lease or under the franchise agreement for a retail outlet between
Assignee and Assignor (the “Franchise Agreement”), or in the event Assignor defaults under any document or
instrument securing the Franchise Agreement, Assignee has the right to take possession of the premises the Lease
demises and expel Assignor from the premises. In that event, Assignor will have no further right and title to or
interest in the Lease but will remain liable to Assignee for all past due rents Assignee is required to pay Lessor to
effectuate the assignment this document contemplates.
Assignor agrees that it will not suffer or permit any surrender, termination, amendment or modification of the
Lease without Assignee’s prior written consent. Throughout the term of the Franchise Agreement, Assignor agrees
that it will elect and exercise all options to extend the term of or renew the Lease not less than thirty (30) days before
the last day upon which the option must be exercised, unless Assignee agrees otherwise in writing. Upon Assignee’s
failure to agree otherwise in writing, and upon Assignor’s failure to elect to extend or renew the Lease as required,
Assignor appoints Assignee as its true and lawful attorney-in-fact with the authority to exercise the extension or
renewal options in the name, place and stead of Assignor for the sole purpose of effecting the extension or renewal.
ASSIGNOR:
Dated:
ENTITY SIGNATURE:
a __________________________ corporation
By:
Its:
INDIVIDUAL SIGNATURE(S):
TCBY FDD 03/2014
1
CONSENT TO LEASE ADDENDUM AND AGREEMENT OF LESSOR
The undersigned Lessor under the Lease:
Agrees to notify Assignee in writing of, and upon Assignee’s failure to cure, any default by Assignor under
the Lease;
Agrees that Assignee will have the right, but not the obligation, to cure any default by Assignor under the
Lease within 30 days after Lessor’s delivery of notice of the default under section (a) above;
Consents to the collateral assignment in the Lease Addendum and agrees that, if Assignee takes possession of
the premises the Lease demises and confirms to Lessor that it has assumed the Lease as tenant, Lessor will recognize
Assignee as tenant under the Lease, provided that Assignee cures within the 30-day period noted in section (b) above
Assignor’s defaults under the Lease; and
Agrees that Assignee may further assign the Lease to or enter into a sublease with a person, firm or
corporation who agrees to assume the tenant’s obligations under the Lease and is reasonably acceptable to Lessor
and that, upon that assignment, Assignee will have no further liability or obligation under the Lease as assignee,
tenant or otherwise, other than to certify that the additional assignee or sublessee operates the premises the Lease
demises as a franchised retail outlet of Assignee.
DATED:
, Lessor
TCBY FDD 03/2014
2
EXHIBIT I
OPERATING PROCEDURES MANUAL
TABLE OF CONTENTS
TCBY FDD 03/2014
EXHIBIT I: Operating Procedures Manual - TOC
MANAGEMENT OPERATIONS MANUAL – TABLE OF CONTENTS
TCBY FDD 03/2014
1
TCBY FDD 03/2014
2
TCBY FDD 03/2014
3
DAILY OPERATIONS MANUAL - -TABLE OF CONTENTS
TCBY FDD 03/2014
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TCBY FDD 03/2014
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TCBY FDD 03/2014
6
EXHIBIT J
TCBY FDD 03/2014
EXHIBIT J: Confidentiality Agreement
This Confidentiality Agreement (the “Agreement”) is made as of this ___ day of _______________, 20___
(the “Effective Date”), by and between TCBY Systems, LLC, and/or the subsidiary of Mrs. Fields Famous Brands,
LLC listed on the signature page below (collectively, “Company”), and _____________________________
(hereinafter referred to as “You,” “you,” “your,” “yourself,” etc.).
Recitals
A.
You are an individual who is a franchisee or prospective franchisee of Company, or are an
individual who is an owner, officer, director, member, employee, agent and/or independent contractor of an entity
that is a franchisee or a prospective franchisee of Company (any such entity referred to herein as “Guarantor”).
B.
As a result of being a franchisee or prospective franchisee of Company, or an owner, officer,
director, member, employee, agent and/or independent contractor of Guarantor, Company or its affiliates may
disclose certain Information (as defined below) to you, which is either non-public, confidential or proprietary in
nature.
C.
Disclosure of the Information may require that you travel to and/or enter onto the property of
Company and/or its affiliates, or their respective agent(s) or designee(s).
D.
It is in the interest Company, you and any Guarantor that the Information be disclosed on a
confidential basis and otherwise pursuant to the terms set forth below.
Agreement
In light of the above recitals and for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, you, Company and any Guarantor agree as follows:
1.
Information which is either non-public, confidential or proprietary in nature delivered, in whole
or in part, before or after the date hereof in any form, including, without limitation, training materials, product
information, operations manuals, supplier and vendor lists, customer lists, videotapes, films, drawings, diagrams
and computer programs, together with analyses, compilations, studies, or other documents prepared by Company,
you or any Guarantor, or any of their respective owners, officers, directors, members, employees, agents and/or
advisers, which contain or otherwise reflect such information, is hereinafter referred to as “Information.”
2.
If Company and you, or Company and any Guarantor, have entered into or shall hereafter
determine to enter into discussions or negotiations concerning a possible transaction involving Company and you,
or Company and any Guarantor, or an affiliate of Company or any Guarantor (a “Transaction”), the existence and
nature of such discussions and negotiations will also constitute Information for purposes of this Agreement. In
the case of a possible Transaction, each party hereto agrees to transmit Information only to the owners, officers,
directors, members, employees, agents and/or advisers of Company and any Guarantor, who need to know the
Information for the purpose of evaluating the Transaction and who are informed of the confidential nature of the
Information.
3.
All Information will be kept secret and confidential and will not be communicated, divulged or
disclosed to any other person or entity by the party receiving the Information (the “Receiving Party”) in any
manner whatsoever, in whole or in part, without the prior written consent of the party providing the Information,
(the “Disclosing Party”), and will not be used by the Receiving Party other than in connection with evaluating or
implementing a possible Transaction, or in the operation of a retail store or outlet franchised by Company and
operated by you or any Guarantor pursuant to a franchise agreement with Company (a “Franchised Store”). The
Receiving Party will be responsible for any breach of any provision of this Agreement.
TCBY FDD 03/2014
1
4.
All Information, and all copies thereof, including, without limitation, training materials, product
information, operations manuals, analyses, compilations, studies or other documents prepared by the Receiving
Party, and any of its owners, officers, directors, members, employees, agents or advisers, will be returned to the
Disclosing Party without retaining any copies thereof immediately upon written request of the Disclosing Party.
5.
You will at all times treat the Information you receive from Company and its affiliates as the sole
and absolute property of Company and its affiliates.
6.
If, during the course of research and due diligence for assessing any possible Transaction, or in
connection with any training conducted by Company, you shall have occasion to visit Company or any of its
corporate offices or designated training facilities (each a “Visit”), then any information and documentation
obtained during such Visits shall be included in the definition of Information. You shall bear any and all costs of
Visits, including, without limitation, your airfare, lodging, living expenses, wages and benefits, and costs of
copying or obtaining Information. Company shall have no obligation to reimburse you for any costs arising from
Visits, whether or not Company and you, or Company and Guarantor, eventually complete a Transaction. You
assume all risks associated with your Visit and/or your participation in any training conducted by Company, and
you agree to defend and indemnify Company and hold Company harmless from and against any and all claims,
actions, damages, liability and expenses arising from, out of or relating to your Visit and/or your participation in
training. In addition, except to the extent limited or prohibited by applicable law, you agree to release and forever
discharge Company and its affiliates, and all of their respective owners, officers, directors, members, employees,
agents, representatives, attorneys, insurers, successors, assigns, heirs and personal representatives, from any and
all claims, debts, covenants, liabilities, suits, judgments, damages, actions and causes of action, whether known or
unknown, direct or indirect, which you ever had, have or ever may have or claim to have, arising out of or relating
to any of your Visits or your participation in training.
7.
Nothing stated herein shall preclude the Receiving Party, and any of its owners, officers,
directors, members, employees, agents or advisers, from disclosing Information that it is legally compelled (by
deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to
disclose, provided that the procedures referred to in this paragraph 7 are satisfied. In the event of a premature
disclosure or any persons to whom Information pursuant to this Agreement is made available becomes legally
compelled to disclose Information, such party will provide the Disclosing Party with prompt notice thereof so that
the Disclosing Party may seek a protective order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. In the event that such protective order or other remedy is not obtained, or that the
Disclosing Party waives compliance with the provisions of this Agreement, any person legally compelled to
disclose any Information will furnish only that portion of such Information that such person is legally required to
disclose and such party shall use its reasonable best efforts to ensure that the information so disclosed is accorded
confidential treatment. In all events the parties agree to cooperate in determining what steps shall be taken.
8.
The term “Information” does not include Information that (a) becomes generally available to the
public other than as a result of disclosure by the Receiving Party or anyone to whom the Receiving Party
transmits Information, (b) was available to the Receiving Party on a non-confidential basis prior to its disclosure
to the Receiving Party by the Disclosing Party, or (c) becomes available to the Receiving Party on a nonconfidential basis from a source other than the Disclosing Party who is not bound by a confidentiality agreement
or other obligation of secrecy with respect to such Information.
9.
For a period of two (2) years following the date of this Agreement, the parties hereto will not, as a
result of knowledge obtained from the Information, and will likewise direct any of their owners, officers,
directors, members, employees, agents, and advisors not to, use the Information to solicit or recruit employees of
the other parties hereto for employment or induce agents or employees of the other parties hereto to terminate
their employment. Nothing in this paragraph 9 shall prevent any of the parties hereto from employing any
employee of the other parties hereto if such employee contacts the one of the other parties on his or her own
TCBY FDD 03/2014
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initiative without any direct or indirect solicitation by or encouragement from the other party (other than general
solicitations in industry journals, national newspaper or similar solicitations or publications).
10.
Neither the parties hereto nor their respective advisers makes any representation or warranty as to
the accuracy or completeness of Information or of any other written or oral communication transmitted or made
available pursuant to this Agreement, and each such party expressly disclaims any and all liability based on such
Information or communications or on omissions therefrom. Only those representations or warranties that are
made to a party in a Franchise Agreement executed between Company and you, or Company or any Guarantor, or
in a definitive Transaction Agreement (as hereinafter defined) when, as and if it is executed, shall have any legal
effect.
11.
This paragraph 11 applies if no Franchise Agreement nor definitive Transaction Agreement has
been executed between Company and you, or Company and any Guarantor. The parties understand and agree that
no contract or agreement shall be deemed to exist between the parties unless and until a definitive Transaction
Agreement has been executed. Until execution of such a definitive Transaction Agreement, other than the
obligations set forth in this Agreement, the parties have no legal obligation of any kind with respect to any
possible Transaction. Each party may conduct negotiations in any manner as it reasonably determines, including
entering into a Transaction Agreement with another party or terminating negotiations with the other parties
hereto. For purposes of this Agreement, a definitive Transaction Agreement is not a letter of interest, term sheet
or any other preliminary agreement or understanding but only a final definitive agreement. Except as expressly
set forth in this Agreement, none of the parties hereto are committed in any way with respect to the matters
discussed by them, unless and until a definitive Transaction Agreement with respect thereto is executed, nor shall
this Agreement be construed as an obligation on the part of the parties hereto to negotiate such a definitive
Transaction Agreement, or be liable for any expenses of the other parties.
12.
The obligations in this Agreement shall be binding upon the parties as well as any successor
assigns.
13.
It is further understood and agreed that no failure or delay by any party to this Agreement in
exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise of any right, power or privilege hereunder.
The provisions of this Agreement may be modified or waived only by a separate writing, expressly modifying or
waiving such provision, and executed by all parties to this Agreement.
14.
Each party recognizes that irreparable injury may result to a Disclosing Party and its business and
property if a Receiving Party breaches any provision of this Agreement and that money damages would not be a
sufficient remedy for any such breach. Each party therefore agrees that if any act in violation of any provision
hereof occurs, the Disclosing Party shall be entitled, in addition to such other remedies, damages and relief as may
be available under applicable law, to an injunction prohibiting the Receiving Party from engaging in any such act
or specifically enforcing this Agreement, as the case may be.
15.
This Agreement is the complete and exclusive statement of the agreement between the parties and
supersedes all prior written and oral communications and agreements, if any relating to the subject matter hereof.
16.
This Agreement shall be governed by and construed in accordance with the laws of the State of
Colorado, without giving effect to the principles of conflict of laws thereof. This Agreement may be executed in
counterparts, each of which when so executed and delivered shall be an original, but such counterparts shall
constitute one and the same instrument.
17.
If you are an owner, officer, director, member, employee, agent and/or independent contractor of
a Guarantor, Guarantor must sign the Undertaking and Guarantee; Release attached to this Agreement.
TCBY FDD 03/2014
3
The undersigned, by executing this Agreement, agree to be bound by the provisions of this Agreement as of the
date first above written.
[MFFB SUBSIDIARY]
YOU
By:
Its:
By:
Its:
Your Contact information: (Please Print)
Name:
Phone:
Relationship to Guarantor:
Address:
City:
State:
Fax:
email:
Zip:
Best time to contact:
TCBY FDD 03/2014
4
UNDERTAKING AND GUARANTEE; RELEASE
Guarantor acknowledges and agrees that you are an owner, officer, director, member, employee, agent
and/or independent contractor of Guarantor, and are signing the foregoing Confidentiality Agreement (the
“Agreement”) as a benefit to and at the request of Guarantor. Accordingly, in consideration of the execution of the
Agreement by you, and for other good and valuable consideration, Guarantor for itself, its heirs, legal representatives,
successors and assigns hereby agrees to sign this Undertaking and Guarantee; Release (the “Guarantee”) and
guarantee the full and timely performance by you of each of your obligations arising under the Agreement, including,
without limitation, your obligations to defend, indemnify and hold harmless Company and its affiliates in accordance
with paragraph 6.
In addition, the Guarantor hereby agrees to be personally bound by each and every condition and term
contained in the Agreement as though the Guarantor had executed an agreement containing the identical terms and
conditions of the Agreement. The Guarantor agrees to pay all attorneys’ fees and costs and other expenses incurred in
connection with the enforcement of the Guarantee or with any negotiations related to such enforcement.
Further, except to the extent limited or prohibited by applicable law, Guarantor agrees to release and
forever discharge Company and its affiliates, and all of their respective owners, officers, directors, members,
employees, agents, representatives, attorneys, insurers, successors, assigns, heirs and personal representatives,
from any and all claims, debts, covenants, liabilities, suits, judgments, damages, actions and causes of action,
whether known or unknown, direct or indirect, which Guarantor ever had, has or ever may have or claim to have,
arising out of or relating to any of your Visits or your participation in training.
The Guarantor agrees that each and every provision, covenant, and condition of the Guarantee shall inure to
the benefit of Company’s successors and assigns.
GUARANTOR(S):
By:
Its:
TCBY FDD 03/2014
5
EXHIBIT K
FRANCHISEE INFORMATION
TCBY FDD 03/2014
EXHIBIT K: Franchisee Information
LIST OF CURRENT FRANCHISEES AS OF DECEMBER 28, 2013
9040302
Anniston #2
James Kemp
TCBYT
1903 Quintard Ave
Anniston
9291601
Corner Village
TCBYT
300 N Dean Rd Ste 3
Auburn
9396703
280 Station
TCBYT
400 Cahaba Park Circle
Birmingham
AL
9432401
1352-1
Eufaula Ave.
Gulf Shores
Ryan
Schoonover
Ronald
Howard
Mark Joy
TCBYT
1352-1 Eufaula Ave.
Eufaula
AL
Dan Farmer
TCBYT
1301 Gulf Shores Pkwy
Gulf Shores
Merchants
Walk
Picadilly
Square
Shopping
Essex Square
Market Place
Meadowbrook
Ronald
Howard
Brenda
Thomas
TCBYT
1919 28th Ave S Ste
153
6345 Airport Blvd Ste
B
Homewood
Mobile
AL
C E Jr Tiller
TCBYT
2 McFarland Blvd
Northport
AL
C E Jr Tiller
TCBYT
2304 McFarland Blvd E
Tuscaloosa
AL
University
Town Center
Dave Ward
Drive
Harrison
C E Jr Tiller
TCBYT
Tuscaloosa
AL
Milinda
Holman
Don Weir
TCBYT
Conway
AR
Harrison
AR
Cornerstone
Marketplace
Markham
Plaza
Lakewood
Village
Promenade
Pointe
Arrowhead
Towne Center
Carefree Hwy
Roy Tim
Webb
Don Weir
TCBYT
1130 University Blvd
Ste A-5
3900 Dave Ward Dr
Ste 2300
1313 Highway 62 65 N
#G
227 Cornerstone Blvd
Hot Springs
AR
TCBYT
11418 W Markham St
Little Rock
AR
Elly Rumbach
TCBYT
TCBYT
North Little
Rock
Rogers
AR
Jared Greer
Edward Daly
TCBYT
Michael &
Ursula
Conroy
Michael &
Ursula
Conroy
Atul Jain
TCBYT
2600 Lakewood
Village Pl Ste E
2005 Promenade Blvd
Ste 140
7700 W Arrowhead
Towne Ctr
3134 W. Carefree Hwy
TCBYT
8120 N Hayden Road
TCBYP
Ravinder
Grewal
9104201
9396701
9403301
9017905
9017906
9017907
9315001
9109311
9427801
9109314
9411601
9423701
9434001
9431402
9431401
Village at
Hayden
9376101
9431801
Foothills Mall Bakery Cafe
Grewal
Business
Center
Camp
Pendleton Mainside
Exeter
9293505
Solano Mall
9400801
9430902
TCBYT
TCBYT
P.O.
Box
2309
PO Box
274
AL
362013217
(256)-238-8229
AL
368305045
352425008
36027
(334)-826-8828
365425933
352092600
366083127
(251)-968-8229
354763348
354045802
354010326
720345581
726012013
71913
(205)-758-6855
(501)-221-9020
AL
AL
(205)-637-0500
(334)-546-3966
(205)-870-8229
(251)-342-5866
(205)-349-4661
(205)-345-0804
(501)-327-0909
(870)-741-9554
(501)-520-0700
Glendale
#1259
AZ
722112806
721168049
727589073
85308
Phoenix
Suite 8
AZ
85086
(630)-596-3990
Scottsdale
AZ
852582465
(630)-596-3990
Tucson
AZ
CA
857412329
92309
(520)-531-8404
TCBYP
7401 N La Cholla Blvd
Ste 155
72363 Baker Blvd
Anil Kumar
TCBYT
Building 15-100
Camp
Pendleton
CA
92055
(714)-612-3751
Carol Nickel
TCBYT
112 South E Street
Exeter
CA
93221
(559)-592-4455
David Smith
TCBYP
1350 Travis Blvd
#1427B
Fairfield
CA
945334646
(707)-429-5205
TCBY FDD 03/2014
Baker
AR
PO Box
729
(501)-753-5572
(479)-636-8229
(0)--0
(760)-733-4505
1
9147232
9293506
9345903
9139502
9430501
9427101
9431501
9293502
9147233
9293503
9385202
9405601
9407301
9293504
9412801
9421701
9261901
Folsom
Premium
Outlets
Folsom
Premium
Outlets
San Vicente
Plaza
Great Mall of
the Bay Area
Northridge
Mall
Westfield
Shopping
Town
Victoria
Gardens
Galleria at
Roseville
Country Club
Plaza
SmoothiesArden Fair
Mall
Weberstown
Mall
Stockton
Subway
Stockton
Subway
Factory Stores
at Vacaville
West Covina
Fashion Plaza
Market Place
Austin Bluffs
Craig Subway
David Smith
TCBYP
13000 Folsom Blvd
#210
Folsom
CA
956308002
(916)-351-1448
David Smith
TCBYT
13000 Folsom Blvd Ste
808
Folsom
CA
956308008
(916)-351-1438
Michael Zreik
TCBYP
Los Angeles
CA
TCBYT
Milpitas
CA
Kamyar
Lashgari
Cherie
CoulterWeith
Braden &
Luisa Onishi
David Smith
TCBYP
9301 Tampa Ave
Northridge
CA
TCBYP
72840 Highway 111
Ste S339
Palm Desert
CA
900496610
950358039
913242503
922603337
(310)-207-1604
Dung Nguyen
11740 San Vicente
Blvd
173 Great Mall Dr
TCBYT
7834 Kew Ave
David Smith
TCBYP
David Smith
TCBYP
1151 Galleria Blvd Spc
#276
2380 Watt Ave Spc
338
1689 Arden Way Ste
1116
917392465
956781945
958250610
958154043
(213)-448-8920
TCBYP
Rancho
Cucamonga
Roseville
Sohn, Jong
TCBYP
(209)-474-3466
Kahlon,
Jagwinder K.
Kaur, Rajvir
TCBYS
David Smith
952076307
952193741
952075636
956873242
917902837
80918
(970)-824-2900
CO
816253412
80249
CO
80249
(303)-342-6971
CO
80249
(303)-342-6972
CO
805045276
(303)-990-8557
CO
805253037
(970)-223-4851
CA
CA
Sacramento
CA
Sacramento
CA
4950 Pacific Ave
Stockton
CA
Stockton
CA
Stockton
CA
TCBYP
3201 W Benjamin Holt
Dr # 18
5308 Pacific Ave Ste
92
321 Nut Tree Rd Ste 2
Vacaville
CA
Yui Man Mak
TCBYP
603 Plaza Dr
CA
Enkler Jean
TCBYT
George
Barlow
Greg Forst
TCBYS
3670 Austin Bluffs
Parkway
1420 W Victory Way
West
Covina
Colorado
Springs
Craig
TCBYT
P.O. Box 492025
Denver
TCBYS
9028808
Denver Int'l
Airport/Main
Term
9028809
Denver Int'l
Airport/Conc
B
Greg Forst
TCBYT
P.O. Box 492025
Denver
9028810
Denver Int'l
Airport/Conc
C
Greg Forst
TCBYT
P.O. Box 492025
Denver
9425907
Black
Diamond
Marketplace
Troutman
Parkway
Steve Lauer
TCBYT
11169 E I25 Frontage
Rd Ste B
Firestone
Steve Lauer
TCBYT
100 W Troutman Pkwy
Fort Collins
9425901
#1765
TCBY FDD 03/2014
CO
CO
8400
Pena
Bv/Mai
n
Termin
al
8900
Pena
Bv/Con
course
B
9100
Pena
Bv/Con
course
C
(408)-942-0331
(818)-407-0404
(760)-346-4598
(916)-878-5418
(916)-971-4803
(916)-927-5483
(209)-952-8873
(209)-951-2524
(707)-448-4718
(626)-960-7011
(719)-265-8229
(303)-342-6970
2
9425902
9425906
9426001
9424501
9425908
9425903
9431701
9424003
9424001
9089001
9412001
9383002
9427902
9424201
9428602
9430601
9425103
9425104
9239701
9233503
9424202
9428601
9420601
9425101
9210806
9425102
9304601
9345603
9424101
Rain Tree
Village
Timberline
Shops
Center Place
CO
80526
(970)-484-8195
CO
80525
(970)-682-1954
CO
806343747
801121430
805037
603
80538
(970)-673-8193
(720)-872-6459
CT
802292173
060022033
06070
Bethany
Beach
Dover
DE
19930
(302)-537-2266
DE
(302)-678-9797
1531 Christiana Mall
Newark
DE
199018710
19702
TCBYT
1600 Ocean Outlets
19971
(302)-226-7801
TCBYT
1230 S Dixie Highway
Suite
1580
DE
Lisa Wolfe
FL
TCBYT
TCBYT
Suite
113
24-C
FL
Chris
Hartwell
Tommy
Douglas
Tommy
Douglas
Burr Camp
8076 Mediterranean
Drive
2441 NW 43rd
331462902
33928
(786)-433-8229
Shawn Tolley
Rehoboth
Beach
Coral
Gables
Estero
FL
32606
(352)-378-1051
322585427
32256
(904)-260-9833
(305)-441-2613
Plaza Del
Paraiso
Mary Brickell
Village
Falls Mall
Beach Walk
Center
Seminole
Shoppes
Tioga Town
Center
Pine Tree
Plaza
Orlando
Premium
Outlet Mall
Universal
Studios Florida
Shops at
Pembroke
Arapahoe
Marketplace
Clover Basin in
Longmont
Garfield
Avenue
HighPointe
Park
Wintonbury
Mall
Avon
Marketplace
Secrest Shops
Unit 4
Dover Mall
Christiana
Mall
Tanger Outlet
Center
University
Centre
Shops at
Coconut Point
Thornbrook
Village
Shoppes at
Bartram Park
St. Vincents
Hospital
Miami Subway
Steve Lauer
TCBYT
2519 S Shields
Fort Collins
Steve Lauer
TCBYT
2638 S. Timberline Rd
Fort Collins
Tim
Brynteson
Rick Green
TCBYT
4548 Center Place
Greeley
TCBYT
TCBYT
Greenwood
Village
Longmont
CO
Steve Lauer
Steve Lauer
TCBYT
8547 East Arapahoe
Road
2345 Clover Basin
Drive
3033 N Garfield Ave
Loveland
CO
Jeffrey
Roberts
Lisa Gross
Arnold
Lisa Gross
Arnold
J. Robert
McCabe
Kenneth
Rebbro
Abdul
Mannan
Rhoda Salem
TCBYT
Thornton
CO
TCBYT
9645 Washington St
Ste 140
836 Park Ave
Bloomfield
CT
TCBYT
530R Bushy Hill Road
Simsbury
TCBYT
TCBYP
Garfield and Atlantic
Ave
1365 N Dupont Hwy
TCBYP
CO
(303)-220-8229
(720)-378-7877
(970)-619-8557
(860)-263-7360
(860)-658-4520
(302)-678-9797
(239)-992-8229
Jacksonville
FL
TCBYT
13820 Old Saint
Augustine Road
7936 Pine Lake Road
Jacksonville
FL
TCBYS
2720 S Dixie Hwy Ste B
Miami
FL
Maria Linares
TCBYT
Miami
FL
Lisa Wolfe
TCBYT
Miami
FL
Shawn Tolley
TCBYT
12070 SW 127th
Avenue
900 S Miami Ave Ste
147
8888 SW 136th Street
331333786
331864663
33130
Miami
FL
33176
(305)-232-4280
Meena Shah
TCBYT
130 Scenic Gulf Dr
FL
TCBYT
628-5 Atlantic Blvd
325504960
32266
(850)-654-2076
Tommy
Douglas
Ken Rembert
TCBYT
TCBYT
326695709
32073
(352)-332-8896
Tommy
Douglas
Michael
D'Argenio
12921 SW 1st Rd Ste
103
410 Blanding Blvd
Miramar
Beach
Neptune
Beach
Newberry
TCBYP
8200 Vineland Ave Ste
1238
Orlando
FL
328216828
(407)-238-9775
Bruce Eakin
TCBYT
Orlando
FL
TCBYT
328197601
330271453
(407)-226-2689
Jerry Calvo
1000 Universal Studio
Plz #340
14543 SW 5th St
TCBY FDD 03/2014
TCBYT
Gainesville
Suite
120
Orange Park
Pembroke
Pines
FL
FL
Space 7
City
Walk
FL
FL
(904)-273-4135
(305)-252-7906
(786)-517-5555
(904)-246-2800
(904)-276-0955
(954)-432-5900
3
Gardens
9330101
Frank
Messina
Frank
Messina
Donald
Everett
Danielle
Trubey
TCBYT
4771 Bayou Blvd
Pensacola
TCBYT
1765 East 9 Mile Road
Pensacola
TCBYT
2715 South Byron
Butler Pkwy
2750 Race Track Road
Ste 306
Perry
FL
Saint Johns
FL
9109309
Bayou
Boulevard
University
Town Center
Waco Travel
Center
Plantation
Plaza
Shopping Ctr
Paradise Plaza
Don Weir
TCBYT
Sarasota
FL
9433701
Mahan Square
Maya Sutaria
TCBYT
3800 S Tamiami Trail
#100
1350 E Tennessee St
Tallahassee
FL
9424401
Mitchell
Ranch Plaza
Courtyard
Shops at
Wellington
Dawson Road
Jay Silar
TCBYT
3140 Little Road
Trinity
FL
Joe Iacidfoli
TCBYT
13860 Wellington Trce
Ste 43
Wellington
FL
Sandra S.
Jones
Nasim Jina
TCBYT
2416 Dawson Rd
Albany
GA
TCBYT
4920 Roswell Rd NE
Atlanta
GA
Mohammad
Malik
Michael
Murtaugh
TCBYT
807 West Ave.
Cartersville
TCBYT
532 Crosstown Dr
Charles and
Will Tiller
Bipin Patel
TCBYT
Honolulu
Subway
Council Bluffs
Subway
Albertson's
Marketplace
Silverstone
Plaza
Fred Meyer
Plaza
Mountain
Home Moxie
Java
Nampa
Seung Eun
Park
Kent Tyler
9428201
Chicago
Premium
Outlets
Old Farm
9101501
Grove Mall
9381307
York Street
9421201
Evanston
Subway
9330102
9424801
9413601
9429301
9413301
9354901
9432101
9423501
9017908
9357701
9412701
9299901
9024405
9228604
9343701
9228601
9431001
9394201
Fountain Oaks
Shopping
Center
Westside
Plaza
Braelinn
Village
Shopping Ctr
Brookwood
Marketplace
Valdosta Mall
325031930
325145531
323486309
322593230
(850)-475-8048
342396907
32308
(941)-953-3241
346551864
33414
(727)-375-1177
317072344
303422686
(229)-883-7143
GA
30120
(678)-557-3692
Peachtree
City
GA
302692916
(770)-631-9803
Suwanee
GA
Valdosta
GA
Honolulu
HI
TCBYS
208 E Broadway
IA
Jim Mowbray
TCBYT
1790 W State St
Council
Bluffs
Boise
Diana
Mallard
Dave Niblett
TCBYT
Meridian
ID
Meridian
ID
Jesse Mallard
TCBYP
1630 S Eagle Rd Ste
100
1800 N Locust Grove
Rd Ste A
390 American Legion
Blvd
Mountain
Home
ID
300241061
316017407
968223100
515034407
837023923
836422445
836467842
836472703
(678)-947-0540
TCBYS
2615 Peachtree Pkwy
Ste 140
1700 Norman Dr Spc
1054
1249 Wilder Ave
Talel Aref
TCBYT
624 12th Ave S
Nampa
Suite 6
ID
83651
(208)-461-4846
Ghanshyam I
Vyas
TCBYP
1650 Premium Outlets
Blvd
Aurora
Ste
1245
IL
605022911
(630)-898-9909
Todd
Thorstenson
Ashokkuma
Savsani
Yousef
Kashkeesh
Minesh Patel
TCBYT
1731 W Kirby Avenue
Champaign
IL
61821
(217)-607-5090
TCBYT
1340 W 75th St
IL
158 N York St
TCBYS
1551 Sherman Ave
Evanston
605164205
601262806
602014421
(630)-963-9559
TCBYT
Downers
Grove
Elmhurst
Space
B-12
TCBY FDD 03/2014
TCBYT
TCBYP
TCBYT
FL
Suite 7
Suite B
FL
ID
IL
IL
(850)-607-8099
(850)-838-1852
(904)-287-8229
(0)--0
(561)-366-7725
(404)-252-7437
(229)-293-0093
(808)-531-6355
(712)-322-4114
(208)-384-0994
(208)-898-1482
(208)-884-8366
(208)-587-9048
(708)-422-2810
(847)-328-2917
4
9407001
9423802
9433301
9428102
9428101
9381308
9432302
9433401
9421401
9025804
9423801
9381303
9434101
9427201
9432001
Hawthorne
Square
Naperville
Crossings
New Lenox
North
Riverside Park
Mall
Oakbrook
Center
Oak LawnSouth Chicago
Coopers
Square
Oswego
Northwoods
Mall
Quincy
Shorewood
Crossings
Westfield Old
Orchard
East Gate
Shopping
Center
Hinsdale Lake
Commons
Rangeline
Crossing
9382801
Galleria Retail
9261701
Georgetown
Square
Glendale
Shoppes
Blimpie
Southlake
Mall
Massachusetts
Street
Plaza Pointe
9200402
9434201
9428901
9365401
9202001
9388402
9388403
9421302
9388406
9195201
Prairie Village
Shoppes
Jefferson
Highway
George O'Neal
Road
Flowers
Center
Broadway
Place
Geismar Exxon
Kenneth T.
Hahn
Victor
Howard
Marge & Scot
Boulanger
Lomesh Amin
TCBYT
Naperville
TCBYT
1807 S Washington St
Ste 105
2860 Showplace Drive
(630)-416-8229
IL
605652049
60564
TCBYT
2356 E Lincoln Hwy
New Lenox
IL
60451
(0)--0
TCBYT
7501 W Cermak Rd
North
Riverside
IL
605461436
(708)-447-5938
Lomesh Amin
TCBYT
Yousef
Kashkeesh
Mubarak
Amine
Vyomesh
Desai
Khalid
Mohammed
Marvin
Hufford
Victor
Howard
Yousef
Kashkeesh
Bhasker Patel
TCBYT
100 Oakbrook Center
Ste 30
6770 West 95th St
Oak Brook
IL
(630)-368-1002
Oak Lawn
IL
605231838
60453
14658 S. LaGrange
Road
2840 Route 34
Orland Park
IL
60462
(708)-951-1905
Oswego
IL
60543
(0)--0
Peoria
IL
Quincy
IL
TCBYT
930 Brook Forest Ave
Shorewood
IL
616130100
623015053
60404
(309)-682-4901
TCBYT
4501 War Memorial
Drive
1735 State St
TCBYP
4999 Old Orchard Ctr
Skokie
IL
(847)-677-0123
TCBYT
3835 East Main Street
St. Charles
IL
600771450
60174
Colleen
Pushic
Roy
Patel/Nate
Patel
Victor 'Bud'
DiMaggio
Gabe Keri
TCBYT
6300 Kingery Highway
Spc 4
1350 S. Rangeline Rd
Willowbroo
k
Carmel
IL
60527
(630)-920-8229
IN
46032
(317)-938-2472
Dyer
IN
46311
(219)-865-2240
TCBYT
425 U.S. Hwy 30 Ste
221
6422 E State Blvd
Fort Wayne
IN
(260)-493-2795
Shirley Ho
TCBYT
2132 E 62nd St
Indianapolis
IN
468157025
462202312
James Sheets
TCBYT
2109 Southlake Mall
Merrillville
IN
46410
(219)-718-8108
Ed Forman
TCBYT
Lawrence
KS
66044
(785)-249-0999
Mary
McMinn
Nancy Bream
TCBYP
845 Massachusetts
Street
4841 W 135th St
Leawood
KS
(913)-897-6544
TCBYT
6966 Mission Rd
KS
Richard T
Daspit, Sr
Richard T
Daspit, Sr
Holly
Schwartz
Richard T
Daspit Sr
Elvin Simpson
Jr
TCBYT
7631 Jefferson Hwy
TCBYT
15226 George ONeal
Rd
70488 Highway 21 Ste
206
7755 Magnolia Beach
Rd Ste E
13475 Highway 73
Prairie
Village
Baton
Rouge
Baton
Rouge
Covington
Denham
Springs
Geismar
LA
662248901
662082609
708091102
708171507
704338134
707268970
707343061
TCBY FDD 03/2014
TCBYT
TCBYT
TCBYP
TCBYT
TCBYP
TCBYT
TCBYT
TCBYP
Naperville
IL
12-20
Suite F1
LA
LA
LA
LA
(630)-961-8229
(708)-422-2810
(217)-228-2292
(815)-577-8229
(203)-214-8746
(317)-251-2766
(913)-671-8180
(225)-923-2400
(225)-755-2590
(985)-626-4770
(225)-243-5741
(225)-673-8406
5
9421301
Highway 59
9237202
Old Metairie
Village
Shreveport
9374701
9237206
9407601
9087103
9420903
9103702
9420901
9398602
9398605
9398604
9431101
Camellia
Square
Zachary
Queen Anne
Plaza
Belvedere
Square
Harford Mall
Snowden
River
127th Street
Ocean City
33rd Street
Ocean City
56th Street
Ocean City
Salisbury
9103701
Timonium
TCBY
9332501
Dearborn
Subway
East Paris
Plaza
Holly
Schwartz
John Ploen
TCBYT
1680 Highway 59
Mandeville
Suite
100
LA
70448
(985)-626-4770
TCBYT
Metairie
Scott Ferris
TCBYT
John Ploen
TCBYT
701 Metairie Rd
#23101
1704 East Bert Kouns
Loop
1736 Gause Blvd East
LA
(504)-835-2983
Industri
al Dr
LA
700054050
71105
LA
70461
(985)-288-0340
Frances
Nezianya
Mike Grubor
TCBYT
4461 Main Street
Zachary
LA
(225)-654-5620
10 Washington St
Norwell
MA
540 East Belvedere
Ave Spc 11
696 Bel Air Road J08
Baltimore
Columbia
TCBYT
9400 Snowden River
Pkwy
12701 Coastal Hwy Ste
10
3310 Coastal Hwy
TCBYT
5601 Coastal Highway
Ocean City
21842
(410)-524-0253
Khurshid
Ahmed
Mary B.
Taylor
TCBYT
306 Dogwood Dr
Salisbury
2080 York Rd Ste 125
Timonium
218017122
210934258
(0)--0
TCBYT
M
D
M
D
M
D
M
D
M
D
M
D
M
D
M
D
707913756
020611749
212123750
210144201
210455297
218426055
21842
TCBYT
Dennis
McGrath
Mary B.
Taylor
Dennis
McGrath
Nayfeh Salem
TCBYT
Munther
Salem
Nayfeh Salem
TCBYS
5929 Schaefer Rd
Dearborn
(313)-581-1977
TCBYT
2675 E Paris Ave SE
Grand
Rapids
MI
481262254
495466138
TCBYT
17045 Kercheval Ave
MI
482301562
482361610
(313)-885-0384
480401130
494414356
(810)-364-7737
483071121
48084
(248)-650-2161
553019813
55306
(763)-497-7077
554031821
551133005
635013285
612-388-3725
TCBYT
TCBYT
TCBYT
Shreveport
Slidell
Belair
Ocean City
Ocean City
Attn:
Mary
Taylor
9133802
Grosse Pointe
Ramzi
Hourani
Miller,
Edward &
Paula
Brian Coury
9133801
Grosse Pointe
Brian Coury
TCBYT
20385 Mack Ave
9270201
Marysville
Subway
K-Mart
Shopping
Center
North Hill
Gerald
Mccarthy
Rosalyn Karp
TCBYS
1030 Gratiot Blvd
Grosse
Pointe
Grosse
Pointe
Wood
Marysville
TCBYT
3468 Henry St
Muskegon
MI
Won Sook
Kim
Thomas
Runyan
Paul Yenish
TCBYT
1421 N Rochester Rd
MI
TCBYT
2848 W Maple Rd
Rochester
Hills
Troy
TCBYP
Albertville
Thu Nguyen
TCBYT
6415 Labeaux Ave NE
Ste C800
1042 Burnsville Center
Joe Huang
TCBYP
Justina
Huang
Ed
Featherstone
TCBYT
600 Hennepin Ave.
Ste 260
120 Rosedale Ctr
Minneapoli
s
Roseville
516 N Baltimore St Ste
C
Kirksville
M
N
M
N
M
N
M
N
M
O
9305502
9029801
9393801
9433101
9425801
9432601
93842011
9143201
9347802
Somerset
Plaza
Outlets of
Albertville
Burnsville
Center TCBY
SmoothiesBlock E
Rosedale Mall
Kirksville
Bellacino's
Pizza
TCBY FDD 03/2014
TCBYP
Burnsville
MI
MI
MI
MI
(318)-797-8229
(781)-982-8220
(410)-323-4351
(410)-420-9552
(410)-995-6140
(410)-250-5909
(410)-430-9270
(410)-252-9554
(616)-949-4418
(313)-881-5608
(231)-733-2110
(0)--0
(952)-956-2642
(651)-635-9868
(660)-665-7665
6
9221501
Laurel
Chevron
William
Carmichael
TCBYP
1037 Highway 15 N
Laurel
Mac's
Mini
Mart
MS
394402647
(601)-425-5900
9432402
421 Pinola
Drive
McComb
Chevron
Mark Joy
TCBYT
421 Pinola Drive
Magee
MS
39111
(334)-546-3966
Clifton Cleave
TCBYP
1812 Delaware Ave
McComb
Buffalo
Service
s, Inc.
MS
396483614
(601)-250-0360
Wedgewood
Commons
Chaney's
Pharmacy
Philadelphia
Subway
Missoula Taco
Time
Dingle Creek
Crossing
Westgate
Ron Rye
TCBYT
Brent Smith
TCBYP
5070 Goodman Rd Ste
111
501 Bramlett Blvd
Olive
Branch
Oxford
MS
38654
(662)-420-7823
MS
386554129
393508971
598081408
288033213
288063835
287139501
27511
(662)-234-7221
Jeff George
TCBYS
1006 Central Dr
Philadelphia
MS
Doug & Linda
Barr
Laneal
Vaughn
Alex Hawkins
TCBYP
4780 N Reserve St
Missoula
MT
TCBYT
Asheville
NC
TCBYT
1800 Hendersonville
Rd
5 Westgate Parkway
Asheville
NC
Bryson City
Subway
Shoppes of
Kildaire
Eastgate
Shopping
Center
Colony Place
Alan
Nosworthy
Christian
Poole
Mark A.
Sperry
TCBYS
15 Highway 19 S
Bryson City
NC
TCBYT
1369 Kildaire Farm
Road
1800 E Franklin St Ste
22
Cary
NC
Chapel Hill
NC
275145816
(919)-967-0629
Samuel Batt
TCBYT
7731 Colony Rd Ste 1
Charlotte
NC
(704)-341-2000
9864 Rea Road
Charlotte
NC
282267679
28277
Blakeney
Town Center
Montford
Abbey
Shopping
Center
Quail Corners
Samuel Batt
TCBYT
Samuel Batt
TCBYT
1730 Abbey Place
Charlotte
NC
282093722
(704)-522-7223
Samuel Batt
TCBYT
8502 Park Road
Charlotte
NC
(704)-556-5955
Samuel Batt
TCBYT
NC
Samuel Batt
TCBYT
8550 University City
Blvd
Charlotte
9422211
Town Center
Plaza
TCBY Truck
282105803
28213
Charlotte
NC
28226
(610)-937-1792
9422213
Ballantyne
Samuel Batt
TCBYT
Charlotte
Samuel Batt
TCBYT
NC
282774309
28210
(704)-541-0230
Piedmond
Town Center
Charlotte Intl
Arpt
Suite
130
NC
9422218
Host Marriott
dbe Sandy
Dunn
YOV-F
14835 Ballantyne
Village Way
4620 Piedmont Row
South
5501 Josh Birmingham
Pkwy
NC
28208
(704)-359-4610
Gateway
Village
Carolina Mall
Samuel Batt
TCBYT
1390 Tiger Blvd
Clemson
NC
29631
(864)-654-3030
Dhruv
Nakrani
Samuel Batt
TCBYP
1480 Concord Pkwy
Concord
Food
Court
CD/Pret
zel
Mania
Suite
302
NC
28025
(240)-625-4695
TCBYT
610 Jetton Street
Davidson
NC
(610)-937-1792
Mark A.
Sperry
TCBYT
105 W Nc Highway 54
Spc 299
Durham
NC
280369318
277136646
9247801
9323706
9143701
9256501
9227401
9242101
9424701
9253301
9431601
9409602
9422201
9422202
9422205
9422208
9422209
9106056
9422219
9432201
9422216
9409601
Davidson
Commons
Homestead
Market
Shopping Ctr
TCBY FDD 03/2014
TCBYT
Charlotte
Charlotte
(601)-389-0020
(406)-542-1414
(828)-274-1100
(828)-225-5111
(828)-488-1227
(919)-234-0059
(704)-341-2002
(704)-547-1234
(610)-937-1792
(919)-544-5229
7
9427701
Rakesh Sethi
TCBYT
112 Westwood
Shopping Center
Fayetteville
NC
283141521
(910)-229-2446
Charles Hunt
TCBYS
3284 S Union Rd
Gastonia
NC
(704)-853-2493
Biren Patel
TCBYT
3343 Battleground
Greensboro
NC
280567050
27410
Samuel Batt
TCBYT
Huntersville
NC
TCBYT
Huntersville
NC
280781819
28078
(704)-987-2262
Samuel Batt
Samuel Batt
TCBYT
16916-A Birkdale
Commons Pkwy
9334 Rose Commons
Drive
208 Morganton Blvd
SW
Lenoir
NC
28645
(610)-937-1792
Samuel Batt
TCBYT
Matthews
NC
28105
(704)-847-0444
Ross Shattuck
TCBYT
3116 Weddington
Road
111D Marketplace Ave
NC
28117
(704)-660-9995
William Juno
TCBYS
1408 Edgewood Dr
Mount Airy
NC
(336)-789-0800
William Juno
TCBYS
701 W Pine St Ste 100
Mount Airy
NC
Bina Kalaria
TCBYT
Pineville
NC
Laneal
Vaughn
Samuel Batt
TCBYP
11025 Carolina Place
Parkway
105 Weaver Blvd
270305216
270304575
28134
NC
28787
(828)-645-0234
TCBYT
6312 WeddingtonMonroe Road
Wesley
Chapel
NC
28104
(704)-843-0260
Samuel Batt
TCBYT
3804 Oleander Drive
Wilmington
NC
28403
(910)-794-5663
Steven
Rudzinski
Tim
Wonnenburg
TCBYT
Winston
Salem
Bismarck
NC
27127
(336)-784-6101
TCBYP
5038 Peters Creek
Parkway
2921 N 11th St
ND
585030514
(701)-223-0609
Tim
Wonnenburg
TCBYP
1020 19th Ave N
Fargo
ND
581022298
(701)-239-4500
Douglas
Wonnenberg
Lori Zavalney
TCBYP
808 20th St SW
Jamestown
ND
TCBYP
1340 S Broadway
Minot
584016131
587015931
(701)-252-3363
9282501
Westwood
Shopping
Center
Forest Brook
Subway
Westridge
Square
Birkdale
Village
Rosedale
Commons
Thrift
Shopping
Center
Plantation
Market
Shoppes at
Morrison
Plantation
Edgewood
Drive Subway
Pine Street
Subway
Carolina Place
Mall
Weaverville
Subway
Village
Commons at
Wesley Chap
Oleander
Place
Oliver's
Crossing
Bismarck Red
Carpet Car
Wash
Fargo Red
Carpet Car
Wash
Jamestown - I94 Clark
Minot Amoco
9262801
Lincoln
Joanne Haase
TCBYT
6450 O St
Lincoln
(402)-464-7766
9263801
McCook
Subway
Omaha
Subway
Harvey Oaks
Plaza
Omaha - West
Maple
Lakeview
Plaza
Bedford
Michael
Jonasen
Kent Tyler
TCBYS
216 Westview Plaza
McCook
NE
TCBYS
7616 Dodge St
Omaha
NE
Stephen
McColley
Angela
Greisen
Tom and
Kara Negley
Mark and
Ann Lagasse
TCBYT
14506 W Center Rd
Omaha
NE
TCBYT
Omaha
NE
TCBYT
14615 W Maple Rd Ste
113
5170 S. 72nd Street
NE
685102369
690014414
681143635
681443218
681164392
68127
TCBYT
5 Kilton Rd Unit #1
Bedford
NH
33110
(603)-782-8733
9270801
9428401
9422203
9422221
9422215
9422207
9425201
9279301
9279302
9428501
9242102
9422204
9422212
9429201
9250301
9250303
9284901
9299902
9421801
9426601
9429901
9430101
TCBY FDD 03/2014
Mooresville
Weaverville
Ralston
Suite
700
Space
C-27
Unit 16
L&B
Zavalne
y, Inc.
Suite
102
ND
NE
(336)-286-5020
(610)-937-1792
(336)-789-0900
(704)-547-1234
(701)-852-8988
(308)-345-2322
(402)-392-1567
(402)-697-1419
(402)-496-3981
(402)-934-8844
8
9147224
Fox Run Mall
Patty Krukoff
TCBYP
50 Fox Run Rd Ste #65
Newington
NH
9304501
Jagat Patel
TCBYS
559 East Main St # 53
Denville
NJ
9408001
Denville
Subway
Crispin Square
TCBYT
230 N Maple Ave #A-4
Marlton
NJ
9124402
Nutley
P. Andrew
Williams
Jose Young
TCBYT
226 Franklin Ave
Nutley
NJ
9423901
Paramus Park
Mall
Shoppes at
Lake Mohawk
Poppy's Bagels
Nate Patel
TCBYT
Paramus
NJ
Cynthia Rust
TCBYT
700 Paramus Park Ste
1540
243 Sparta Ave
Sparta
NJ
Jacob Geffner
TCBYP
204 W Englewood Ave
Teaneck
NJ
Woodbridge
Mall
NMSU Food
Court
Pinetree
Square
Meadows Mall
Nate Patel
TCBYT
Irma May
TCBYP
250 Woodbridge
Center Drive
Williams & Frenger St
Woodbridg
e
Las Cruces
Jimmy
Goodwin
Ted Yang
TCBYP
2812 Sudderth Dr
Ruidoso
TCBYP
Las Vegas
Lakeside
Crossing
Guilderland
Marlene
Frallicciardi
Tejraj Hada
TCBYT
Reno
NV
TCBYT
4300 Meadows Ln Ste
133A
900 W Moana Ln Ste
101
1512 Western Ave
N
M
N
M
NV
Albany
NY
Finger Lake
Mall Subway
Mckinley
Parkway
Atlantic
Terminal
Bonwit Village
Joseph Liseno
Jr
Steven
Christensen
Luther
Robinson
Joseph C
DePalma
Tejraj Hada
TCBYS
2000 Clark Street Rd
Auburn
NY
TCBYT
3860 Mckinley
Parkway
139 Flatbush Ave
Blasdell
Commack
NY
TCBYT
9 Vanderbilt Motor
Pkwy
307 Toy Road
NY
Dennis
Kaplan
Marc Schein
TCBYT
1955 Jericho Tpke
TCBYP
TCBYT
90-15 Queens Blvd Ste
1036
158 7th St
East
Greenbush
East
Northport
Elmhurst
Garden City
NY
TCBYT
1090 Morton Blvd
Kingston
NY
9426101
9391701
9423903
9026303
9170301
9322801
9421001
9426701
9209102
9430301
9383201
9398901
9426704
TCBYP
TCBYT
Brooklyn
#1075
Suite
180
NJ
NY
NY
038012858
078342482
080539411
071104701
076523557
078711102
076663512
07095
(603)-431-7531
88001
(575)-646-4001
883456308
891073017
895094880
122030511
130219698
14219
(575)-257-7822
112171450
117255409
12144
(718)-230-7067
117316216
113734914
115305725
124011504
12110
(631)-499-1007
115633246
10547
(516)-596-1994
(973)-586-6767
(856)-983-8229
(973)-235-9229
(201)-203-9278
(973)-726-4140
(201)-862-0800
(732)-634-5800
(702)-877-9165
(775)-829-7447
(518)-456-8229
(315)-258-8830
(716)-822-1100
(631)-499-6555
9326601
East
Greenbush
Jericho
Turnpike
Queens
Center Mall
Garden City
9050405
Morton Plaza
Patrick &
Felicia Bruno
John Bassett
9426702
Newton Plaza
Tejraj Hada
TCBYT
594 New Loudon Rd
Latham
NY
9395201
Phillips Plaza
Patricia Diaz
TCBYT
653 Sunrise Hwy
Lynbrook
NY
9427401
Route 6 Plaza
TCBYT
1775 East Main Street
Mount Sinai
Shopping
Center
Shop Rite
Square
Washington
Avenue Plaza
Ronkonkoma
TCBYT
5507 Nesconsett Hwy
Ste 16
Mohegan
Lake
Mount Sinai
NY
9183201
Mahendar
Patel
Asghar Jafri
NY
117662019
(631)-474-3345
Tejraj Hada
TCBYT
2321 Nott St E
Niskayuna
NY
12309
(518)-393-8229
Louis Brienza
TCBYT
10 Washington Ave
Plainview
NY
(516)-942-8229
Arlene
Musselwhite
TCBYT
630 Portion Rd
Ronkonkom
a
NY
118034045
117791872
9132101
9392601
9426703
9059015
9391401
TCBY FDD 03/2014
NY
NY
(518)-283-8229
(718)-271-7893
(516)-741-5132
(845)-336-8146
(518)-783-8229
(914)-245-9796
(631)-467-6520
9
9431301
Stewart
Manor
Destiny Mall
Helene &
Carlos Jorge
Jui Trivedi
TCBYT
100 Covert Ave
TCBYT
9090 Destiny Mall
Stewart
Manor
Syracuse
Steven
Christensen
Jui Trivedi
TCBYT
405 Commerce Drive
Victor
TCBYP
665 Route 318 Space
A025B
Waterloo
Ramesh
Bhalodia
Nick D'Intino
TCBYP
2380 Palisades Center
Dr
728 Central Park Ave
9392101
Burnside Road
9426201
Sandy Shops
9422002
Washington
Square Mall
Bridgeport
Village - Kiosk
Tigard
Duke & Yumi
Hong
Kenneth
Mellor
George
Prindle
Hannah
Smith
Dean Nguyen
TCBYT
9220301
Victor
Crossing
Waterloo
Premium
Outlets
Palisades
Center Mall
Mall at Cross
County
Sunnyside
Road
Eugene
David Young
Kim
Sung Bae Yu
TCBYP
Neshaminy
Mall
Charleroi
Subway
Nate Patel
TCBYT
Ron Barbe
TCBYS
Cranberry
Township
Whiteland
Towne Center
King Of
Prussia Plaza
Rosa Court
Gary
Vanasdale
Zeng Wang
TCBYT
Cindy Tang
TCBYT
Sunil Anand
TCBYT
Cheltenham
Square
Brentwood
Towne Square
Fashion Mall
Abu Taher or
Abul Karim
Ritesh Patel
TCBYP
Darrel Fantini
TCBYT
Jessica
Kramer
Samuel Batt
9425601
Stroud
Commons
South
Windermere
Shopping Ctr
916 Gervais St
9400101
9423003
9430302
9423002
9351301
9032802
9411801
9428701
9397001
9423904
9244801
9425301
9427301
9412901
NY
11530
(0)--0
NY
13290
(315)-423-5566
NY
14564
(973)-901-8899
NY
13165
(315)-539-2700
West Nyack
NY
(845)-348-9150
Yonkers
NY
Clackamas
OR
TCBYT
10117 SE Sunnyside
Rd Ste D
3001 W 11th Ave #V-3
Eugene
OR
TCBYT
1101 NE Burnside Rd
Gresham
OR
TCBYT
16605 SE 362nd Dr #F
Sandy
OR
TCBYP
9487 SW Washington
Square Road
7403 SW Bridgeport
Rd # K6
11681 SW Pacific Hwy
Tigard
OR
Tigard
OR
Tigard
OR
4200 Neshaminy Blvd
#707
407 McKean Avee
Bensalem
00311
PA
109946403
107042061
970157708
974026642
970305710
970559289
972234448
972247773
972238672
19020
Charleroi
PA
150221527
(724)-483-9495
1667 Route 228 Ste
300
153 West Lincoln Hwy
Ste 1230
160 N Gulph Rd Ste
2020
4430 William Penn
Hwy
2385 W Cheltenham
Ave Rm 327
4090 Brownsville Rd
Cranberry
Twp
Exton
Attn:
Ron
Barbe
PA
160665326
19341
(724)-591-8985
194062937
15668
(610)-337-7530
191501506
152273449
185081111
183608384
294077412
(215)-887-1250
292013128
295014043
29708
(803)-832-7586
297077587
(803)-547-8229
TCBYT
TCBYT
TCBYT
Suite
200
PA
King of
Prussia
Murrysville
PA
Philadelphia
PA
Pittsburgh
PA
Scranton
PA
TCBYT
217 Scranton
Carbondale Hwy
1619 N 9th St Ste 7
Stroudsburg
PA
TCBYT
2 Windermere Blvd
Charleston
SC
Anup Patel
TCBYT
916 Gervais Street
Columbia
SC
Magnolia Mall
Paul Branco
TCBYP
Florence
9422217
Baxter Village
Samuel Batt
TCBYT
2701 David H McLeod
Blvd
940 Market Street
9428801
Doby's Bridge
Williams Ross
TCBYT
8433 Charlotte
Highway
Fort Mill
9429801
9394001
9390402
9111302
9422801
9422210
TCBY FDD 03/2014
TCBYT
Fort Mill
PA
Spc
1034A
SC
SC
SC
(914)-375-1588
(503)-654-0399
(541)-345-5955
(503)-669-8383
(503)-482-0822
(503)-620-8300
(503)-968-1000
(503)-684-0551
(215)-469-2904
(484)-879-6577
(631)-889-3077
(412)-856-9044
(570)-961-3033
(570)-730-4886
(843)-769-8222
(843)-664-0744
(610)-937-1792
10
9047104
Sutton Place
Betty Crow
TCBYT
7 Brendan Way Ste A
Greenville
SC
9411401
George
Renwick
Samuel Batt
TCBYT
205-A Columbia Ave
Lexington
SC
TCBYT
1332 Theater Drive
Mount
Pleasant
SC
106 Sayebrook Pkwy
Ste 5
1802 N Kings Hwy
Rock Hill
9297002
Charles
Hodge
Gregorie
Lane
TCBYP
Sumter
SC
TCBYP
5 Lane St
Yemassee
Gregorie
Lane
Kathleen
Lindsay
Ron Rye
TCBYP
698 Kings Hwy
Yemassee
TCBYS
411 N Highway 77
Dell Rapids
SD
9323703
Sumter
Texaco
Yemassee
Subway Loneco Exprs
Laneco
Express #111
Crossroads
Mall - Subway
Wolf Chase
1965 Canterbury Glen
Lane
2000 W Liberty St
Myrtle
Beach
Myrtle
Beach
Rock Hill
SC
9422214
Eugene
Spivey
Jean Phillipe
Saad
Samuel Batt
TCBYT
9400601
Lexington
Village
Mount
Pleasant
Towne Centre
Sayebrook
Village
Kings Highway
TCBYT
Bartlett
TN
9323705
Stage Centre
Ron Rye
TCBYT
7994 US Highway 64 #
108
2955 Kirby Whitten Rd
Bartlett
TN
9010602
Almadale
Crossing
Saddle Creek
North
Greeneville
Eric Tushek
TCBYT
Collierville
TN
Jitendra
Parekh
Scotty Long
TCBYT
2059 South Houston
Levee Rd
7584 Farmington Blvd
TN
TCBYT
1370 Tusculum Blvd
Germantow
n
Greeneville
Kingsport
Amoco
Crown Point
Shopping
Center
Knoxville BP
Demetrice
Garst
Leisa Self
TCBYP
4121 Fort Henry Dr
Kingsport
TN
TCBYT
1229 North Eastman
Rd #205
Kingsport
TN
Charles
Carruthers
Massengil,
James
James
Tugwell
TCBYP
Knoxville
TN
Knoxville
TN
TCBYP
7406 Strawberry
Plains Pike
9420 Northshore Dr
#105
3548 Canada Rd
TCBYP
1104 Highway 321 N
Lenoir City
TCBYT
6515 Poplar Ave #104
Memphis
TN
9422206
9392401
9187301
9187302
9194302
9382002
9016016
9284401
9324504
9178902
9401601
9178001
Lakeside
Village III
Tiger Mart
Exxon
TCBYT
TCBYT
TCBYT
Lakeland
SC
SC
Exit 38
and I95
Hwy 68
SC
SC
TN
Tugwell
Oil
Compa
ny Inc.
TN
(864)-297-5683
295886854
295773152
29730
(843)-294-8229
291539226
299452251
(803)-934-0708
299458330
570221543
381334008
38134
(843)-726-4954
381396970
381382809
377454108
376632224
376643145
(901)-861-1710
379244309
379226549
380029722
(865)-933-2251
(865)-986-2307
(803)-957-7444
(843)-884-8224
(843)-448-8229
(803)-366-8229
(843)-589-4010
(605)-428-6075
(901)-383-7994
(901)-343-0114
(901)-755-6069
(423)-638-7674
(423)-239-5871
(423)-246-2266
(865)-769-0767
(901)-386-9920
9178907
Lenoir City BP
9010603
Poplar Court
Charles
Carruthers
Tushek Eric
9010604
Union Ave
Tushek Eric
TCBYT
1708 Union Ave
Memphis
TN
377716665
381194878
38104
9010605
University
Center
Brookhaven
Tushek Eric
TCBYT
3445 Poplar Ave
Memphis
TN
38111
(901)-552-5419
Ron Rye
TCBYT
5134 Poplar Ave # 102
Memphis
TN
(901)-761-4126
Plaza Terrace
Shopping
Center
Powell BP
Scotty Long
TCBYT
400 E Economy Rd
Morristown
TN
381177607
378143388
Charles
Carruthers
TCBYP
404 E Emory Rd
Powell
TN
378493517
(865)-947-0338
9323701
9016001
9178906
TCBY FDD 03/2014
TN
296153514
290722662
294642304
(901)-680-9123
(901)-552-4727
(423)-587-6212
11
9307601
Martin Luther
King
Boulevard
Parkside
Village
Michael Trub
TCBYT
303 W Martin Luther
King Jr Bl
Austin
Herbert
Grebe
TCBYT
5701 Slaughter Lane
Austin
9426302
Parkdale Mall
Chuck Schrick
TCBYT
6155 Eastex Freeway
Beaumont
9248001
Brownwood
Subway
Lakewood
Dallas
Heritage Town
Crossing
Parkwood
Shopping
Center
Lincoln Village
Steve
Weckwerth
Doug Sanders
TCBYS
211 E Commerce St
Brownwood
TCBYT
Dallas
TX
John Jerman
III
John Jerman
III
TCBYT
6402 E Mockingbird
Lane
1301 W Glade Rd
Euless
TCBYT
5800 N Tarrant Pkwy
Fort Worth
David
Weaver
Richard Soler
TCBYT
6328 Camp Bowie Blvd
TCBYT
Scott Gilmore
TCBYT
104-B S Friendswood
Dr
302 Millers Xing
John Jerman
III
TCBYT
3090 Justin Road
Mustaque
Dharmajwala
Adam Saadi
TCBYT
5884 San Felipe St
Houston
TX
TCBYT
9639 Scarsdale Blvd
Houston
Nizar
Khimani
Nizar
Khimani
Brij Agrawal
TCBYT
11700 Westheimer Ste
F
5508 FM 1960 Rd W
Houston
David Tran
TCBYT
Ali Samadi
TCBYS
9429501
Kingsville
Subway
South Main
303 Memorial City
Mall
27110 Cinco Ranch
Blvd
620 N Armstrong Ste B
Gary Camp
TCBYT
9425001
Magnolia
9426501
Stone Oak
9405901
Town East
Mall
Midland
Joylanne
Glover
Gerardo
Carrillo
Suresh Chand
9427501
9174404
9372203
9372204
9424603
9099101
9339901
9372205
9281302
9426901
9428301
9428302
9433202
9429101
9236802
9303201
9424607
9433001
9429401
9424609
Friendswood
Corner
Millers
Crossing
Marketplace
@ Highland
Village
San Felipe
Green Tee
Center
Royal Oaks
Centre
Champion
Forest
Memorial City
Mall 1
Cinco Ranch
Spring Creek
Plaza
Alamo Heights
Panther Creek
Shopping
Center
Marketplace
Commons
TX
787011218
(512)-320-8229
TX
78749
(830)-693-0313
TX
77706
(409)-898-2222
TX
(915)-643-4688
TX
768011802
752147011
76039
TX
76248
(817)-581-8229
Fort Worth
TX
76116
(817)-570-0367
Friendswoo
d
Harker
Heights
Highland
Village
TX
775463951
765485659
75077
(281)-992-3323
(713)-278-1252
TX
770573066
77089
Houston
TX
77077
(832)-331-5191
Houston
TX
(832)-331-5191
TX
770694304
77024
Katy
TX
77494
(713)-828-3399
Kingsville
TX
(361)-592-6200
318 S. Main
Lindale
TX
783634268
75771
TCBYT
6311 FM 1488
Magnolia
TX
77354
(281)-259-3344
TCBYT
3701 Expressway 83
McAllen
TX
78503
(956)-630-3109
TCBYP
2063 Town East Mall
Mesquite
TX
(972)-270-2550
Thomas
McComic
David
Weaver
James &
Patrica Reid
Lance
Langenhoven
TCBYT
5115 W Wadley Ave
Ste A
1201 E Spring Creek
Pkwy
5920 Broadway
Midland
TX
751504118
797075190
75074
San Antonio
TX
78209
(0)--0
TCBYT
4775 W Panther Creek
Dr A-150
Spring
TX
773813592
(281)-419-8053
David
Weaver
TCBYT
3010 S 31st Street
Temple
TX
76502
(254)-773-2750
TCBY FDD 03/2014
TCBYT
TCBYT
TCBYT
TCBYT
Plano
Building
B, Suite
B100
Suite
106
TX
Suite
305
#675A
Suite
200
TX
TX
C-120
(214)-821-5757
(817)-545-7535
(254)-680-7108
(972)-966-8229
(281)-741-9024
(0)--0
(903)-882-9261
(432)-520-8597
(972)-881-4384
12
9424605
Richmond
Ranch
Shopping
Center
The
Woodlands
Mall
South
Broadway
Shopping
Center
5th and
Beckham
University
Mall I
Sugar House
David
Weaver
TCBYT
2511 Richmond Road
Texarkana
TX
75503
(903)-838-0771
Brij Agrawal
TCBYP
1201 Lake Woodlands
Dr
The
Woodlands
TX
77380
(0)--0
David
Weaver
TCBYT
7488 S Broadway
Tyler
TX
75703
(903)-747-3434
David
Weaver
Blane Smith
TCBYT
1690 S Beckham Ave
Tyler
TX
75701
(903)-747-3924
TCBYP
Orem
UT
TCBYT
840977601
84106
(801)-802-7788
Lisa Liu
575 University Pkwy
Ste M214
2274 South 1300 East
Tightsqueeze
Plaza Subway
Cockerham
Food Mart BP
Robert
Adams
Dickie Mayes
TCBYS
13701 US Highway 29
Chatham
(434)-432-1544
TCBYP
1115 E Stuart Dr #9
Galax
245313611
243332513
9429701
West Broad
TCBYT
9466 West Broad St
Henrico
9206902
Hillsville Pizza
Inn
Leslie &
Claudia Davis
Joe White
TCBYP
49 Farmers Market Dr
Hillsville
9357803
Xiaopeng
Guo
Jack Padia
TCBYP
9430802
Bellis Fair
Jignesh Padia
TCBYT
45415 Dulles Crossing
Plz
3011 Cinema Place Ste
101
1 Bellis Fair Parkway
Sterling
9430801
Sterling
Walmart
Barkley Village
9400702
Commons at
Federal Way
Issaquah
Avinder Singh
TCBYT
2008 Seatac Mall
Tom and
Kara Negley
Brian Lim
TCBYT
2520 NE Park Drive
Federal
Way
Issaquah
TCBYT
2615 184 St SW
Lynnwood
Dan Peterson
TCBYT
4717 68th Dr. NE
Marysville
Young Kim
TCBYT
1420 5th Ave
Seattle
Pengpeng
Wang
Thomas
Sandstedt
Young Kim
TCBYT
2800 Southcenter Mall
Seattle
TCBYS
Shoreline
TCBYT
18002 15th Ave NE Ste
A
13804 NE 175th Street
Sean
Harrison
Saad & Ellen
Khalifa
Bruce
Greenwald
Adam
Sponaugle
TCBYS
503 Peck Ave
Clinton
W
A
W
A
W
A
W
A
W
A
W
A
W
A
W
A
W
A
W
A
WI
TCBYT
6654 Odana Rd
Madison
WI
TCBYT
11523 N Port
Washington Rd
4144 State Route 34
Mequon
WI
Hurricane
WV
9433201
9424601
9424604
9339605
9432501
9257301
9206901
9430001
9378401
9431901
9424301
9428001
9217601
9424302
9227101
Alderwood
Park Place
Frontier
Village
City Centre Seattle
Southcenter
Mall
North City
Plaza Subway
Woodinville
9429001
Cliton Citgo &
Subway
Market
Square
Concord 22
9206301
Scott Junction
9033604
TCBY FDD 03/2014
TCBYT
TCBYT
Salt Lake
City
Building
#8571,
Space#
G17
UT
Attn:
Tina
Lawson
VA
VA
23293
(804)-513-7423
Attn:
George
Black
VA
243433649
(276)-728-2799
VA
201668921
98226
(703)-444-1203
98226
(917)-257-4833
980036040
98029
(253)-839-3470
980374737
98270
(425)-774-6698
98101
(206)-420-7787
981882875
981553838
98072
(206)-708-1096
535259017
537191012
53092
(608)-676-4606
255268821
(304)-757-8220
Bellingham
Bellingham
Woodinville
516
C-105
VA
(505)-507-8934
(276)-236-3036
(917)-257-4833
(425)-394-4168
(206)-423-2427
(206)-306-0933
(425)-806-8088
(608)-833-8474
(262)-241-8833
13
9404502
Frontier Mall
Gary & Cindy
TCBYP
Oliver
9300101
Lander Exxon
Ron Hansen
TCBYP
Jr
9250604
Mills Subway
Richard
TCBYS
Bertagnole
Includes TCBYP Smoothie location store #9384201
which is still Temporarily closed from 2012
TCBY FDD 03/2014
1400 Dell Range Blvd
Spc 40
8116 State Highway
789
516 SW Wyoming Blvd
Cheyenne
WY
Lander
WY
Mills
WY
820094849
825202953
826449990
(307)-637-5547
(307)-332-4402
(307)-473-1113
14
EXHIBIT K – PART 2
LIST OF FRANCHISEES THAT WERE TERMINATED, NOT RENEWED OR
REACQUIRED, OR OTHERWISE VOLUNTARILY OR INVOLUNTARILY CEASED
DOING BUSINESS DURING 2013
9426401
The Garland
Shops
TCBYT
Closed
Fayetteville
AR
David Bass
(479)-301-2719
9010402
Jonesboro
TCBYT
Closed
Jonesboro
AR
Lynn Denton
(870)-935-5825
9400802
Grewal
Travel Plaza
TCBYT
Closed
Baker
CA
Ravinder
Grewal
(310)-748-1348
9413001
Fresno
TCBYT
Closed
Fresno
CA
Chae Lee
(559)-323-8229
9430401
Paseo
Colorado
TCBYP
Closed
Pasadena
CA
Mary and
Betty Horton
(818)-523-1829
9425905
Laurel
Street
TCBYT
Closed
Fort Collins
CO
Steve Lauer
(970)-682-1223
9425904
Marketplace
in Loveland
TCBYT
Closed
Loveland
CO
Steve Lauer
(970)-685-4058
9424002
Eric Town
Square
TCBYT
Closed
Glastonbury
CT
Lisa Gross
Arnold
(860)-659-8550
9425501
Marketplace
@ Seminole
Town Ct
TCBYT
Closed
Sanford
FL
Richard
Santos
(407)-617-8232
9034903
Monroe
TCBYT
Closed
Tallahassee
FL
Michael
Stumpf
(850)-385-6991
9034904
Mahan
Square
TCBYT
Closed
Tallahassee
FL
Michael
Stumpf
(850)-878-0013
9345102
Red Bug
Lake
TCBYT
Closed
Winter
Springs
FL
David Bishop
(407)-699-5446
9362101
Executive
Park
TCBYT
Closed
Atlanta
GA
Tim McGhee
(404)-325-8736
9407201
Columbus
TCBYT
Closed
Columbus
GA
Myong
Jamieson
(706)-569-1251
9422401
Chicago
Union
Station
TCBYP
Closed
Chicago
IL
Nishit Shah
(312)-234-9070
9268401
Centre Park
Mall
TCBYT
Closed
Lafayette
LA
James
Plumley
(337)-233-7740
9268402
South
College
Center
TCBYT
Closed
Lafayette
LA
James
Plumley
(337)-504-4701
TCBY FDD 03/2014
15
9420902
Brandywine
Crossing
TCBYT
Closed
Brandywine
MD
Dennis
McGrath
(301)-782-1950
9413901
Maine Mall
TCBYP
Closed
South
Portland
ME
Paul Delisle
(207)-879-7779
9394901
SmoothiesTwelve Oaks
Mall
TCBYP
Closed
Novi
MI
Navi Singh
(248)-380-8303
9227601
Tannery
Square
TCBYT
Closed
Morganton
NC
Laura Hurt
(828)-430-8444
9426602
Linden
Market
TCBYT
Closed
Omaha
NE
Angela
Greisen
(402)-496-3981
9409701
Pheasant
Lane Mall
TCBYP
Closed
Nashua
NH
Sree Kumar
Menon
(603)-891-1413
9360602
Taj Mahal
Casino
TCBYT
Closed
Atlantic City
NJ
Praveen Vig
(609)-348-9000
9422101
New Road
Plaza
TCBYT
Closed
Parsippany
NJ
Wayne
Gargiulo
(973)-227-8229
9423902
Franklin
Turnpike
TCBYT
Closed
Ramsey
NJ
Nate Patel
(201)-962-3330
9407401
Guru
Express
Market
TCBYP
Closed
Las Vegas
NV
Nikolaas Bos
(702)-433-9322
9370401
New York
TCBYT
Closed
New York
NY
Dennis Ratis
(212)-327-3869
9423001
Greater
Rochester
Intl Airport
TCBYP
Closed
Rochester
NY
Jui Trivedi
(585)-235-5588
9203701
Yonkers
Nathans
TCBYP
Closed
Yonkers
NY
Carl Paley
(914)-779-1881
9413801
Woodland
Hills Mall
TCBYP
Closed
Tulsa
OK
Michael
Schultz
(918)-252-2901
9106703
High Pointe
Center
TCBYT
Closed
Irmo
SC
Dipak Patel
(803)-781-7560
9365102
Myrtle
Beach Mall
TCBYP
Closed
Myrtle
Beach
SC
James Rugg
(843)-272-7146
9301202
North Fork
Crossing
TCBYT
Closed
Orangeburg
SC
Dayle Bolen
(803)-531-3663
9178901
Maryville BP
TCBYP
Closed
Maryville
TN
Charles
Carruthers
(865)-982-1197
9399001
Copperfield
Shopping
Center
TCBYT
Closed
Corpus
Christi
TX
Alyeh Azali
Hatami Fardy
(361)-993-5727
TCBY FDD 03/2014
16
9376502
Fountains at
Fry Road
TCBYT
Closed
Katy
TX
Ahmad
Ghalamdanchi
(281)-578-1077
9424606
Faith Village
TCBYT
Closed
Wichita Falls
TX
David Weaver
(903)-372-7073
9375801
Factory
Stores at
Park City
TCBYP
Closed
Park City
UT
Jason Reeder
(435)-940-1200
9199701
Richland
Exxon
TCBYP
Closed
Richlands
VA
Bill Lester
(276)-963-0256
9336801
Glenmark
Center
TCBYP
Closed
Morgantown
WV
Marshall
Bishop
(304)-292-5375
9250601
Casper
Subway
TCBYS
Closed
Casper
WY
Richard
Bertagnole
(307)-266-1841
TCBY FDD 03/2014
17
LIST OF FRANCHISEES WHO TRANSFERRED A FRANCHISE DURING 2013
TCBYT
9426801
Diane Pothast
Scottsdale
AZ
TCBYT
9413401
Tracy Avooski
Rancho
Cucamonga
CA
TCBYT
9210801
Ken Rembert
Gainesville
FL
TCBYT
9427601
Andy Womack
Cartersville
GA
TCBYT
9228602
Jesse Mallard
Nampa
ID
TCBYT
9381306
Yousef Kashkeesh
Orland Park
IL
TCBYT
9381305
Yousef Kashkeesh
Merrillville
IN
TCBYT
9398601
Nayfeh Salem
Salisbury
MD
TCBYT
9095601
Brian Coury
Troy
MI
TCBYP
9395301
Chimanlal
Bhingrodia
Concord
NC
TCBYT
9426301
Chuck Schrick
Houston
TX
TCBYT
9325002
Lawrence Cohen
Houston
TX
TCBYT
9409501
Cheryl Watson
San Antonio
TX
TCBYP
9325003
Doc Cohen
Spring
TX
TCBY FDD 03/2014
18
NAMES AND CONTACT INFORMATION FOR AREA DIRECTORS
AS OF DECEMBER 28, 2013
Franchisee
Name
Froyo
Development
Co., LLC
Territory
Contact Person
Address
City
State
Zip
Phone Number
Larimer and Weld
Counties in the State of
Colorado
Steven L. Lauer
1218 W. Ash
St., Suite G
Windsor
Colorado
80550
(970) 690-7070
Froyo
Development
Co., LLC
Laramie and Albany
Counties in the State of
Wyoming and Boulder
County in the State of
Colorado
Steven L. Lauer
1219 W. Ash
St., Suite G
Windsor
Colorado
80551
(970) 690-7071
Batt
Enterprises
VIII, LLC
Mecklenberg, Union
and Hanover Counties
in the State of North
Carolina and Charleston
and York Counties in
the State of South
Carolina
Samuel Batt
1037 Westbury
Drive
Matthew
s
North
Carolina
28104
(610) 937-1792
Lone Star
Yogurt, Inc.
Texas
David Weaver
15488 FM 2493
Tyler
Texas
75703
(903) 561-0860
Green Bowl
Time, Inc.
Washington and the
Island of Oahu in
Hawaii
Hyoungsoo Kim
1000 2nd Avenue
Suite 1320
Seattle
Washington
98104
(206) 774-3800
TCBY FDD 03/2014
19
EXHIBIT L
FINANCIAL STATEMENTS
TCBY FDD 03/2014
EXHIBIT L: Financial Statements
THESE FINANCIAL STATEMENTS ARE PREPARED WITHOUT AN AUDIT. PROSPECTIVE
FRANCHISEES OR SELLERS OF FRANCHISES SHOULD BE ADVISED THAT NO CERTIFIED
PUBLIC ACCOUNTANT HAS AUDITED THESE FIGURES OR EXPRESSED HIS/HER OPINION
WITH REGARD TO THE CONTENT OR FORM.
TCBY FDD 03/2014
1
May 25,
Mrs. Fields' Original Cookies, Inc.
Monthly Financial Statements
May 2014
Consolidated Balance Sheets
(in thousands)
(unaudited)
May 24,
2014
ASSETS:
Cash and cash equivalents ....................................................................................................
Restricted cash ......................................................................................................................
Receivables, net ....................................................................................................................
Inventories ............................................................................................................................
Prepaid expenses and other ..................................................................................................
Deferred tax asset .................................................................................................................
Total current assets ...................................................................................................
$
Property and equipment, net .................................................................................................
Goodwill ...............................................................................................................................
Trade names and other intangible assets, net ........................................................................
Other assets ..........................................................................................................................
Total assets ............................................................................................................
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Accounts payable .................................................................................................................
Accrued liabilities ................................................................................................................
Accrued restructure liabilities ...............................................................................................
Senior secured notes, current portion ...................................................................................
Current portion of other liabilities ........................................................................................
Total current liabilities .............................................................................................
2,707
450
4,206
2,178
383
179
10,103
December 28,
2013
$
3,417
7,651
18,135
440
5,337
400
6,691
2,322
467
179
15,396
3,471
7,651
18,827
442
$
39,746
$
45,787
$
2,638
4,248
317
6,297
488
13,988
$
4,572
5,450
141
6,297
688
17,148
Revolver ...............................................................................................................................
Term loan .............................................................................................................................
Senior secured notes .............................................................................................................
Deferred tax liabilities ..........................................................................................................
Other liabilities .....................................................................................................................
25,362
27,304
4,155
377
25,000
26,977
4,155
443
Total liabilities ......................................................................................................
71,186
73,723
Common stock ......................................................................................................................
Additional paid-in-capital ....................................................................................................
Accumulated deficit ..............................................................................................................
Accumulated other comprehensive income ..........................................................................
47,961
(79,427)
26
45,711
(73,662)
15
Total stockholders' deficit .....................................................................................
(31,440)
(27,936)
Total liabilities and stockholders' deficit ............................................................
$
39,746
$
45,787
Consolidated Statements of Operations
(in thousands)
(unaudited)
4 Weeks
Ended
May 24,
2014
REVENUES:
Mrs. Fields Gifts ........................................................................................................
Mrs. Fields Branded Retail ........................................................................................
Mrs. Fields Franchising .............................................................................................
Mrs. Fields Licensing ................................................................................................
Total Mrs. Fields ....................................................................................................
$
4 Weeks
Ended
May 25,
2013
1,162
(38)
324
308
1,756
$
21 Weeks
Ended
May 24,
2014
1,319
(15)
349
352
2,005
$
6,502
(75)
1,780
1,589
9,796
21 Weeks
Ended
May 25,
2013
$
6,762
189
1,888
1,528
10,367
TCBY ........................................................................................................................
International Franchising ...........................................................................................
Total revenues .....................................................................................................
440
269
2,465
483
104
2,592
1,800
795
12,391
2,080
521
12,968
OPERATING COSTS AND EXPENSES:
Mrs. Fields Gifts ........................................................................................................
Mrs. Fields Branded Retail ........................................................................................
Mrs. Fields Franchising .............................................................................................
Mrs. Fields Licensing ................................................................................................
Total Mrs. Fields ....................................................................................................
1,245
201
17
1,463
1,436
8
269
33
1,746
7,173
1,283
104
8,560
7,528
370
1,490
181
9,569
TCBY ........................................................................................................................
International Franchising ...........................................................................................
351
85
348
75
1,853
320
2,178
322
General and administrative ........................................................................................
Depreciation and amortization ..................................................................................
Total operating costs and expenses ......................................................................
774
260
2,933
582
272
3,023
3,694
1,290
15,717
3,259
1,313
16,641
Income (loss) from operations .......................................................................
(468)
(431)
(3,326)
(3,673)
OTHER (EXPENSE) INCOME, NET:
Interest expense, net ..................................................................................................
(489)
(447)
(2,422)
(2,242)
Income (loss) before
and provision for income taxes ...................................................................
(957)
(878)
(5,748)
(5,915)
Provision for income taxes ........................................................................................
2
1
17
12
Net income (loss) ...........................................................................................
$
(959)
$
(879)
$
(5,765)
$
(5,927)
EBITDA from continuing operations ............................................................
$
(208)
$
(159)
$
(2,036)
$
(2,360)
Consolidating Statements of Cash Flows
(in thousands)
(unaudited)
21 Weeks
Ended
May 24,
2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................................................................................................
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ........................................................................................
Lease termination expense ..............................................................................................
Interest paid in kind ........................................................................................................
Changes in assets and liabilities:
Restricted cash .............................................................................................................
Receivables ..................................................................................................................
Inventories ...................................................................................................................
Prepaid expenses and other assets ................................................................................
Accounts payable .........................................................................................................
Accrued liabilities ........................................................................................................
Accrued restructuring liabilities ...................................................................................
Other liabilities ............................................................................................................
Net cash used in operating activities ......................................................................
$
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ...................................................................................
Net cash used in investing activities ......................................................................
(5,765)
21 Weeks
Ended
May 25,
2013
$
(5,927)
1,290
(47)
689
1,313
(33)
-
(50)
2,485
144
86
(1,934)
(1,202)
223
(266)
(4,347)
2,524
939
193
(2,897)
(1,306)
(613)
(64)
(5,871)
(544)
(544)
(1,094)
(1,094)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligations ...................................................................
Capital contribution ..............................................................................................................
Net cash provided by financing activities ..............................................................
2,250
2,250
Effect of foreign exchange rate changes on cash .....................................................................
Net decrease in cash and cash equivalents ...............................................................................
Cash and cash equivalents at beginning of period ...................................................................
Cash and cash equivalents at end of period ..............................................................................
$
11
(2,630)
5,337
2,707
$
(7)
(6,986)
7,985
999
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest ............................................................................................................
$
2,258
$
2,688
(14)
(14)
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KPMG LLP
Suite 1500
15 W. South Temple
Salt Lake City, UT 84101
Independent Auditors' Report
The Board of Directors and Shareholders Mrs.
Fields' Original Cookies, Inc.:
We have audited the accompanying consolidated balance sheets of Mrs. Fields Original Cookies, Inc. and subsidiaries
as of December 31, 2011 and January 1, 2011, and the related consolidated statements of operations and comprehensive
loss, stockholders' deficit, and cash flows for the years ended December 31, 2011, January 1, 2011, and January 2,
2010. 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 auditing standards generally accepted in the United States of America.
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 consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement 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 Mrs. Fields' Original Cookies, Inc. and subsidiaries as of December 31, 2011 and January 1,
2011, and the results of their operations and their cash flows for the years ended December 31, 2011, January 1,
2011, and January 2, 2010, in conformity with U.S. generally accepted accounting principles.
KPMG LLP
Salt Lake City, Utah March 29,
2012
TCBY FDD 03/2014
50
Consolidated Financial Statements
December 31, 2011 and January 1, 2011
Confidential Proprietary Information
TCBY FDD 03/2014
51
Table of Contents
Independent Auditors Report ....................................................................................................................... 1
Consolidated Balance Sheets ........................................................................................................................ 2
Consolidated Statements of Operations and Comprehensive Loss ............................................................. 3
Consolidated Statements of Stockholders' Deficit........................................................................................ 4
Consolidated Statements of Cash Flows ...................................................................................................... 5
Notes to Consolidated Financial Statements ................................................................................................ 7
TCBY FDD 03/2014
52
Audit Opinion
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53
[This Page Intentionally Left Blank]
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54
December 31,
2011
ASSETS
Cash and cash equivalents ...........................................................................
Restricted cash ................................................................................................
Receivables, net of allowance for doubtful accounts
of $1,422 and $1,201, respectively ............................................................
Inventories .......................................................................................................
Prepaid expenses and other ..........................................................................
Deferred tax asset ...........................................................................................
$
6,548
1,075
January 1,
2011
$
9,930
1,019
8,094
2,842
898
853
6,347
3,179
1,331
343
Total current assets ........................................................................
20,310
22,149
Property and equipment, net .........................................................................
Goodwill ...........................................................................................................
Trademarks and other intangible assets, net ..............................................
Other assets .....................................................................................................
3,830
7,789
22,377
394
4,100
7,789
24,038
554
Total assets .............................................................................
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable ..........................................................................................
Accrued liabilities ...........................................................................................
Current portion of store closure reserve, capital lease obligations
and deferred revenues ...............................................................................
Current portion of term loan ..........................................................................
$
54,700
$
58,630
$
5,984
3,702
$
5,954
5,411
730
-
1,141
1,000
Total current liabilities ...................................................................
10,416
13,506
Revolving loan facility ...................................................................................
Term loan facility ............................................................................................
Senior secured notes ......................................................................................
Store closure reserve, capital lease obligations and deferred
revenues, net of current portion ...............................................................
Deferred tax liabilities .....................................................................................
Other liabilities ................................................................................................
14,000
26,977
6,297
6,800
65,837
54
7,190
843
112
4,567
1,020
Total liabilities .........................................................................
65,777
91,842
43,714
(54,799)
8
22
17,829
(51,065)
2
Commitments and contingencies
Common stock - $0.01 par value; 100 shares authorized and
outstanding in 2011 and $0.001 par value; 29,900,000 shares
authorized; 22,371,056 shares issued and outstanding in 2010 ...........
Additional paid-in-capital ..............................................................................
Accumulated deficit .......................................................................................
Accumulated other comprehensive income ...............................................
Total stockholders' deficit .............................................................
Total liabilities and stockholders' deficit .............................
TCBY FDD 03/2014
(11,077)
$
54,700
(33,212)
$
58,630
55
For the
Fiscal Year
Ended
January 1,
2011
For the
Fiscal Year
Ended
December 31,
2011
REVENUES:
Mrs. Fields .................................................................................
TCBY ..........................................................................................
International Franchising ........................................................
$
58,189
5,951
1,741
$
54,849
5,604
1,902
For the
Fiscal Year
Ended
January 2,
2010
$
52,376
5,871
1,499
Total revenues ......................................................................
65,881
62,355
59,746
OPERATING COSTS AND EXPENSES:
Mrs. Fields .................................................................................
TCBY ..........................................................................................
International Franchising ........................................................
49,065
4,546
644
45,570
3,255
604
42,960
2,438
494
General and administrative ......................................................
Executive severance, recruiting and compensation
costs .......................................................................................
Depreciation ...............................................................................
Amortization ..............................................................................
Impairment of goodwill and intangible assets ......................
Other expense (income), net ....................................................
5,852
8,023
8,077
1,158
1,660
51
1,065
1,093
1,660
4,976
(113)
445
1,169
1,660
14,191
(32)
Total operating costs and expenses ..................................
62,976
66,133
71,402
Income (loss) from operations ........................................
2,905
(3,778)
(11,656)
OTHER EXPENSES, NET:
Interest expense, net ................................................................
Gain on extinguishment of debt, net ......................................
Reversal of severance accrual ................................................
(8,183)
1,712
-
(8,513)
992
(8,087)
-
Income (loss) before provision (benefit) for
income taxes ................................................................
(3,566)
(11,299)
(19,743)
168
Provision (benefit) for income taxes ......................................
34
(3,017)
Net loss ..................................................................
$
(3,734)
$
(11,333)
$
(16,726)
COMPREHENSIVE INCOME (LOSS):
Net loss ......................................................................................
Foreign currency translation adjustment ..............................
$
(3,734)
6
$
(11,333)
(9)
$
(16,726)
5
Comprehensive loss .............................................
$
(3,728)
$
(11,342)
$
(16,721)
TCBY FDD 03/2014
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Shares
Balance at January 3, 2009 .............................
Foreign currency translation
adjustment ...................................................
Net loss ............................................................
adjustment ...................................................
Net loss ............................................................
adjustment ...................................................
Net loss ............................................................
Repurchase and cancellation of
common stock .............................................
Issuance of common stock ........................
Capital contribution on debt exchange,
net of income taxes of $2.0 million
and expenses of $6.5 million ......................
Balance at December 31, 2011 .......................
TCBY FDD 03/2014
Additional
Paid-in
Capital
Amount
22,371,056
$
-
$
-
22,371,056
22
-
-
22,371,056
22
-
-
(22,371,056)
100
(22)
-
100
22
-
$
(16,726)
17,829
(39,732)
-
(11,333)
17,829
(51,065)
-
(3,734)
-
26,087
$
(23,006)
-
(202)
-
$
17,829
Accumulated
Other
Accumulated Comprehensive
Deficit
Income (Loss)
43,714
$
(54,799)
$
5
(16,726)
11
(21,870)
(9)
(9)
(11,333)
2
(33,212)
6
-
6
(3,734)
-
(224)
-
-
$
(5,149)
5
-
$
6
Total
26,087
8
$
(11,077)
57
For the
Fiscal Year
Ended
December 31,
2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ..............................................................................................................
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation and amortization ...............................................................
Amortization of deferred loan costs ......................................................
Impairment of goodwill and intangible assets .....................................
Reversal of excess severance accrual ...................................................
Gain on extinguishment of debt .............................................................
Loss (gain) on sales of assets ................................................................
Non-cash interest expense on Senior Secured Notes ........................
Deferred income taxes .............................................................................
Changes in assets and liabilities:
Receivables ...........................................................................................
Inventories ............................................................................................
Prepaid expenses and other assets ...................................................
Accounts payable ................................................................................
Accrued liabilities ................................................................................
Store closure reserve, deferred revenues and other liabilities ......
$
Total operating cash flows (used in) provided by
continuing operations .................................................................
Total operating cash flows used in
discontinued operations .............................................................
(3,734)
For the
Fiscal Year
Ended
January 1,
2011
$
(11,333)
For the
Fiscal Year
Ended
January 2,
2010
$
(16,726)
2,818
292
(1,712)
8
3,854
122
2,753
35
4,976
(992)
2
7,242
(8)
2,829
14,191
(40)
6,446
(2,353)
(1,751)
337
561
34
(1,709)
(577)
(323)
(646)
(788)
297
77
377
(1,047)
1,384
307
947
(1,947)
(149)
(1,457)
1,669
3,842
-
-
Net cash (used in) provided by operating activities ......
(1,457)
1,669
3,800
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in restricted cash ...............................................................................
Proceeds from sales of assets ........................................................................
Purchases of property and equipment ..........................................................
(56)
(895)
469
(1,291)
(1,488)
6
(516)
(42)
Net cash used in investing activities ................................
(951)
(822)
(1,998)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving loan facility ...........................................................
Proceeds from term loan ..................................................................................
Proceeds from term loan facility .....................................................................
Principal payments on term loan ....................................................................
Principal payments on senior secured notes ...............................................
Payment of debt financing costs ...................................................................
Debt exchange fees paid to shareholders ....................................................
Principal payments on capital lease obligations .........................................
Purchase and cancellation of common stock ...............................................
14,000
3,200
1,089
(11,000)
(1,089)
(4,387)
(2,500)
(69)
(224)
(2,200)
(67)
(63)
-
(63)
-
Net cash used in financing activities ................................
(980)
(2,330)
(63)
Effect of foreign exchange rate changes on cash ...........................................
6
Net (decrease) increase in cash and cash equivalents ...................................
Cash and cash equivalents at beginning of period ........................................
Cash and cash equivalents at end of period ....................................................
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(3,382)
9,930
$
6,548
$
(9)
5
(1,492)
11,422
1,744
9,678
9,930
$
11,422
58
For the
Fiscal Year
Ended
December 31,
2011
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest ..................................................................................
Refunds received for income taxes ...........................................................
Supplemental Disclosures of Noncash Investing
and Financing Activities:
Capital contribution on debt exchange, net of income taxes
of $2.0 million and expenses of $4.0 million .........................................
Increase in long-term debt related to non-cash interest expense .........
TCBY FDD 03/2014
For the
Fiscal Year
Ended
January 1,
2011
For the
Fiscal Year
Ended
January 2,
2010
$
5,135
-
$
1,311
(350)
$
1,578
(374)
$
28,587
-
$
7,242
$
6,446
59
1. Business
Description of the Business
Mrs. Fields' Original Cookies, Inc. ("MFOC") and its wholly-owned subsidiary Mrs. Fields Famous Brands, LLC
("MFFB", together with MFOC, the "Company") develops and franchises retail stores which sell core products
including cookies, brownies and frozen yogurt through two specialty branded concepts, Mrs. Fields and TCBY.
The Company operates two company-owned TCBY stores.
The Company markets and distributes products through catalogs and its website as well as affiliations with other
websites and sales to large corporate customers for gifting purposes and various retail channels.
The Company authorizes franchisees and third-party licensees to use certain business formats, systems, methods,
procedures, designs, layouts, specifications, trade names and trademarks in the United States of America (the
"United States") and other countries.
The Company licenses the use of its trademarks, logos and recipes to third parties for distribution of Mrs. Fields
and TCBY branded products through non-bakery stores and cafés.
Refinancing Transaction
On December 13, 2011, MFOC and its subsidiaries consummated an exchange offer/tender offer (the
"Exchange") pursuant to which (a) the holders of its 10 percent senior secured notes ( the "Senior Secured
Notes") either (i) exchanged their respective Senior Secured Notes for a portion of a new 10 percent term loan
(the "Term Loan Facility") in an aggregate principle amount of $27.0 million or (ii) tendered all of their Senior
Secured Notes to MFFB and Mrs. Fields Financing Company, Inc., for a certain cash purchase price (the "Note
Purchase") and (b) certain eligible holders of the Senior Secured Notes subscribed for interests in a new
revolving loan facility (the "Revolving Loan Facility", together with the Term Loan Facility, the "Credit
Facilities") in an aggregate principle amount of $20.0 million and additional interests in the Term Loan and
common stock of MFOC Holdco Inc. ("Holdco"), the Company's ultimate parent, an entity organized under
Delaware law. In addition, the Company purchased all of the outstanding common shares of MFOC for
$224,000 in cash and issued 100 shares of new common stock to Holdco (the "Transactions").
In exchange for their total claims of $59.5 million, the holders of the Senior Secured Notes received at closing
$1.1 in cash, $27.0 million of the new Term Loan Facility and 100 percent of the common stock of Holdco.
Certain holders of the Senior Secured Notes, aggregating $6.3 million, elected not to participate in the Exchange.
The initial lenders also provided the Company with the Credit Facilities. The retirement of the Senior Secured
Notes was accounted for as an extinguishment of debt with a portion deemed to be a troubled debt restructuring
under Accounting Standards Codification ("ASC") 470-60 (see Note 10).
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements of the Company have been prepared in accordance with
U.S. generally accepted accounting principles ("GAAP"). All intercompany accounts and transactions have been
eliminated in consolidation.
Accounting Periods
The Company operates using a 52/53 week fiscal year ending on the Saturday closest to December 31.
TCBY FDD 03/2014
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Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures
of contingent liabilities in the financial statements and accompanying notes. From time to time management
evaluates these estimates, including those that relate to allowances for bad debt, inventory valuation, fair value of
goodwill and intangible assets, long-lived asset impairments, deferred tax valuation allowances and
contingencies. The Company bases its estimates on historical experience and on various assumptions that it
believes reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities. Actual results could differ from those estimates.
Foreign Currency Translation
The balance sheet accounts of foreign subsidiaries are recorded in their local currency (the functional currency)
and translated into U.S. dollars using the applicable balance sheet date exchange rates, while revenues and
expenses are translated using the average exchange rates for the period presented.
Cash Equivalents
The Company considers all highly liquid investments purchased with initial maturities of three months or less to
be cash equivalents. The Company places its temporary cash investments with high credit quality financial
institutions. At times such investments may be in excess of the Federal Deposit Insurance Corporation insurance
limit. As of December 31, 2011 and January 1, 2011, the Company had cash equivalents of $14,000 and
$13,000, respectively.
Restricted Cash
Restricted cash of $1.1 million and $1.0 million at December 31, 2011 and January 1, 2011, respectively, represents
cash held in reserve accounts under agreements with the Company’s financial institutions to cover their risk associated with
the Company’s Automated Clearing House ("ACH") transactions, company credit card and 3rd party credit card transactions.
Receivables
Most of the Company's receivables are due from domestic and international franchisees, distributors, licensees, as well as
corporate customers of Mrs. Fields Gifts and Mrs. Fields Branded Retail (see Note 14). These receivables are comprised of
normal trade accounts receivable and longer-term notes receivable. Service charges may be assessed on past due invoices
but any revenue associated with the service charges is only recognized when collected. The Company maintains an
allowance for doubtful accounts to cover potential losses. This allowance is the Company's best estimate of the amount of
probable collection losses in the Company's existing trade accounts receivable. The Company determines the allowance
based upon historical write-off experience and individual facts and circumstances associated with individual debtors. If the
assumptions that are used to determine the allowance for doubtful accounts change, the Company may have to provide for a
greater level of expense in future periods or reverse amounts provided for in prior periods.
Inventories
Inventories, consisting of finished goods, novelties, packaging and raw materials, are stated at the lower of cost
(first-in, first-out method) or market value. In assessing the realizability of inventories, the Company makes
judgments as to future demand requirements and product expiration dates. The inventory requirements change
based on projected customer demand, which changes due to fluctuations in market conditions and product life
cycles.
TCBY FDD 03/2014
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Property and Equipment
Additions of property and equipment are recorded at cost and depreciation is computed using the straight-line
method over the estimated useful lives of the assets. Leasehold improvements are capitalized and amortized over
the lesser of the life of the lease or the estimated useful life of the asset.
Expenditures that materially extend useful lives of property and equipment are capitalized. Routine
maintenance, repairs and renewal costs are expensed as incurred. Gains or losses from the sale or retirement of
property and equipment are recorded in current operations.
Goodwill, Trademarks and Other Intangible Assets
Goodwill and intangible assets with indefinite lives are not amortized, but are tested for impairment at least
annually and more frequently in the event of an impairment indicator. Intangible assets with definite useful lives
are amortized over their respective estimated useful lives and reviewed whenever events or circumstances
indicate an impairment may exist.
A two-step test must be performed to assess goodwill for impairment. First, the fair value of each reporting unit
is compared to its carrying value. Fair value is computed by the Company utilizing a discounted cash flow
model. If the estimated fair value of the reporting unit exceeds the carrying value, the reporting unit's goodwill
is not impaired and no further testing is performed. The second step is performed if the reporting unit's carrying
value exceeds its estimated fair value. The implied fair value of the reporting unit’s goodwill must be
determined and compared to the carrying value of the goodwill. If the carrying value of reporting unit’s
goodwill exceeds its implied fair value, an impairment loss equal to the difference is recorded.
Deferred Loan Costs
Deferred loan costs are amortized to interest expense over the period of the underlying indebtedness using the
effective interest rate method. As a result of its extinguishment of debt, the Company wrote-off unamortized deferred loan
costs associated with its old Term Loan of $457,000 which were deemed to be a reduction of the capital contribution and
were recorded to paid-in-capital in the consolidated statement of operations and comprehensive loss for the year ended
December 31, 2011.
As of December 31, 2011 and January 1, 2011, the Company had unamortized deferred loan costs of $0 and
$32,000, respectively, which are included in other assets in the accompanying consolidated balance sheets. During the years
ended December 31, 2011, January 1, 2011 and January 2, 2010, the Company amortized deferred loan costs of $292,000,
$35,000 and $0, respectively.
Long-Lived Assets
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the book
value of an asset may not be fully recovered. The Company uses an estimate of future undiscounted net cash flows of the
related asset or group of assets over the remaining life in measuring whether the assets are recoverable. Impairment of longlived assets is assessed at the lowest level for which there are identifiable cash flows that are independent of other groups of
assets. Impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair
value of the assets. The impairment of long-lived assets requires judgments and estimates. If circumstances change, such
estimates could also change.
Revenue Recognition
The Company recognizes revenues, net of state and local sales taxes, from gift sales at the time of shipment.
Revenues, net of sales discounts and allowances, from the sale of shelf stable cookies directly through various
retail channels are recognized upon delivery and are included in branded retail revenues.
TCBY FDD 03/2014
62
Revenues from initial franchising and licensing fees under domestic franchise agreements are recognized when
all material services or conditions relating to the franchising or licensing agreement have been substantially
performed or satisfied and collectability of the initial franchise fee is reasonably assured, which is generally upon
the opening of a location by a franchisee or licensee. The Company recognizes revenues from initial franchise
fees under domestic area director agreements and international master franchise agreements when substantially
all of the initial services required by the agreement have been met and collectability of the initial franchise fee is
reasonably assured.
Franchise and license royalties, which are based on a percentage of gross store sales, are recognized as earned
net of any amounts due under area director agreements. Royalties are generally earned upon sale of product by
franchisees or licensees. Minimum royalty payments under certain licensing agreements are deferred and
recognized on a straight-line basis over the term of the agreement. Revenues from the two company-owned
TCBY stores are recognized when payment is tendered at the time of sale.
The Company receives cash payments for product formulation fees and allowances from suppliers based on the
amount of product purchased directly by its distributors and franchisees. These product formulation fees include
cash payments to the Company for the right to use the Company's proprietary formulations and recipes to
manufacture the frozen dough and TCBY products these suppliers sell to the Company's franchisees.
Formulation fees and allowances are recorded as revenues within the Mrs. Fields Franchising, TCBY and
International Franchising operating segments upon shipment of product to the Company's distributors or
franchisees.
Formulation fees and allowances for each of the operating segments are as follows (in thousands):
M rs. Fields ................................................
TCBY ........................................................
International Franchising ...........................
For the
Fiscal Year
Ended
December 31,
2011
$
1,248
3,643
260
$
5,151
For the
Fiscal Year
Ended
January 1,
2011
$
1,328
3,566
284
$
5,178
For the
Fiscal Year
Ended
January 2,
2010
$
1,343
4,024
179
$
5,546
Operating Expenses
Mrs. Fields Gifts operating expenses are comprised of costs incurred to generate gifting revenues which include
cost of sales for products sold, selling and promotional expenses, compensation and related costs and other direct
operating expenses of the gifts segment. Cost of sales includes inbound freight charges, purchasing and
receiving costs, inspection costs, warehousing costs, formulation fees and other costs of the Company's
distribution network.
Mrs. Fields Branded Retail operating expenses are comprised of cost of sales for products sold, selling and
promotional expenses, compensation and related costs and other direct operating expenses of the branded retail
segment.
Operating expenses of the Company's franchising segments, including Mrs. Fields, TCBY and International
Franchising, are comprised of costs incurred to generate franchising revenues, which include operation and
supervision expenses wherein the Company provides support, direction and supervision to the franchisees;
development and support expenses including product development costs, expenses relating to new franchise
development, marketing and advertising, bad debt expense and other direct franchising expenses. TCBY
operating expenses also include the expenses related to its two company-owned stores.
TCBY FDD 03/2014
63
Mrs. Fields Licensing operating expenses are comprised of costs incurred to generate licensing revenues, which
primarily are selling and promotional expenses, bad debt and other direct operating expenses of the licensing
segment. Selling expenses include compensation and related costs, outside commissions and professional fees.
General and administrative expenses are comprised of compensation and related costs of corporate employees
such as executive, accounting, legal, human resources and information systems personnel; travel and travelrelated expenses of corporate employees; professional and legal fees, bank charges, insurance costs and facility
costs not related to the generation of revenues. These costs are associated with providing management support
for all of the Company's business segments.
Executive severance, recruiting and compensation costs are comprised of costs incurred during 2010 for
compensation and severance related to one of the Company's former Co-CEOs and President of Mrs. Fields
Division ("Co-CEO") and recruiting and relocation costs related to its Chief Executive Officer ("CEO"), hired in
May 2010.
Shipping and Handling Costs
The Company charges customers in its gifting segment for shipping and handling costs and records the amounts
in Mrs. Fields revenues. The costs for shipping and handling are included in Mrs. Fields operating costs and
expenses.
Sales Tax
The Company records revenues net of state and local sales taxes.
Income Taxes
Income taxes are accounted for under the asset and liability method. The Company recognizes deferred income
tax assets or liabilities for expected future income tax consequences of events that have been recognized in the
financial statements or income tax returns. Under this method, deferred income tax assets or liabilities are
determined based upon the difference between the financial statement and income tax bases of assets and
liabilities using enacted tax rates expected to apply when differences are expected to be settled or realized.
Advertising
The Company administers advertising funds (the "Ad Funds") collected from its domestic franchisees. The
Company directs the expenditures of the Ad Funds in connection with advertising and marketing campaigns for
the overall benefit of the respective concepts. The Ad Funds and their related activities are not included in the
accompanying consolidated financial statements.
General corporate advertising costs are expensed as incurred. During the years ended December 31, 2011,
January 1, 2011 and January 2, 2010, the Company incurred advertising expenses, excluding the expenditures of
the advertising funds, totaling approximately $5.5 million, $5.3 million and $4.7 million, respectively, which are
included in the operating costs of Mrs. Fields and TCBY.
Legal and Regulatory
The Company records liabilities for legal and regulatory matters when the contingency is both probable and
estimable. The Company is involved in several legal and regulatory matters. After consultation with legal
counsel, the Company believes that the ultimate dispositions of these matters will not have a material adverse
impact on its financial position, liquidity or results of operations. However, there can be no assurance that the
TCBY FDD 03/2014
64
Company will be successful in its efforts to satisfactorily resolve these matters and the ultimate outcome could
result in a material adverse impact on its financial position, liquidity or results of operations.
New Accounting Pronouncements Not Yet Adopted
In September 2011, the FASB issued ASU No. 2011-08, "Intangibles—Goodwill and Other (ASC 350): Testing
Goodwill for Impairment," which specifies that an entity has the option to first assess qualitative factors to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount
as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. An entity is
not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than
not that its fair value is less than its carrying amount. ASU No. 2011-08 is effective prospectively for fiscal
years and interim periods beginning after December 15, 2011. The Company's adoption of ASU No. 2011-08 is
not expected to have a significant impact on the Company's consolidated financial condition or results of
operations.
In June 2011, the FASB issued ASU 2011-05, "Comprehensive Income (Topic 220): Presentation of
Comprehensive Income". Under ASU 2011-05, an entity will have the option to present the components of net
income and comprehensive income in either one or two consecutive financial statements. The ASU eliminates
the option in U.S. GAAP to present other comprehensive income in the statement of changes in equity. An
entity should apply the ASU retrospectively. The ASU is effective for fiscal years ending after December 15,
2012 and interim and annual periods thereafter. Early adoption is permitted. In December 2011, the FASB
decided to defer the effective date of those changes in ASU 2011-05 that relate only to the presentation of
reclassification adjustments in the statement of income by issuing ASU 2011-12, "Comprehensive Income (Topic
220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of
Accumulated Other Comprehensive income in Accounting Standards Update 2011-05". The Company's
adoption of ASU No. 2011-05 is not expected to have a significant impact on the Company's consolidated
financial condition or results of operations.
3. Fair Value Measurement
FASB authoritative guidance defines fair value as the exchange price that would be received for an asset or paid
to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. It also establishes a fair value hierarchy which
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
•
Level 1 – quoted prices for identical instruments in active markets;
•
Level 2 – quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active and model-derived valuations in which all significant inputs
and significant value drivers are observable in active markets; and
•
Level 3 – valuations derived from valuation techniques in which one or more significant inputs or
significant value drivers are unobservable.
The Company applies fair value techniques on a non-recurring basis associated with valuing potential
impairment losses related to goodwill and other long-lived assets. Non-financial assets and liabilities measured
at fair value on a non-recurring basis are summarized below (in thousands):
TCBY FDD 03/2014
65
Goodwill ...................................................
Other intangible assets ..............................
Total
$
2,837
1,377
January 1, 2011
Level 1
Level 2
$
$
-
$
Level 3
2,837
1,377
4. Inventories
Inventories are comprised of the following (in thousands):
Finished goods ..........................................
Novelties ...................................................
Packaging ...................................................
Raw materials ............................................
December 31,
2011
1,386
$
704
529
223
$
2,842
January 1,
2011
$
1,625
664
488
402
$
3,179
5. Property and Equipment
Property and equipment are comprised of the following (in thousands):
Equipment and fixtures .............................
Leasehold improvements ..........................
Accumulated depreciation .........................
Estimated
Useful Life's
up to 7 years
up to 10 years
December 31,
2011
$
3,678
3,583
7,261
(3,431)
$
3,830
January 1,
2011
$
3,193
3,414
6,607
(2,507)
$
4,100
Property and equipment at December 31, 2011 and January 1, 2011 includes gross assets acquired under capital
leases of $315,000 and $318,000, respectively, and related accumulated depreciation of $217,000 and $151,000,
respectively.
Included in leasehold improvements at December 31, 2011 and January 1, 2011 is $1.1 million for tenant
improvements provided as a lease incentive by the lessors related to the leases for the Company's gifting
operations facility and the two company-owned TCBY stores, less accumulated depreciation of $461,000 and
$309,000, respectively. Deferred rent at December 31, 2011 and January 1, 2011 of $134,000 is included in
accrued liabilities and $467,000 and $601,000, respectively, in other liabilities relating to these lease incentives.
The total amount of these leasehold improvements and deferred rents are amortized over the life of the lease.
6. Goodwill and Other Intangible Assets
The Company performed its annual impairment analysis for goodwill as of December 31, 2011 and January 1,
2011 by comparing the fair value of each of the reporting units to the carrying amount of each reporting unit as
of December 31, 2011 and January 1, 2011.
As of December 31, 2011, management concluded that the fair value of its reporting units exceeded the carrying
amount of the reporting units, thus indicating no impairment. Accordingly, the Company recorded no
impairment charge for the fiscal year ended December 31, 2011.
As of January 1, 2011, management concluded that the carrying amount of its Mrs. Fields Franchising, Mrs.
Fields Licensing and TCBY reporting units exceeded the fair value of the reporting units, thus indicating an
TCBY FDD 03/2014
66
impairment. Accordingly, the Company recorded an impairment charge of $5.0 million for the fiscal year ended
January 1, 2011
As of January 2, 2010, management concluded that the carrying amount of its Mrs. Fields Branded Retail, Mrs.
Fields Franchising and Mrs. Fields Licensing reporting units exceeded the fair value of the reporting units, thus
indicating an impairment. Accordingly, the Company recorded an impairment charge of $6.2 million for the
fiscal year ended January 2, 2010.
The Company performed its annual impairment analysis for indefinite-lived intangible assets, consisting of the
Mrs. Fields and TCBY trade names, for fiscal year 2011 and fiscal year 2010 by comparing the fair value of the
trade names to their carrying amount as of December 31, 2011 and January 1, 2011.
As of December 31, 2011, management concluded that the estimated fair value of its trade names exceeded the
carrying value and recorded no impairment charge for the fiscal year ended December 31, 2011.
As of January 1, 2011, management concluded that the carrying value of the TCBY trade names exceeded the
estimated fair value and recorded an impairment charge of $22,000 for the fiscal year ended January 1, 2011.
As of January 2, 2010, management concluded that the carrying value of the Mrs. Fields trade names exceeded
the estimated fair value and recorded an impairment charge of $8.0 million for the fiscal year ended January 2,
2010.
As a result of the impairment of goodwill and indefinite-lived intangible assets as of January 1, 2011 and January
2, 2010, the Company concluded that a triggering event had occurred. The Company performed an impairment
test of its definite-lived intangible assets and concluded that as of January 1, 2011 and January 2, 2010 its
definite-lived intangible assets were not impaired.
The following summarizes the Company's goodwill by operating segment (in thousands):
M rs. Fields Gifts ......................................
M rs. Fields Licensing ................................
TCBY ........................................................
International ..............................................
December 31,
2011
$
3,496
1,818
1,019
1,456
7,789
$
January 1,
2011
$
$
3,496
1,818
1,019
1,456
7,789
The following table summarizes the changes in goodwill (in thousands):
Goodwill
Balance at January 3, 2009 .......................
$
32,077
Accumulated
Impairment
Loss
$
(12,454)
Total
$
19,623
Other intangible assets
are
Reduction in goodwill resulting from
changes in income tax receivable ...........
Impairment loss ........................................
(724)
31,353
(4,954)
(18,610)
(724)
(4,954)
12,743
Impairment loss ........................................
31,353
(4,954)
(23,564)
(4,954)
7,789
Impairment loss ........................................
Balance at December 31, 2011 ..................
$
31,353
$
(23,564)
$
7,789
indefinite-lived
definite-lived
(amortized
years).
TCBY FDD 03/2014
comprised
of
and
assets
over
10
The following
67
details the Company's other intangibles (in thousands):
December 31, 2011
Gross
Accumulated
Amount
Amortization
Indefinite-lived intangibles
Trade names ..........................................
$
Definite-lived intangibles
Recipes ..................................................
Franchise relationships .........................
11,032
$
5,063
11,594
27,689
$
1,629
3,683
16,657
$
-
January 1, 2011
Gross
Accumulated
Amount
Amortization
5,312
$
5,063
11,594
5,312
$
11,032
1,126
2,525
16,657
$
27,689
-
3,651
$
3,651
The range of remaining useful lives and weighted average amortization period for the definite-lived intangible
assets at December 31, 2011 are as follows:
Recipes ......................................................
Franchise relationships .............................
Range of
Remaining
Estimated
Useful Lives
6.8 years
6.8 years
Weighted
Average
Amortization
Period
6.8 years
6.8 years
Future amortization expense of the definite-lived intangible assets as of December 31, 2011 is estimated to be as
follows (in thousands):
Fiscal Year
2012 ..........................................................................................
2013 ..........................................................................................
2014 ..........................................................................................
2015 ..........................................................................................
2016 ..........................................................................................
Thereafter ..................................................................................
$
$
TCBY FDD 03/2014
1,660
1,660
1,660
1,660
1,660
3,045
11,345
68
7. Accrued Liabilities
Accrued liabilities are comprised of the following (in thousands):
December 31,
2011
Compensation and benefits .......................
Gift cards and gift certificates ...................
Branded Retail trade spend .......................
Interest ......................................................
Professional fees .......................................
Deferred rent credits .................................
Occupancy ................................................
Severance ...................................................
Legal ..........................................................
Other .........................................................
$
$
1,117
934
454
342
190
134
116
415
3,702
January 1,
2011
$
$
979
700
435
1,418
227
134
121
311
292
794
5,411
Included in accrued compensation and benefits at December 31, 2011 and January 1, 2011 is $216,000 and
$220,000, respectively, for accrued commissions.
The activity in accrued severance is as follows (in thousands):
Beginning balance ......................................
Additions ..................................................
Reversal of accrual ....................................
Payments ..................................................
December 31,
2011
$
311
(311)
$
-
January 1,
2011
$
1,272
800
(992)
(769)
$
311
During June 2010, the Company agreed to a severance payment to its former CEO at an amount less than originally
provided. As a result, the Company reversed approximately $992,000 of severance accrual and included it in a separate line
item in the accompanying consolidated statements of operations and comprehensive loss.
8. Store Closure Reserve
At the date the Company ceases use of a property under an operating lease, the Company records a liability for
any remaining lease obligations, net of estimated sublease income. Lease termination costs include both
settlement payments and continued contractual payments over time under the original lease agreements where no
settlement can be reached with the landlord.
Management periodically assesses the remaining store closure reserve based on all available relevant data.
Reserves for closed stores that are settled on terms more favorable than were originally estimated and expensed
through the store closure provision are reversed through the store closure provision in the accompanying
consolidated statements of operations and comprehensive loss.
TCBY FDD 03/2014
69
The activity in the store closure reserve is as follows (in thousands):
Beginning balance ......................................
Additional reserves ...................................
Utilization of reserves ...............................
December 31,
2011
$
509
37
(406)
Less current portion ..................................
$
140
(126)
14
January 1,
2011
$
456
336
(283)
$
509
(502)
7
During fiscal year 2010, the Company recorded a specific reserve of $405,000 for certain locations where it
holds the primary obligation under the lease.
9. Deferred Revenues
Deferred revenues represent initial franchising and licensing fees received from customers under domestic and
international franchise agreements and amounts received from customers for merchandise to be shipped in
subsequent periods and are included in current liabilities in the accompanying consolidated balance sheets. Such
fees and revenues will be earned in subsequent periods in accordance with the Company's revenue recognition
policy.
Deferred revenues are comprised of the following (in thousands):
Initial franchise and licensing fees .............
Customer deposits ....................................
Royalties ...................................................
December 31,
2011
$
384
148
6
Less current portion ..................................
$
TCBY FDD 03/2014
538
(526)
12
January 1,
2011
$
353
196
21
$
570
(570)
-
70
10. Long-Term Debt and Capital Lease Obligations
Long-term debt is comprised of the following (in thousands):
December 31,
2011
Revolving Loan Facility, interest at 10 percent, payable
quarterly in arrears on M arch 31, June 30, September 30
and December 31; due December 13, 2014 with option to
extend to December 13, 2015 upon payment of an
extension fee ......................................................................
$
14,000
January 1,
2011
$
-
Term Loan Facility, interest at 10 percent, payable
quarterly in arrears on M arch 31, June 30, September 30
and December 31; due December 13, 2016 .......................
26,977
-
Senior Secured Notes and Additional Notes, interest at 10
percent, payable semi-annually in arrears on April 24 and
October 24; due October 24, 2014 ....................................
6,297
65,837
Term Loan, interest at adjusted LIBOR, plus applicable
margin of 12 percent, payable quarterly in arrears on
January 29, April 29, July 29 and October 29; due
October 23, 2011 ...............................................................
$
Less current portion ..................................................
$
-
$
7,800
47,274
73,637
-
(1,000)
47,274
$
72,637
In connection with the Transactions on December 31, 2011, the initial Lenders provided a Term Loan Facility to
the Company in an aggregate principal amount of $26,977,000 and a Revolving Loan Facility in an aggregate
principal amount of $20,000,000 under Credit Facilities, with an outstanding balance of $14,000,000 at
December 31, 2011. The Credit Facilities carry interest on unpaid principal at 10 percent paid quarterly in
arrears on the last day of each fiscal quarter. The Revolving Loan Facility also requires interest on the unused
portion at 0.5 percent paid quarterly in arrears on the last day of each fiscal quarter. The Term Loan Facilities
ranks senior in right of payment to all subordinated indebtedness of the Company and is secured by a first
priority lien on substantially all of the tangible and intangible assets of the Company and its subsidiaries.
The Credit Facilities contain certain covenants that limit among other things, the ability of the Company and its
subsidiaries to:
•
incur additional indebtedness;
•
make certain investments or enter into sale and leaseback transactions;
•
pay dividends, redeem subordinated debt, repurchase the Company’s or its subsidiaries' stock or make
any other restricted payments as defined in the Indenture;
•
enter into certain transactions with affiliates;
•
create or incur liens;
•
transfer or sell assets;
•
make dividends, distributions or other payments from the Company’s subsidiaries;
TCBY FDD 03/2014
71
•
consummate a merger, consolidation or sale of all or substantially all of its assets; and
•
engage in unrelated business.
The Credit Facilities limits the Company’s use of the proceeds from an asset sale to:
•
consideration at the time of the sale is at least equal to the fair market value of the assets sold or
otherwise disposed of;
•
at least 75 percent of the consideration received be in the form of cash or cash equivalents and is
received at the time of disposition;
•
apply the net cash proceeds related to the sale pursuant to Section 2.10(a) of the Credit Facilities
agreement;
•
make an investment within 365 days in long term productive assets of the general type used in the
Company's business; or
•
use the net proceeds to make an offer to pay down long-term debt.
The Credit Facilities also contain certain covenants whereby the Company must maintain a quarterly maximum
leverage ratio and limits capital expenditures to $3,000,000 for each fiscal year plus any unused amounts carried
forward from the preceding year.
Term Loan
The $10 million term loan (the "Term Loan"), as amended, carried interest on unpaid principal at a fluctuating rate, at 90
day LIBOR or three percent, whichever is greater ("Adjusted LIBOR") plus an applicable margin of 12 percent, increased
by two percent per annum every six months. The proceeds of the amended Term Loan were used for general corporate
purposes of the Company and its subsidiaries and to repay the $6,800,000 balance under the previous Term Loan
(including a prepayment premium required by the previous term loan agreement) and to pay all fees, costs and expenses
related to the Term Loan. Effective May 17, 2011, the Company entered into a Second Amendment to the Credit and
Guaranty Agreement (the "Second Amendment"). The Second Amendment increased the Term Loan to $10 million and
required loan costs of $707,000. The outstanding balance on the Term Loan was repaid in full on December 13, 2011
from the proceeds of the Revolving Loan Facility in conjunction with the Transactions. As a result, the unamortized
balance of these loan costs were written off against interest expense.
Effective February 4, 2010, the Company, Bank of New York Mellon and the Requisite Lenders (as defined in the credit
agreement governing the Term Loan) entered into a First Amendment to the Credit and Guaranty Agreement (the "First
Amendment"). The First Amendment, among other items, revised the minimum consolidated EBITDA targets and
maximum capital expenditures set forth in section 6.12 of the Credit and Guaranty Agreement and required a one-time
payment of principal of $2.2 million, loan costs of $67,000 and an additional one-time payment of principal of $1.0 million
and additional loan costs of $10,000 that was paid in January 2011.
Senior Secured Notes
The 10 percent senior secured notes and the additional notes (the "Additional Notes", together with the 10
percent senior secured notes, the "Senior Secured Notes") are due October 24, 2014 and interest payments are
payable semiannually in arrears on October 24 and April 24, commencing April 24, 2009, until the principal
thereof is paid or made available for payment (see Note 10). The Company elected to pay interest from October
2008 to October 2010 by the issuance of Additional Notes at the rate of 12 percent per annum, in accordance to
the provisions of the Indenture and authorized by a board resolution. Interest is payable in cash after October
2010 at the rate of 10 percent until the principal is paid or made available for payment. The Additional Notes
totaled $13.7 million at January 1, 2011 and are included in Senior Secured Notes in the accompanying
consolidated balance sheets.
TCBY FDD 03/2014
72
Pursuant to the indenture governing its Senior Secured Notes (the "Indenture"), the Company was required to
make a semiannual interest payment on April 24, 2011. The Company notified the Trustee and Note Holders
that it would not pay the required interest on that date. The Company paid the required interest payment on May
19, 2011, before the 30 day cure period expired in accordance to the Indenture.
The retirement of $59,540,000 of the Senior Secured Notes was accounted for as an extinguishment of debt with
a portion deemed to be a troubled debt restructuring under ASC 470-60 as outlined below. Certain holders of the
Senior Secured Notes, aggregating $6.3 million, elected not to participate in the Exchange.
Extinguishment of Debt
As a result of the Transactions on December 13, 2011, the Company exchanged $56,693,000 of its Senior
Secured Notes for interests in the Term Loan Facility of $25,833,000 and 100 percent of the common stock of
Holdco, the Company's ultimate parent, resulting in a capital contribution of $26,087,000, net of income taxes of
$1,991,000 and including $3,669,000 of accrued interest and $6,451,000 of expenses. Because these note
holders are the controlling shareholders after the Transactions, the extinguishment embodies a capital
transaction.
Transactions costs totaling $3,494,000 paid to third parties that were directly associated with the Transactions
and $457,000 of unamortized loan costs associated with its Term Loan were deemed to be reductions of the
capital contribution and were recorded to paid-in-capital in the accompanying consolidated balance sheets.
Troubled Debt Restructuring
As a result of the Transactions on December 13, 2011, the Company exchanged $2,726,000 of its Senior Secured
Notes for a cash payment of $1,089,000 and exchanged $121,000 for interests in the Term Loan Facility of
$55,000 and recorded a $1,712,000 gain on extinguishment of debt, including $184,000 of accrued interest that
was forgiven, net of expenses of $175,000.
Subscription Rights
In connection with the Exchange, eligible holders were offered the right to subscribe for a pro rata share of
additional interests in the Term Loan Facility in aggregate principal amount equal to the funds necessary to pay
the consideration to those note holders that elected the cash option. Accordingly, the Company made a cash
payment of $1,089,000 which was funded by the eligible holders and increased their interests in the Term Loan
Facility by the same amount.
In conjunction with the Transactions, the Company entered into Supplemental Indenture No. 1 (the
"Supplemental Indenture"). The Supplemental Indenture amends the Indenture dated October 24, 2008 to
eliminate certain restrictions, covenants and reporting requirements.
Capital Lease Obligations
The Company has acquired equipment under various capital leases. Capital lease obligations are comprised of
the following (in thousands):
Capital lease obligations ............................................................
Less current portion of capital lease obligations .......................
December 31,
2011
$
105
(78)
$
TCBY FDD 03/2014
27
January 1,
2011
$
175
(70)
$
105
73
As of December 31, 2011, the future minimum lease payments, including interest, for capital lease obligations
are as follows (in thousands):
Fiscal Year
2012 ..........................................................................................
2013 ..........................................................................................
$
85
28
113
(8)
Less amount representing interest
$
Present value of net minimum lease payments
105
11. Income Taxes
The components of the provision (benefit) for income taxes are as follows (in thousands):
For the
Fiscal Year
Ended
December 31,
2011
Current
Federal ...................................................
Foreign ...................................................
$
Deferred
Federal ...................................................
State ........................................................
Allowance ..............................................
Total provision (benefit) for income
taxes ........................................................
TCBY FDD 03/2014
46
46
For the
Fiscal Year
Ended
January 1,
2011
$
5,518
1,129
(6,525)
122
$
168
42
42
For the
Fiscal Year
Ended
January 2,
2010
$
(1,878)
(384)
2,254
(8)
$
34
60
60
(4,514)
(923)
2,360
(3,077)
$
(3,017)
74
The differences between income taxes at the U.S. federal statutory income tax rate and income taxes reported in
the consolidated statements of operations and comprehensive loss are as follows (in thousands):
For the
Fiscal Year
Ended
December 31,
2011
Income taxes computed at federal
statutory rate .........................................
State income taxes ....................................
Foreign taxes .............................................
Goodwill .....................................................
Tax attribute reduction ............................
Cancellation of indebtedness .................
Equity contribution ..................................
Valuation allowance .................................
Other ...........................................................
$
$
(1,212)
14
46
10,328
(582)
(2,414)
(5,794)
(218)
168
For the
Fiscal Year
Ended
January 1,
2011
$
$
(3,842)
(253)
42
1,685
2,254
148
34
For the
Fiscal Year
Ended
January 2,
2010
$
$
(6,712)
(345)
40
2,093
1,959
(52)
(3,017)
The components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
TCBY FDD 03/2014
75
December 31,
2011
Deferred tax asset - current:
Allowance for doubtful accounts ..........
Accrued expenses ....................................
Other ...........................................................
Deferred tax assets - current ...............
Valuation allowance .............................
Net deferred tax
asset - current ...............................
Deferred tax asset - long-term:
Depreciation ..............................................
Net operating loss and carryforwards ...
Capital loss carry over .............................
Loan costs .................................................
Other ...........................................................
Deferred tax assets - long-term ...........
Valuation allowance .............................
Net deferred tax asset - long-term
$
545
219
89
853
-
$
452
267
112
831
(488)
$
853
$
343
$
463
727
188
1,378
1,378
$
Deferred tax liabilities -long-term:
Intangibles .................................................
Deferred tax liabilities - long-term ......
Net deferred tax
liabilities - long-term .....................
January 1,
2011
(8,808)
(8,808)
(8,568)
(8,568)
$
(7,190)
133
5,084
4,588
473
10,278
(6,037)
4,241
$
(4,567)
A valuation allowance is provided when it is more-likely-than-not that all or some of the deferred income tax assets will not
be realized. Based upon the level of historical taxable income and projections for future taxable income over the periods in
which the temporary differences are deductible, the Company has determined a valuation allowance is necessary of $0 and
$6.5 million at December 31, 2011 and January 1, 2011, respectively. The net change in valuation allowance for the years
ended December 31, 2011 and January 1, 2011, was a decrease of $6.5 million and an increase of $2.3 million.
The Company recognizes the impact of a tax position in the financial statements if that position is more likely than not of
being sustained on audit, based on the technical merits of the position. For fiscal year 2011 and fiscal year 2010, the
Company had no unrecognized tax benefits.
The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense. There have been no
interest or penalties recognized in the financial statements of the Company.
The Company was subject to an audit by the federal tax authority for fiscal years 2007 and 2008, which was closed with no
adjustments. The Company remains subject to income tax examinations for each of its open tax years, which extend back to
2008 for federal income tax purposes and 2007 for state income tax purposes.
The Company realized income from the cancellation of indebtedness as a result of the Transactions to restructure
the Company's debt and capital structure. Because the Company was insolvent, the cancellation of indebtedness
is excluded from taxable income on the Company's federal income tax return for the year ended December 31,
2011. However, the Company is required to reduce its tax attributes on the first day of the following tax period.
As such, during the tax period ending December 29, 2012, the Company will reduce its estimated Net Operating
Loss carry forwards of $19.1 million and its estimated AMT Loss Carry Forwards of $20.5 million to zero.
TCBY FDD 03/2014
76
Capital Loss Carry Forwards of $12.0 million will also be reduced to zero. The tax effect of the attribute
reduction related to the capital transaction of $2.0 million was recorded as an adjustment to equity.
12. Related Party Transactions
Services Agreement
In conjunction with the Transactions, The Company entered into a services agreement (the "Services Agreement")
with Carlyle Strategic Partners II, L.P and CSP II Co-Investment L.P. (together, "Carlyle") and Z Capital Special Situations
Fund Holdings I, L.P. ("Z Capital" and together with Carlyle, the "Advisors"). The Services Agreement retains each of the
Advisors to provide services, including but not limited to, accounting and financial planning, market research, product
development, risk assessments, information systems analysis and transactional due diligence services to the Company on
an ongoing basis in connection with the operation and growth of the Company in the ordinary course of business.
The term of the Services Agreement, unless terminated earlier pursuant to the terms of the Services Agreement,
continues until the fourth anniversary of the date of the Services Agreement and thereafter will extend automatically each
year for one additional year, unless at least three months written notice is provided. In consideration for the services
provided as described above, the Company is required to pay a non-refundable annual payment equal to five percent of
consolidated EBITDA (as defined in the Credit Facilities agreement). This fee will be allocated to the Advisors on a pro
rata basis based on the number of shares of the Company's common stock they each hold as of the last day of the fiscal
year.
Fees Related to the Transactions
Carlyle and Z Capital entered into a backstop agreement (the "Backstop Agreement") in conjunction with the
Transactions (see Note 10). Pursuant to the Backstop Agreement, in exchange for an aggregate cash payment of
$1,350,000 (the "Backstop Fee") on December 13, 2011, Carlyle and Z Capital, severally and not jointly, agreed to
backstop the subscriptions rights by funding in the aggregate any portion of the Credit Facilities not otherwise funded in
accordance with the Subscription Rights. The Backstop Fee is in addition to any corresponding subscription consideration
they will receive in respect of the subscription rights covered thereby.
On December 13, 2011, The Company made an aggregate cash payment of $400,000 to Carlyle and Z Capital for
upfront fees on the aggregate revolving loan commitment (the "Loan Commitment Fee") on that date. The Company is
required to pay an additional commitment fee of 0.5 percent per annum times the daily average undrawn portion of the
Revolving Loan Facility, payable quarterly in arrears.
As the Backstop Fee and the Loan Commitment Fee were fees paid by the Company to Carlyle and Z Capital, the
note holders, these fees have been included with the extinguishment of the Senior Secured Notes. The $2,500,000 reduced
the capital contribution of $28,587,000, net of income taxes of $1,991,000, recorded as an increase to paid-in-capital in the
accompanying consolidated balance sheets and consolidated statements of stockholders' deficit.
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13. Employee Benefit Plans
The Company sponsors the Mrs. Fields' Original Cookies, Inc. 401(k) Retirement Savings Plan (the "401k
Plan") for all eligible employees of the Company. Under the terms of the 401k Plan, employees make voluntary
contributions to the 401k Plan. A portion of the employee contributions to the 401k Plan were matched by
contributions from the Company at the rate of 100 percent of the first three percent of employee contributions
plus 50 percent of the next two percent of employee contributions. The total matching contributions made by
the Company to the 401k Plan for the years ended December 31, 2011, January 1, 2011 and January 2, 2010 $0,
$0 and $41,000, respectively.
During the first quarter of 2009, the 401k Plan was amended to eliminate all employer matching fund
provisions.
14. Reportable Segments
Operating segments are components of the Company for which separate financial information is available that
is evaluated regularly by management in deciding how to allocate resources and assess performance. The
segment information is reported on the basis that it is used internally for evaluating segment performance.
The Company has the following six operating segments:
Mrs. Fields Gifts
Mrs. Fields Branded Retail
Mrs. Fields Franchising
Mrs. Fields Licensing
TCBY
(collectively "Mrs. Fields")
International Franchising
The accounting policies for the segments are the same as those discussed in the summary of significant
accounting policies (see Note 2). Sales and transfers between segments are eliminated in consolidation.
The Mrs. Fields Gifts operating segment includes sales generated from the Company's gift catalog and website
as well as affiliations with other websites and sales to large corporate customers for gifting purposes.
The Mrs. Fields Branded Retail operating segment includes sales generated from the sale of Mrs. Fields branded
products directly to various retail channels.
The Mrs. Fields Licensing operating segment includes licensing activity with third parties for the sale of
products bearing the Company's brand names.
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The Mrs. Fields Franchising and TCBY operating segments include revenues received either directly or
indirectly from cookie and yogurt stores in the United States, which are owned and operated by third parties.
These domestic revenues include initial franchise or license fees, monthly royalties based on a percentage of a
franchisee's gross sales and certain product formulation fees and supplier allowances which are based upon
sales to franchisees. In addition, the operations of the two company-owned TCBY stores are included in the
TCBY operating segment.
The International Franchising operating segment includes revenues received either directly or indirectly from
cookie and yogurt stores outside of the United States, which are owned and operated by third parties. These
international revenues include initial franchise or license fees, monthly royalties based on a percentage of a
franchisee's gross sales and certain product formulation fees and supplier allowances which are based upon
sales to franchisees.
The Company evaluates performance of each operating segment based on contribution. Contribution is
computed as the difference between the revenues generated by a reportable segment and the selling, cost of
sales and direct operating expenses related to that reportable operating segment. Contribution is used as a
measure of the operating performance of an operating segment. The Company does not allocate any general
and administrative expenses, interest expense, or depreciation and amortization to its reportable operating
segments
Segment revenues and contribution are presented in the following table (in thousands):
For the
Fiscal Year
Ended
December 31,
2011
Revenues:
M rs. Fields
M rs. Fields
M rs. Fields
M rs. Fields
Gifts ..................................
Branded Retail ...................
Franchising ........................
Licensing ............................
$
TCBY ....................................................
International Franchising .......................
Contribution:
M rs. Fields
M rs. Fields
M rs. Fields
M rs. Fields
Gifts ..................................
Branded Retail ...................
Franchising ........................
Licensing ............................
For the
Fiscal Year
Ended
January 2,
2010
$
$
5,951
1,741
26,034
22,165
5,691
959
54,849
5,604
1,902
23,963
21,591
5,861
961
52,376
5,871
1,499
$
65,881
$
62,355
$
59,746
$
2,374
1,955
2,656
2,139
9,124
$
2,735
3,066
2,789
689
9,279
$
2,724
2,462
3,407
823
9,416
TCBY ....................................................
International Franchising .......................
$
TCBY FDD 03/2014
28,597
21,889
5,396
2,307
58,189
For the
Fiscal Year
Ended
January 1,
2011
1,405
1,097
11,626
$
2,349
1,298
12,926
$
3,433
1,005
13,854
79
The reconciliation of contribution to loss before reorganization items and provision (benefit) for income taxes is
as follows (in thousands):
Contribution ...................................................
General and administrative .............................
Executive severance, recruiting and
compensation costs ........................................
Depreciation and amortization .......................
Impairment of goodwill and intangible assets
Store closure provision ...................................
Other income, net ...........................................
Interest expense, net .......................................
Reversal of severance accrual .........................
Gain on extinguishment of debt ......................
Loss before provision (benefit)
for income taxes ......................................
For the
Fiscal Year
Ended
December 31,
2011
$ 11,626
(5,852)
For the
Fiscal Year
Ended
January 1,
2011
$ 12,926
(8,023)
For the
Fiscal Year
Ended
January 2,
2010
$ 13,854
(8,077)
(1,065)
(2,753)
(4,976)
113
(8,513)
992
-
(445)
(2,829)
(14,191)
32
(8,087)
-
(2,818)
(51)
(8,183)
1,712
$
(3,566)
$
(11,299)
$
(19,743)
Segment assets are presented in the following table (in thousands):
December 31,
2011
M rs. Fields Gifts ......................................
M rs. Fields Branded Retail .......................
M rs. Fields Franchising ............................
M rs. Fields Licensing ................................
Total M rs. Fields ..................................
$
10,235
3,564
18,662
2,448
34,909
January 1,
2011
$
9,877
3,587
18,464
2,220
34,148
TCBY ........................................................
International Franchising ...........................
8,087
1,729
8,706
1,859
Total segment identified assets .............
44,725
44,713
Non-segment identified assets ..............
9,975
13,917
Total assets .......................................
$
54,700
$
58,630
The assets of Mrs. Fields Gifts operating segment consists of fixed assets, receivables, inventories and goodwill.
The assets of the Mrs. Fields Franchising and TCBY operating segments consist of fixed assets, receivables,
inventories and other intangible assets. The TCBY operating segment also includes goodwill. The assets of the
Mrs. Fields Branded Retail operating segment consists of fixed assets, receivables and inventories. The assets
of the Mrs. Fields Licensing and International Franchising operating segments consist of receivables and
goodwill.
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Segment Revenues
Revenues from franchisees, customers and licensees within the United States were $56.2 million, $52.7 million
and $52.6 million or 85.3 percent, 84.5 percent and 88.0 percent of total revenues for the years ended December
31, 2011, January 1, 2011 and January 2, 2010, respectively.
Revenues from international franchisees, customers and licensees were $9.7 million, $9.7 million and $7.1
million or 14.7 percent, 15.5 percent and 12.0 percent of total revenues for the years ended December 31, 2011,
January 1, 2011 and January 2, 2010, respectively. Revenues from any single foreign country were not
material. Providing geographical information regarding long-lived assets is impracticable.
The Mrs. Fields Gifts, Mrs. Fields Branded Retail and Mrs. Fields Licensing operating segments do not have
any single customers that account for more than ten percent of Company's total revenues.
The Mrs. Fields, TCBY and International Franchising business units are not dependent upon any single
franchisee.
15. Commitments and Contingencies
Legal Matters
The Company and its products are subject to regulation by numerous governmental authorities, including, without
limitation, federal, state and local laws and regulations governing franchising, health, sanitation, environmental protection,
safety and hiring and employment practices.
In the ordinary course of business, the Company is involved in routine litigation, including franchise disputes and
trademark disputes. The Company is not a party to any legal proceedings, except as noted below, that, in the opinion of
management, after consultation with legal counsel, is material to its business, financial condition or consolidated results of
operations.
Litigation Settlements
During the years ended December 31, 2011, January 1, 2011 and January 2, 2010, the Company recorded
expenses, net of insurance coverage, of $143,000, $99,000 and $475,000, respectively, related to the items
discussed below. These settlement amounts are included in general and administrative expenses in the
accompanying consolidated statements of operations and comprehensive loss.
On November 1, 2011, the Company settled a complaint with a former employee by entering into a settlement
agreement and general release. Pursuant to this agreement, the Company was required to pay the settlement on
January 6, 2012.
In December 2010, the Company entered into a separation agreement and general release with a former employee
to settle a claim. Under this agreement, the Company agreed to pay a lump sum severance payment and
reimbursement of six month's Cobra payments.
In December 2009, the Company entered into a settlement agreement representing a complete settlement and
release of a lawsuit filed against the Company for breach of contract. The settlement agreement also provides for certain
amendments to the original Master Franchise Agreement.
In October 2009, the Company entered into a settlement agreement representing a complete settlement and release
of a lawsuit filed against the Company for breach of contract. The settlement agreement also provides for the termination
of the TCBY Transnational Master Franchise Agreement.
TCBY FDD 03/2014
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In September 2009, the Company entered into a settlement agreement representing a complete settlement and
release of a lawsuit filed against the Company. The settlement agreement also grants the plaintiff the exclusive right to
solicit leads and advertise the availability of a Master Franchise within India in the Company's behalf for a period of 12
months from the date of the settlement agreement and on a non-exclusive basis for an additional 12 months and entitles
them to a finder's fee. The dispute resulted from the termination of the Master Franchise Agreement for failure to comply
with the development obligations under the agreement.
Operating Leases
The Company leases office space, facilities and equipment under long-term non-cancelable operating lease
agreements with remaining terms of one to ten years. Rent expense, net of sublease payments, was $1.7 million, $2.3
million and $2.3 million for the years ended December 31, 2011, January 1, 2011 and January 2, 2010, respectively.
Effective October 1, 2010, the Company entered into an Industrial Real Estate Lease (the "Lease") with an
unrelated third party for the lease of approximately 19,000 square feet of space in Salt Lake City, Utah. The Lease carries
a 66 month term and provides for monthly base rent payments of $4,651 for February and March of 2011 and $9,303 per
month commencing April 1, 2011. The Lease also requires additional monthly payments for common area expenses,
maintenance, utilities, insurance and taxes, as well as a $9,303 security deposit. This newly leased space replaces
approximately 41,000 square feet of space the Company was leasing in the Salt Lake City area for its Franchise Support
Center and Corporate Headquarters.
On September 8, 2010, the Company entered into a lease termination agreement (the "Lease Termination
Agreement") with NOP Cottonwood 2855, LLC, which provided for the early termination of the assignment and
assumption of lease dated March 16, 2004. In accordance with the terms of the Lease Termination Agreement, the
Company paid an early termination fee of $95,000, which is included in general and administrative expenses in the
accompanying consolidated statements of operations and comprehensive loss.
As of December 31, 2011, the future minimum lease payments due under operating leases are as follows (in
thousands):
Fiscal Year
2012 ..........................................................................................
2013 ..........................................................................................
2014 ..........................................................................................
2015 ..........................................................................................
2016 ..........................................................................................
Thereafter .................................................................................
$
$
TCBY FDD 03/2014
3,953
2,612
2,228
1,851
646
440
11,730
82
As of December 31, 2011, the future minimum sublease payments due to the Company under these operating
leases are as follows (in thousands):
Fiscal Year
2012 ..........................................................................................
2013 ..........................................................................................
2014 ..........................................................................................
2015 ..........................................................................................
2016 ..........................................................................................
$
$
(2,151)
(915)
(588)
(203)
(63)
(3,920)
Contractual Arrangements
Frozen Dough
The Company has a product supply agreement (the "Frozen Dough Supply Agreement") to purchase frozen dough
products, which stipulates, among other things, minimum annual purchase commitments. These annual purchase
commitments are satisfied primarily through the direct purchase of frozen dough products by franchisees.
The Company entered into a first amendment to the Frozen Dough Supply Agreement effective October 18, 2010.
This amendment, among other items, revised the product price list, extended the term for a period of five years and
eliminated any annual product purchase commitments (see Note 16).
The supplier of the frozen dough product manufactures its products in one location. A production disruption or
the supplier’s inability to secure the raw materials used in the production of its products could adversely affect the
operating results of the Company and its franchisees. Although management believes that other suppliers could provide
similar products on comparable terms, a change in suppliers could cause a delay in manufacturing and a possible loss of
sales, which could adversely affect the financial position, results of operations or liquidity of the Company and its
franchisees.
Soft-Serve Frozen Yogurt
The Company has a supply agreement which provides for manufacturing of TCBY's soft-serve frozen yogurt
products (the "Soft-Serve Supply Agreement”). Under the Soft-Serve Supply Agreement, frozen yogurt products are made
available to TCBY's designated distributors, who purchase the products for resale to TCBY franchisees. The Soft-Serve
Supply Agreement has an initial term of three years with an automatic renewal for one year unless notification of intent to
terminate is not given within 180 days of the expiration of the Soft-Serve Supply Agreement. The Soft-Serve Supply
Agreement has been renewed for a one year term.
The Soft-Serve Supply Agreement was amended effective March 25, 2010 to reset the tolling fee and establish a
date 12 months from the date of execution to review the tolling fee. The tolling fee was not reset during fiscal year 2011.
The Soft-Serve Supply Agreement includes provisions related to licensing of TCBY's trademarks for purposes of:
•
•
•
•
•
production; pricing, payment, invoicing and collection;
inventory controls;
quality standards and assurance;
indemnification; and
confidentiality.
Credit Card Processing
Effective October 21, 2011, the Company entered into a Payment Processing Agreement (the " C/C Agreement")
with Cardservice International, Inc., ("Cardservice, Inc."). Under the C/C Agreement, Cardservice, Inc. will
TCBY FDD 03/2014
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provide credit card processing services for the Company's gifting segment as well as extend preferred pricing to
its franchised and company operated stores.
Hand-Scooped Frozen Yogurt
Effective July 22, 2011, TCBY Systems, LLC ("TCBY"), a wholly-owned subsidiary of the Company, entered
into a product supply agreement (the "Hand-Scooped Supply Agreement") with Hudsonville Creamery & Ice
Cream Company, LLC ("Hudsonville"). Under the Hand-Scooped Supply Agreement, Hudsonville will produce
the Company's proprietary hard-pack yogurt product that will then be made available to distributors designated by
the Company for resale to its franchise system. The Hand-Scooped Supply Agreement replaces a supply
agreement between TCBY and Yarnell Ice Cream Company, Inc., which was terminated for cause by the
Company based on the vendor’s material breach of its obligations thereunder.
The Hand-Scooped Supply Agreement outlines services to be performed and products to be provided by
Hudsonville, and describes production schedules, tolling fees, raw materials and manufacturing costs, product
pricing, quality standards and controls, use of trademarks, confidentiality and other provisions customarily
included in agreements of this nature. The Hand-Scooped Supply Agreement has an initial term of three years,
unless terminated earlier in accordance with provisions set forth in the Hand-Scooped Supply Agreement, and
will automatically renew for additional one-year periods unless either party gives at least 180 days' notice prior to
the end of the current term of its intent not to renew.
16. Subsequent Events
The Company has evaluated subsequent events through March 28, 2012, which is the date these financial
statements were available to be issued and determined the following subsequent events required disclosure:
On March 1, 2012, the Company entered into the second amendment (the "Second Amendment") to the SoftServe Supply Agreement. Under the Soft-Serve Supply Agreement, frozen yogurt products are made available to
TCBY's designated distributors, who purchase the products for resale to the Company's TCBY franchisees. The
Second Amendment reset the tolling fee to be charged on all TCBY products and establishes a date 24 months
from the execution of the Second Amendment to review the tolling fee.
On February 17, 2012, the Company announced a reorganization of certain departments that provide support
functions for the operations of the Company. In order to focus on the its core competencies and its operations, the
Company has outsourced its legal, information technology and certain research and development functions to
various third party providers and eliminated certain positions within its organization.
On January 13, 2012, the Company signed a consent letter allowing Dawn Food Products, Inc., the successor-ininterests to Countryside Baking, Inc. ("Dawn") to assign the Frozen Dough Supply Agreement they had to provide
the Company's frozen dough products to South Coast Bakery, LLC ("South Coast"), as a result of Dawn entering
into an asset purchase agreement with South Coast.
TCBY FDD 03/2014
84
EXHIBIT M
GUARANTEE OF PERFORMANCE
TCBY FDD 03/2014
EXHIBIT M: Guarantee of Performance
TCBY FDD 03/2014
EXHIBIT M: Guarantee of Performance
1
EXHIBIT N
TCBY FDD 03/2014
EXHIBIT N: Assignment, Assumption and Consent
[#/#
]
THIS ASSIGNMENT, ASSUMPTION AND CONSENT (the “Assignment”) is made and entered
into as of this _____ day of
, 20__, by and among ________________________________
(together with its predecessors-in-interest, the “Franchisor”), whose principal address is 8001 Arista Place, Suite
600, Broomfield, Colorado 80021, _____________________________ (individually or collectively “Assignor”),
whose principal address is ____________________________, and _____________________ (individually or
collectively “Assignee”), whose principal address is _____________________.
A.
Assignor wishes to sell, assign or convey to Assignee that certain franchised location described
as: the ________ store located at or in ________________________________ (the “Store”), currently identified
by Franchisor as Store No. ________, and to transfer and convey to Assignee all of Assignor’s rights, title,
interest and obligations in and to that certain Franchise Agreement (the “Franchise Agreement”) for the
operation of the Store, dated as of _________________ (the “Transfer”).
B.
Under the terms of the Franchise Agreement, Franchisor has the right to consent to the Transfer
before it occurs, and further has a right of first refusal pertaining to the Store and the Franchise Agreement.
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1.
Agreement Assigned. Subject to Franchisor’s consent as provided herein, Assignor hereby sells,
assigns, transfers and conveys to Assignee all of its rights, title, interest and obligations in and to the Franchise
Agreement, to have and to hold said rights, title, interest and obligations for the term of the Franchise Agreement
and any renewal thereof consistent with its terms and conditions. Subject to Franchisor’s consent as provided
herein, Assignee hereby unconditionally assumes and accepts such assignment and agrees to perform when and as
due each and every obligation of Assignee thereunder. Any capitalized terms not otherwise defined herein shall
have the same meanings as set forth in the Franchise Agreement.
2.
Representations.
(a)
Assignor and Assignee represent and warrant to Franchisor that they have disclosed to
Franchisor all of the material terms of the Transfer and that they have the authority to execute this
Assignment.
(b)
Assignee represents and warrants to Franchisor that it has independently conducted all
necessary due diligence to make an informed decision respecting the purchase of assets and business
related to the Store.
(c)
Assignor represents and warrants to Franchisor that Assignor owns all rights, title and
interest, free and clear of any mortgage, lien or claim, in and to the Franchise Agreement and the business
related to the Store, and has not assigned any or all of its interest in the Franchise Agreement or the
business related to the Store to any third party. Assignor represents and warrants to Franchisor that
Assignor will not retain any interest in the Store after the Closing.
(d)
Assignor further represents and warrants to Franchisor that Assignor is not in default of
any of the terms of the Franchise Agreement as of the Closing.
TCBY FDD 03/2014
1
(e)
Assignor further represents and warrants to Franchisor that the owner of the principal
business premises for the Store has consented to the assignment, including Assignor’s assignment to
Assignee of the Lease, if any, for the Store premises.
3.
Franchisor’s Consent. Based on the information provided by Assignor and Assignee, Franchisor
hereby (a) waives its right of first refusal to acquire the Store and the Assignor’s interests in the Franchise
Agreement, and (b) gives its consent for the Transfer upon the terms and conditions set forth herein; provided,
however, that its consent does not constitute an express or implied warranty by Franchisor of the successful
operation or profitability of the Store by Assignee following the Transfer.
4.
Purchase and Sale Agreement; Conditions to Closing; Escrow. In consideration of the
Franchisor’s consent to the Transfer, Assignor and Assignee agree that the closing of the Transfer and Assignee’s
purchase of the Store from Assignor (the “Closing”) shall not occur, and Assignee shall not take legal possession
of the Store or accept assignment of the Franchise Agreement or the lease or sublease pertaining to the Store
premises (the “Lease”) until each of the following conditions have been satisfied by them, or waived by the
Franchisor:
(a)
The following items have been delivered to a licensed escrow agent or other third party
selected by Assignor and Assignee and acceptable to Franchisor no later than five (5) days prior to the
date that Assignee is scheduled to commence Franchisor’s training program (the “Escrow Date”):
(1)
A check or certified funds in the amount equal to the total of:
(i)
All past-due royalty and service fees, continuing fees, advertising fund
contributions and any other amounts owed by Assignor to Franchisor or any of its
affiliates, pursuant to the Franchise Agreement, Lease, or any other agreement between
them;
(ii)
All past-due amounts owed to vendors or suppliers pertaining to the
Store if payment is necessary to accomplish the Closing in accordance with any
applicable bulk sales or similar laws, or where the consent of such vendors or suppliers is
required by Franchisor; and
(iii)
The Franchisor’s then-current Transfer Fee (or any balance thereof not
already paid to Franchisor).
(2)
The following documents, fully and properly signed by Assignor and/or
Assignee, to be effective as of the date of the Closing (the “Closing Date”) without condition
except as set forth herein:
(i)
(ii)
the Closing:
This Assignment;
The following Franchise Documents required by Franchisor pertaining to
[list]
(iii)
Instructions acceptable to the parties pertaining to disbursement of all
funds and documents upon the Closing Date, and removing all conditions to the Closing
except satisfaction of the conditions set forth in Sections 4(b), (c) and (d) hereof; and
TCBY FDD 03/2014
2
(iv)
Any other documents between Assignor and Assignee necessary to
complete the Closing as set forth herein.
(b)
Assignee has successfully completed Franchisor’s training program and has been
approved by Franchisor to complete the Transfer upon the proposed terms;
(c)
Assignor and/or Assignee have satisfied any other conditions to obtaining Franchisor’s
consent to the Transfer as set forth in or contemplated by the Franchise Agreement; and
(d)
Assignor and/or Assignee has deposited into escrow any and all other documents and
funds necessary to complete the Closing as set forth herein, including without limitation, any purchase
price to be paid to Assignor at the Closing.
Unless otherwise agreed in writing by the Franchisor, the Closing Date shall occur no later than 15 days following
satisfaction of the conditions to Closing set forth in sections 4(b) and 4(c). Franchisor shall not be required to
sign any documentation until the later to occur of the Closing Date, or a date within 30 days after the Closing
Date, provided in such case that Franchisor delivers into escrow no later than the Closing Date a notice that
Assignor and Assignee have met each of Franchisor’s conditions to obtaining its consent to the Transfer. For the
period of time from the Escrow Date to the Closing Date, Assignor shall continue to operate the Store, or cause it
to be operated, in compliance with Franchisor’s system standards and the Franchise Agreement, and Franchisor
may continue to enforce the terms of the Franchise Agreement against Assignor. Without limiting the foregoing,
during such period, Franchisor shall have the right to draft Assignor’s account for any current royalties,
continuing fees, advertising fund contributions and other fees that become due under the Franchise Agreement.
5.
Agreement to Execute New Franchise Documents. Assignee acknowledges that Franchisor may
condition its consent to the Transfer upon Assignee’s agreement to execute Franchisor’s current form of franchise
agreement and related documents which, if fully executed, shall replace the Franchise Agreement in its entirety.
The new franchise agreement may contain terms that are materially different from those set forth in the Franchise
Agreement, including without limitation, different royalty, service fees, continuing fees, advertising fund
contributions, and other fees. Assignee acknowledges that it has received Franchisor’s current form of disclosure
document at least 14 calendar days prior to the earlier to occur of the Escrow Date and the date on which this
Assignment was executed. Assignee further acknowledges that if Franchisor materially altered the provisions of
the Franchise Agreement and this Assignment (except as a result of negotiations you initiated) Assignee has
received the agreements at least 7 calendar days prior to the earlier to occur of the Escrow Date and the date on
which this Assignment was executed.
6.
Mutual Release. Subject to the full and complete occurrence of the Closing, and effective as of
the Closing Date, Assignor on Assignor’s behalf and for any of Assignor’s wholly-owned or controlled
corporation, subsidiary, and any shareholders, partners, officer, directors, employees agents, successors, assigns,
heirs, executors and administrators of any of them (the “Assignor Parties”), hereby remise, release, and forever
discharge generally the Franchisor and any affiliate, wholly-owned or controlled corporation, subsidiary,
successor or assign thereof and any shareholder, officer, director, employee, or agent of any of them (the
“Franchisor Parties”), and the Franchisor does hereby remise, release, and forever discharge generally the
Assignor Parties, from any and all claims, demands, damages, and injuries, whether presently known or unknown,
suspected or unsuspected, disclosed or undisclosed, actual or potential, which any of the Assignor Parties or the
Franchisor Parties may have, or may hereafter claim to have had or to have acquired against the other of whatever
kind or character arising out of or related to the Transfer, the Store, the Franchise Agreement, any Lease or other
agreements between the Assignor and any of the Franchisor Parties related to the Store or the Franchise
Agreement, and arising from or related to any period prior to and including the date hereof (the “Released
Claims”), including generally any and all claims at law or in equity, those arising under the common law or state
or federal statutes, rules or regulations such as, by way of example only, franchising, securities and antitrust
TCBY FDD 03/2014
3
statutes, rules or regulations, in any way arising out of or connected with the Released Claims, and further
promise never from this day forward, directly or indirectly, to institute, prosecute, commence, join in, or generally
attempt to assert or maintain any action arising from or related to the Released Claims against any of the other
parties, in any court or tribunal of the United States of America, any state thereof, or any other jurisdiction. Not
released by the Franchisor Parties are (1) current or past due debts on account, owed either to the
Franchisor or any affiliate of the Franchisor, and (2) unpaid principal and accrued interest under any
promissory note made by Assignor or Assignee and held by any of the Franchisor Parties, or any holder to
which any note may be negotiated or assigned. Not released by the Franchisor Parties or the Assignor
Parties against the other are (1) claims arising from their obligations or performance under this
Assignment, and (2) any claims arising from or related to any relationship or agreement between them not
included in the Released Claims.
7.
Indemnification.
(a)
Assignor, for itself, its heirs, successors and assigns, agrees to indemnify and hold
harmless each of the Franchisor Parties against any and all liabilities, damages, actions, claims, costs
(including reasonable attorneys’ fees) or expenses of any nature resulting, directly or indirectly, from any
of the following: (i) any misrepresentations or breach of warranty by Assignor under this Assignment;
(ii) the transfer of the Franchise Agreement; or (iii) any claim, suit or proceeding initiated by or for a third
party or third parties, now or in the future, that arises out of or relates to Assignor’s operation of the Store
prior to the Closing.
(b)
Assignee, for itself, its heirs, successors and assigns, agrees to indemnify and hold
harmless each of the Franchisor Parties against any and all liabilities, damages, actions, claims, costs
(including reasonable attorneys’ fees) or expenses of any nature resulting, directly or indirectly, from any
of the following: (i) any misrepresentations or breach of warranty by Assignee under this Assignment; or
(ii) the transfer of the Franchise Agreement.
8.
Assignor Post-Assignment and Post-Termination Obligations. Assignor acknowledges and
agrees that those obligations and duties which have effect on a post-assignment or a post-termination basis and
which are expressly set forth in the Franchise Agreement or implied by their nature therein shall be performed and
observed hereafter to the extent and for a term as expressed or implied in the Franchise Agreement.
9.
Subordination. Assignor agrees to subordinate any right to receive any payment from Assignee
to any rights or claims of the Franchisor to receive or for payments from Assignee. Any payments received by
Assignor as a result of any sale of assets connected with or by virtue of this Assignment shall be subject to
settlement of all accounts Assignor has with the Franchisor, and Assignee shall not pay any material portion of
such purchase price to Assignor without first obtaining the Franchisor's written consent.
10.
Miscellaneous. This Assignment, and the documents referred to herein, constitute the entire
agreement among the parties with respect to the subject matter hereof. No amendment will be binding unless in
writing and signed by the party against whom enforcement is sought. All representations, warranties, agreements
and all other provisions of this Assignment which by their terms or by reasonable implication are intended to
survive the closing of this Transfer will survive it.
11.
Counterparts. This Assignment may be executed in more than one counterpart, each of which
shall constitute an original copy.
TCBY FDD 03/2014
4
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed this
Assignment to be effective as of the date first set forth above.
Assignor:
By:
Title:
Assignee, as the purchaser of an existing franchised location in Franchisor’s franchise system, by
signing where indicated below, understands and acknowledges the absolute right of the Franchisor, and
companies affiliated with the Franchisor to sell Franchisor branded products and similar products
wherever the Franchisor, or any affiliated company, may from time to time deem appropriate. Such
products may include, but shall not be limited to, the products that franchisees, including Assignee, are
authorized to sell under their franchise agreements, and other products of whatever type that the
Franchisor or any affiliated company may from time to time deem appropriate for sale through franchised,
traditional, non-traditional or other distribution methods. Such methods of distribution may include, but
shall not necessarily be limited to, sales by franchisees of the Franchisor or its affiliates, sales at sports
arenas and stadiums, department stores, airports, toll road travel plazas, hospitals, office buildings, schools
and colleges, and other non-store venues, as well as sales to wholesalers and/or distributors for resale.
Assignee:
By:
Title:
Not binding without execution by an authorized officer of the Franchisor.
Franchisor:
By:
Title:
TCBY FDD 03/2014
5
EXHIBIT O
RENEWAL ADDENDUM TO FRANCHISE AGREEMENT
TCBY FDD 03/2014
EXHIBIT O: Renewal Addendum
RENEWAL ADDENDUM TO TCBY®
FRANCHISE AGREEMENT
This is an addendum (the “Renewal Addendum”) to the TCBY® FRANCHISE AGREEMENT
between________________________________________________________ (“you” or the “Franchisee”) and
TCBY SYSTEMS, LLC (“us”, “we” or “TCBY”), dated __________________, 20__ (the “Agreement”) and is
considered to be part of that Agreement. All capitalized terms used in this addendum but not defined herein shall
have the same meanings ascribed to them in the Agreement.
1.
Preambles. You have owned and operated a TCBY store under and by virtue of a franchise
agreement dated _______________ made and entered into between you and TCBY (the “Original Franchise
Agreement”). The initial term of the Original Franchise Agreement has expired or will soon expire, and the
parties wish to renew the franchise relationship by entering into the Agreement, as modified by this Renewal
Addendum. The Renewal Addendum is necessary to modify the terms of the standard form of Franchise
Agreement to remove the right to renew for an additional term thereunder, and to provide for a general mutual
release of claims, a condition to renewal set forth in the Original Franchise Agreement.
2.
Term. Article 3 of the Franchise Agreement is hereby deleted in its entirety and the following is
substituted in its place:
ARTICLE 3
TERM
3.1
Term of the Franchise Agreement. The term of this Agreement will be 10 years,
commencing on the date of this Agreement. This Agreement is granted in connection with the
renewal of a predecessor franchise agreement entered into between you and us. See the Renewal
Addendum attached to this Agreement. References to the term of this Agreement mean the 10year renewal term granted hereunder, and notwithstanding anything to the contrary contained in
this Agreement or any related exhibit or addenda, no additional right to renew is granted by virtue
of this Agreement.
3.
Section 15.8:
Mutual Release.
The following provision is hereby added to the Agreement as a new
15.8
Mutual Release of Claims. You (and your Entity Owners, if you are an Entity),
on behalf of you, your Entity Owners, your affiliates, wholly-owned or controlled corporations,
subsidiaries, parents, employees, agents, representatives consultants, predecessors, successors,
assigns, heirs, executors, and administrators (collectively the “Franchisee Parties”), hereby
remise, release, and forever discharge generally TCBY and any affiliate, wholly-owned or
controlled corporation, subsidiary, predecessor, successor, or assign thereof and any shareholder,
officer, director, employee, or agent of any of them (collectively the “TCBY Parties”), and
TCBY does hereby remise, release, and forever discharge generally the Franchisee Parties from
any and all claims, demands, damages, and injuries, whether presently known or unknown,
suspected or unsuspected, disclosed or undisclosed, actual or potential, which any of the
Franchisee Parties or the TCBY Parties may now have, or may hereafter claim to have had or to
have acquired against the other, of whatever source of origin, which in any way arise out of or are
connected with the Store, or any franchise agreements or rights under which you currently
operate the Store, arising from any periods prior to and including the date hereof, including
TCBY FDD 03/2014
1
generally any and all claims at law or in equity, those arising under the common law or state or
federal statutes, rules or regulations such as, by way of example only, franchising, securities and
antitrust statutes, rules or regulations (the “Released Claims”). Further, each of the Franchisee
Parties and the TCBY Parties agree never from this day forward, directly or indirectly, to
institute, prosecute, commence, join in, or generally attempt to assert or maintain any action
against the other, in any court or tribunal of the United States of America, any state thereof, or
any other jurisdiction in connection with or related to the Released Claims.
NOT RELEASED BY THE TCBY PARTIES ARE (1) CURRENT OR PAST DUE DEBTS
ON ACCOUNT OR UNDER ANY AGREEMENT, PAYABLE EITHER TO TCBY OR
ANY OF OUR AFFILIATES, (2) THE COLLECTION OF ANY CURRENT OR
DELINQUENT REPORTS OR RECORDS REQUIRED TO BE FILED BY YOU UNDER
ANY AGREEMENT BETWEEN YOU AND TCBY OR ANY OF OUR AFFILIATES,
AND (3) ANY CLAIMS ARISING FROM OR RELATED TO TCBY’S AUDIT RIGHTS
UNDER THE FRANCHISE AGREEMENT.
THIS IS A RELEASE. A RELEASE HAS LEGAL CONSEQUENCES. ANY PARTY
HERETO SHOULD CONSULT WITH AN ATTORNEY IF SUCH PARTY DOES NOT
FULLY UNDERSTAND WHAT A RELEASE IS OR THE EFFECT OF THIS RELEASE.
THIS RELEASE MAY BE SUBJECT TO OR LIMITED BY LOCAL LAW IN YOUR
STATE. PLEASE REFER TO ANY STATE-SPECIFIC ADDENDA OR RIDERS
ATTACHED TO THE AGREEMENT.
first written above.
TCBY SYSTEMS, LLC
By:
By:
Title:
Title:
TCBY FDD 03/2014
2
EXHIBIT P
STATE SPECIFIC ADDENDA TO DISCLOSURE DOCUMENT, FRANCHISE
AGREEMENT AND AREA DIRECTOR AGREEMENT
TCBY FDD 03/2014
EXHIBIT P: State Specific Addenda
CALIFORNIA ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
NOTE: THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL
PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED
TOGETHER WITH THE FRANCHISE DISCLOSURE DOCUMENT.
As a supplement to the information disclosed in this disclosure document, the following additional
paragraphs are added:
1.
State Cover Page, Risk Factor 4: IN ADDITION, WE WILL DEFER COLLECTION OF ALL
INITIAL FEES DESCRIBED IN ITEM 5 UNTIL WE HAVE COMPLETED OUR INITIAL
OBLIGATIONS UNDER THE FRANCHISE OR AREA DIRECTOR AGREEMENT UNTIL
THE FRANCHISEE OR AREA DIRECTOR IS OPEN FOR BUSINESS.
2.
State Cover Page, additional Risk Factor: AS SUMMARIZED IN ITEM 4, WE, OUR PARENT,
AND SEVERAL AFFILIATES EACH FILED A VOLUNTARY CHAPTER 11
BANKRUPTCY IN 2008. YOU SHOULD CAREFULLY REVIEW ITEM 4 BEFORE
INVESTING IN THIS FRANCHISE.
3.
No person identified in Item 2 of the disclosure document is subject to any currently effective
order of any national securities association or national securities exchange, as defined in the
Securities Exchange Act of 1934, 15 U.S.C.A 78a et seq., suspending or expelling such person
from membership in such association or exchange.
4.
California Business and Professions Code Sections 20000 through 20043 provide rights to you
concerning termination or nonrenewal of a franchise. If the Franchise Agreement contains a
provision that is inconsistent with the law, the law will control.
5.
The Franchise Agreement and Area Director Agreement provide for termination upon
bankruptcy. These provisions may not be enforceable under federal bankruptcy law (11 U.S.C.A.
Sec. 101 et seq.).
6.
The Franchise Agreement and Area Director Agreement contain a covenant not to compete which
extends beyond the termination of the franchise. These provisions may not be enforceable under
California Law.
7.
The Franchise Agreement and Area Director Agreement require litigation to occur at Broomfield,
Colorado, with the costs being borne by the non-prevailing party in the litigation. You are
encouraged to consult private legal counsel to determine the applicability of California and
federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure
Section 1281) to any provisions of an agreement restricting venue to a forum outside the State of
California.
8.
The Franchise Agreement and Area Director Agreement require application of the laws of the
State of Colorado. These provisions may not be enforceable under California law.
9.
The Franchise Agreement and Area Director Agreement require the parties to waive any and all
rights to a trial by jury in the event of litigation. These provisions may not be enforceable under
California law.
TCBY FDD 03/2014
1
10.
With respect to franchises governed by California law, we agree to comply with the requirements
of Section 31109.1 of the Franchise Investment Law if we waive some fees for some franchisees,
as described in Item 5.
11.
You must sign a general release if you transfer your franchise. California Corporations Code
31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations
Code 31000 through 31516). Business and Professions Code 20010 voids a waiver of your rights
under the Franchise Relations Act (Business and Professions Code 20000 through 20043).
12.
The Franchise Agreement contains a liquidated damages clause. Under California Civil Code
Section 1671, certain liquidated damages clauses are unenforceable.
13.
THE CALIFORNIA INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED
AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED
TOGETHER WITH THE FRANCHISE DISCLOSURE DOCUMENT. SECTION 31125 OF
THE FRANCHISE INVESTMENT LAW REQUIRES US TO GIVE TO YOU A DISCLOSURE
DOCUMENT APPROVED BY THE COMMISSIONER OF CORPORATIONS BEFORE WE
ASK YOU TO CONSIDER A MATERIAL MODIFICATION OF YOUR FRANCHISE
AGREEMENT.
14.
OUR WEBSITE HAS NOT BEEN REVIEWED OR APPROVED BY THE CALIFORNIA
DEPARTMENT OF CORPORATIONS.
ANY COMPLAINTS CONCERNING THE
CONTENT OF THIS WEBSITE MAY BE DIRECTED TO THE CALIFORNIA
DEPARTMENT OF CORPORATIONS AT www.dbo.ca.gov.
TCBY FDD 03/2014
2
CALIFORNIA ADDENDUM TO FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Franchise Investment Law and the rules and regulations promulgated thereunder,
the Franchise Agreement is modified as follows:
1.
Collection of the initial franchise fee identified in Subparagraph 6.1 of the Franchise Agreement and any
other fees described in Item 5 of the Franchise Disclosure Document is deferred until we have completed
our initial obligations under the Franchise Agreement and until the franchisee is open for business.
3.
Subparagraph 17.6 of the Franchise Agreement requires the parties to waive any and all rights to a trial by
jury in the event of litigation. This provision may not be enforceable under California law.
4.
Except as expressly provided herein, the Franchise Agreement shall remain in full force and effect.
Dated: ____________________
TCBY SYSTEMS, LLC
By
Its
Dated: ____________________
FRANCHISEE(S)
(Signature)
(Signature)
TCBY FDD 03/2014
3
CALIFORNIA ADDENDUM TO AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Franchise Investment Law and the rules and regulations promulgated thereunder,
the Area Director Agreement is modified as follows:
1.
Collection of the initial territory fee identified in Section 5.1 of the Area Director Agreement is deferred
until we have completed our initial obligations under the Area Director Agreement and until the Area
Director is open for business.
2.
Section 19.3 of the Area Director Agreement requires the parties to waive any and all rights to a trial by
jury in the event of litigation. This provision may not be enforceable under California law.
3.
Except as expressly provided herein, the Area Director Agreement shall remain in full force and effect.
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
4
HAWAII ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
paragraph is added to Item 5:
“For those franchises governed by Hawaiian law, we will defer payment of the initial fees
described in Item 5 until we have completed our initial obligations under the Franchise
Agreement or Area Director Agreement.”
TCBY FDD 03/2014
5
HAWAII ADDENDUM TO THE FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Hawaiian Franchise Investment Law and the rules and regulations promulgated
thereunder, the Franchise Agreement executed as of ____________, 20___, of TCBY Systems, LLC shall be
modified as follows:
1.
Payment of the initial franchise fee identified in Section 6.1 of the Franchise Agreement and any other
fees described in Item 5 of the Franchise Disclosure Document are deferred until we have completed our
initial pre-opening obligations under the Franchise Agreement.
TCBY SYSTEMS, LLC
FRANCHISEE(S)
By
(Signature)
Its
(Signature)
TCBY FDD 03/2014
6
HAWAII ADDENDUM TO THE AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Hawaiian Franchise Investment Law and the rules and regulations promulgated
thereunder, the Area Director Agreement executed as of ____________, 20___, of TCBY Systems, LLC shall be
1.
Payment of the initial territory fee identified in Section 5.1 of the Area Director Agreement is deferred
until we have completed our initial pre-opening obligations under the Area Director Agreement.
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
7
ILLINOIS ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
1.
The following is inserted after the third paragraph under the sub-heading “Risk Factors” at the cover page
of this disclosure document:
“The Risk Factors set forth above may be affected by Illinois law, 815 ILCS §§ 705/4 and
705/41.”
2.
The following is added to Item 5:
“Based on our financial condition, the Illinois Attorney General has imposed a fee deferral
requirement with respect to the franchises governed by Illinois law. We therefore will defer
payment of the initial fees described in Item 5 until all initial obligations owed the franchisee
have been completed and the franchisee has commenced business pursuant to the Franchise
Agreement or Area Director Agreement.”
3.
The following paragraphs are inserted at the end of Item 17:
“The conditions under which your franchise can be terminated and your rights upon non-renewal
may be affected by Illinois law, 815 ILCS 705/19 and 705/20.”
“Provisions regarding jurisdiction and venue and choice of law may be affected by Illinois law,
815 ILCS §§ 705/4 and 705/41, respectively.
TCBY FDD 03/2014
8
ILLINOIS ADDENDUM TO FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Illinois Disclosure Franchise Act and the rules and regulations promulgated
1.
fees described in Item 5 of the Franchise Disclosure Document are deferred until we have completed all
of our pre-opening obligations and you commence business pursuant to the Franchise Agreement.
2.
The following statement is added to the end of Section 13.2 and inserted as Section 13.3:
The conditions under which your license rights can be terminated and your rights upon non-renewal may
be affected by Illinois law, 815 ILCS 705/19 and 705/20.
3.
Section 17.4 is hereby deleted in its entirety, to the extent required under Illinois law, and the following is
EXCEPT TO THE EXTENT GOVERNED BY THE UNITED STATES TRADEMARK ACT OF 1946
(LANHAM ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL LAW OR MATTERS
ARISING UNDER THE ILLINOIS FRANCHISE DISCLOSURE ACT WHICH SHALL BE
GOVERNED BY ILLINOIS LAW, THIS AGREEMENT, THE FRANCHISE AND THE
RELATIONSHIP BETWEEN COMPANY AND FRANCHISEE SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF COLORADO, EXCEPT THAT ANY STATE LAW RELATING TO
(1) THE OFFER AND SALE OF FRANCHISES, (2) FRANCHISE RELATIONSHIPS OR
(3) BUSINESS OPPORTUNITIES, SHALL NOT APPLY UNLESS THE APPLICABLE
JURISDICTIONAL REQUIREMENTS ARE MET INDEPENDENTLY WITHOUT REFERENCE TO
THIS PARAGRAPH.
4.
Section 17.5 is hereby deleted in its entirety, to the extent required under Illinois law.
5.
Section 17 is amended, to the extent required under Illinois law, to include the following:
Section 41 of the Illinois Franchise Disclosure Act states that “any condition, stipulation, or provision
purporting to bind any person acquiring any franchise to waive compliance with any provision of this Act
is void.”
6.
Section 17.7 is deleted in its entirety, to the extent required under Illinois law.
7.
The following Section 18.16 is added to the Agreement:
18.16 Certain Waivers Void. This Agreement is subject to Section 41 of the Illinois Franchise
Disclosure Act which states that “any condition, stipulation, or provision purporting to bind any person
acquiring any franchise to waive compliance with any provision of this Act is void.”
TCBY FDD 03/2014
9
8.
Paragraphs 4 and 5 of the Acknowledgement Addendum are deleted, to the extent required under Illinois
law.
TCBY SYSTEMS, LLC
FRANCHISEE(S)
By:
Its:
(Signature)
(Signature)
TCBY FDD 03/2014
10
ILLINOIS ADDENDUM TO AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Illinois Disclosure Franchise Act and the rules and regulations promulgated
1.
until we have completed all of our pre-opening obligations and you have commenced operation of your
AD Business.
2.
The following statement is added to the end of Section 17.2:
The conditions under which your license rights can be terminated and your rights upon non-renewal may
be affected by Illinois law, 815 ILCS 705/19 and 705/20.
3.
Section 19.2 is hereby deleted in its entirety, to the extent required under Illinois law, and the following is
Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C.
Sections 1051 Et Seq.) or other federal law or matters arising under the Illinois Franchise Disclosure Act
which shall be governed by Illinois law, this Agreement, the franchise and the relationship between
company and area director shall be governed by the laws of the state of Colorado, except that any state
law relating to (1) the offer and sale of franchises, (2) franchise relationships or (3) business
opportunities, shall not apply unless the applicable jurisdictional requirements are met independently
without reference to this paragraph.
4.
Section 19 is amended, to the extent required under Illinois law, to include the following:
Section 41 of the Illinois Franchise Disclosure Act states that “any condition, stipulation, or provision
purporting to bind any person acquiring any franchise to waive compliance with any provision of this Act
is void.”
5.
The following Section 20.14 is added to the Agreement:
20.14 Certain Waivers Void. This Agreement is subject to Section 41 of the Illinois Franchise
Disclosure Act which states that “any condition, stipulation, or provision purporting to bind any person
acquiring any franchise to waive compliance with any provision of this Act is void.”
6.
Paragraphs 6 and 7 of the Acknowledgement Addendum are deleted, to the extent required under Illinois
law.
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
11
MARYLAND ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
paragraphs are added to Item 5 of the disclosure document:
1.
With respect to franchises governed by the Maryland Franchise Registration and Disclosure Law,
all initial fees and payments shall be deferred until such time as the franchisor completes its initial
obligations under the Franchise Agreement and the first outlet opens.
2.
With respect to franchises governed by the Maryland Franchise Registration and Disclosure Law,
the initial territory fee shall be deferred until such time as the franchisor completes its initial
obligations under the Area Director Agreement and the Area Director commences operation of its
AD Business.
3.
With respect to the offer and sale of franchises governed by the Maryland Franchise Registration
and Disclosure Law, we will not require the signing of a release or waiver as a condition of any
refund of the initial franchise fee or initial territory fee.
paragraphs are added to Item 17 of the disclosure document:
1.
The Franchise Agreement and Area Director Agreement provide for termination upon
bankruptcy. These provisions may not be enforceable under federal bankruptcy law (11 U.S.C.A.
Sec. 101 et seq.)
2.
Any claims arising under the Maryland Franchise Registration and Disclosure Law must be
brought within 3 years after the grant of your franchise or AD Business.
3.
You may sue in Maryland for claims arising under the Maryland Franchise Registration and
Disclosure law.
4.
Under the Maryland Franchise Registration and Disclosure Law, the general release required as a
condition of renewal, sale and/or assignment/transfer will not apply to any liability under the
Maryland Franchise Registration and Disclosure Law. Further, in the event of a transfer, you will
sign the Assignment, Assumption and Consent included as an exhibit to our disclosure document,
which contains a release.
TCBY FDD 03/2014
12
MARYLAND ADDENDUM TO FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law and the
rules and regulations promulgated thereunder, the Franchise Agreement is modified as follows:
1.
The following is added at the end of Section 12.3(e):
Nothing in this Section 12.3(e) will act as a release, estoppel or waiver of any liability
incurred under the Maryland Franchise Registration and Disclosure Law.
2.
The following is added at the end of both Section 17.4 and 17.5:
NOTWITHSTANDING THE PRECEDING, YOU MAY BRING A LAWSUIT IN
MARYLAND FOR CLAIMS ARISING UNDER THE MARYLAND FRANCHISE
REGISTRATION AND DISCLOSURE LAW.
3.
The following is added to the end of Section 17.7:
This 1 year limitation of claims shall not apply to any claims arising under the Maryland
Franchise Registration and Disclosure Law. Any claims arising under the Maryland
Franchise Registration and Disclosure Law must be brought within 3 years after the grant
of your franchise.
4.
Any provision in the Franchise Agreement that requires you to disclaim the occurrence and/or
acknowledge the non-occurrence of acts that would constitute a violation of the Maryland
Franchise Registration and Disclosure Law is not intended to nor will it act as a release, estoppel
or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure
Law.
5.
All initial fees and payments shall be deferred until such time as we (the franchisor) have
completed our initial obligations and the first outlet opens.
6.
Except as expressly provided herein, the Franchise Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Addendum in ______
counterparts on the day and year first above written.
Dated:____________________
TCBY SYSTEMS, LLC
By:
Its:
Dated:____________________
FRANCHISEE(S)
(Signature)
(Signature)
TCBY FDD 03/2014
13
MARYLAND ADDENDUM TO AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law and the
rules and regulations promulgated thereunder, the Area Director Agreement is modified as follows:
1.
The following is added at the end of Section 15.3(d):
Nothing in this Section 15.3(d) will act as a release, estoppel or waiver of any liability
incurred under the Maryland Franchise Registration and Disclosure Law.
2.
The following is added at the end of Section 19.2:
NOTWITHSTANDING THE PRECEDING PARAGRAPH, YOU MAY BRING A
LAWSUIT IN MARYLAND FOR CLAIMS ARISING UNDER THE MARYLAND
FRANCHISE REGISTRATION AND DISCLOSURE LAW.
3.
The following is added to the end of Section 19.4:
This 1 year limitation of claims shall not apply to any claims arising under the Maryland
Franchise Registration and Disclosure Law. Any claims arising under the Maryland
Franchise Registration and Disclosure Law must be brought within 3 years after the grant
of your AD Business.
4.
Any provision in the Area Director Agreement that requires you to disclaim the occurrence and/or
acknowledge the non-occurrence of acts that would constitute a violation of the Maryland
Franchise Registration and Disclosure Law is not intended to nor will it act as a release, estoppel
or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure
Law.
5.
The initial territory fee shall be deferred until such time as we (the franchisor) have completed
our initial obligations.
6.
Except as expressly provided herein, the Area Director Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Addendum in ______
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
14
MINNESOTA ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
1.
Any release executed in connection with the Franchise Agreement or Area Director
Agreement shall not apply to any claims arising under Minnesota Statutes 1973 Supplement, Sections
80C.01 to 80C.22, providing that a franchisee cannot be required to assent to a release, assignment, or
waiver that would relieve any person from liability imposed by such statutes; provided, however that this
shall not bar the voluntary settlement of disputes.
2.
With respect to the franchises governed by Minnesota law, we will comply with
Minnesota Statute Sec. 80C.14, subdivisions 3, 4 and 5 which require, except in certain specific cases,
that we give you 90 days notice of termination (with 60 days to cure) and 180 days notice for non-renewal
of the franchise agreement.
3.
Minnesota Statute Sec. 80C.21 and Minnesota Rule 2860.4400J prohibit us from
requiring litigation to be conducted outside Minnesota. In addition, nothing in the disclosure document,
Franchise Agreement or Area Director Agreement can abrogate or reduce any of your rights as provided
for in Minnesota Statutes, Chapter 80C, or your rights to a jury trial or any procedure, forum, or remedies
provided for by the laws of the jurisdiction.
4.
With respect to the franchises governed by Minnesota law, we will defer payment of the
initial fees described in Item 5 until we have completed our initial obligations under the Franchise
Agreement or Area Director Agreement.
TCBY FDD 03/2014
15
MINNESOTA ADDENDUM TO FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Minnesota Franchise Act and the rules and regulations promulgated thereunder, the
Franchise Agreement is modified as follows:
1.
The following is added at the end of Section 12.3(e):
“except that any release shall not apply to any claims arising under the Minnesota Statutes 1973
Supplement, Sections 80C.01 to 80.C.22, providing that a franchisee cannot be required to assent
to a release, assignment, or waiver that would relieve any person from liability imposed by such
statutes; provided, however that this shall not bar the voluntary settlement of disputes;”
2.
The following sentence is added to the end of Section 13.2:
With respect to the franchises governed by Minnesota law, notwithstanding the foregoing,
Company will comply with Minnesota Statute Sec. 80C.14, subdivisions 3, 4 and 5 which
require, except in certain specific cases, that we give you 90 days notice of termination (with 60
days to cure) and 180 days notice for non-renewal of the franchise agreement.
3.
Section 17.5 is amended, to the extent required under Minnesota law, to provide that any litigation or
other court proceeding will take place in the state in which your Store is located.
4.
Section 17.4 is deleted in its entirety, to the extent required under Minnesota law, and the following
language is substituted in its place:
EXCEPT TO THE EXTENT GOVERNED BY THE UNITED STATES TRADEMARK ACT
OF 1946 (LANHAM ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL
LAW, OR MATTERS ARISING UNDER THE MINNESOTA FRANCHISE ACT WHICH
SHALL BE GOVERNED THEREBY, THIS AGREEMENT AND THE RELATIONSHIP
BETWEEN YOU AND US WILL BE GOVERNED BY THE LAWS OF THE STATE OF
COLORADO, EXCEPT THAT ANY STATE LAW RELATING TO (1) THE OFFER AND
SALE OF FRANCHISES, (2) FRANCHISE RELATIONSHIPS, OR (3) BUSINESS
OPPORTUNITIES, WILL NOT APPLY UNLESS THE APPLICABLE JURISDICTIONAL
REQUIREMENTS ARE MET INDEPENDENTLY WITHOUT REFERENCE TO THIS
PARAGRAPH.
5.
Pursuant to Minn. Stat. Sec. 80C.21 and Minn. Rule Part 2860.4400J, this Section shall not in any way
abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C or your rights to
a jury trial or any procedure, forum, or remedies provided for by the laws of the jurisdiction.
8.
Section 17.6 is deleted in its entirety, to the extent required under Minnesota law.
9.
fees described in Item 5 of the Franchise Disclosure Document are deferred until we have completed our
initial obligations under the Franchise Agreement.
10.
Except as expressly provided herein, the Agreement shall remain in full force and effect.
TCBY FDD 03/2014
16
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
FRANCHISEE(S)
(Signature)
(Signature)
TCBY FDD 03/2014
17
MINNESOTA ADDENDUM TO AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Minnesota Franchise Act and the rules and regulations promulgated thereunder, the
Area Director Agreement is modified as follows:
1.
The following is added at the end of Section 15.3(d):
“except that any release shall not apply to any claims arising under the Minnesota Statutes 1973
Supplement, Sections 80C.01 to 80.C.22, providing that a franchisee cannot be required to assent
to a release, assignment, or waiver that would relieve any person from liability imposed by such
statutes; provided, however that this shall not bar the voluntary settlement of disputes;”
2.
With respect to the franchises governed by Minnesota law, notwithstanding the foregoing,
Company will comply with Minnesota Statute Sec. 80C.14, subdivisions 3, 4 and 5 which
require, except in certain specific cases, that we give you 90 days notice of termination (with 60
days to cure) and 180 days notice for non-renewal of the franchise agreement.
3.
Section 19.2 is deleted in its entirety, to the extent required under Minnesota law, and the following
language is substituted in its place:
Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15
U.S.C. Sections 1051 et seq.) Or other federal law, or matters arising under the Minnesota
Franchise Act which shall be governed thereby, this agreement and the relationship between you
and us will be governed by the laws of the state of Colorado, except that any state law relating to
(1) the offer and sale of franchises, (2) franchise relationships, or (3) business opportunities, will
not apply unless the applicable jurisdictional requirements are met independently without
reference to this paragraph.
4.
Section 19.3 is deleted in its entirety, to the extent required under Minnesota law.
5.
until we have completed our initial obligations under the Area Director Agreement.
6.
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
18
NEW YORK ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
1.
Except as disclosed in Item 3 of the disclosure document, neither we, our predecessors, affiliates
nor any person identified in Item 2 of this disclosure document:
A.
Has any administrative, criminal or material civil action (or a significant number of civil
actions irrespective of materiality) pending against it or him alleging a violation of any
franchise law, securities law, fraud, embezzlement, fraudulent conversion, restraint of
trade, unfair or deceptive practices, misappropriation of property or comparable
allegations.
B.
Has been convicted of a felony or pleaded nolo contendere to a felony charge or within
the ten (10) year period immediately preceding the application for registration, been
convicted of a misdemeanor or pleaded nolo contendere to a misdemeanor charge or been
held liable in a civil action by final judgment or been the subject of a material complaint
or other legal proceeding if such misdemeanor conviction or charge or civil action,
complaint or other legal proceeding involved violation of any franchise law, securities
law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive
practices, misappropriation of property or comparable allegations.
C.
Is subject to any currently effective injunctive or restrictive order or decree relating to
franchises or under any federal, state, or Canadian franchise, securities, antitrust, trade
regulation, trade practice law, or any national securities association or national securities
exchange (as defined in the Securities and Exchange Act of 1934) suspending or
expelling such person from membership in such association or exchange as a result of a
concluded or pending action or proceeding brought by a public agency.
2.
Except as disclosed in Item 4 of the disclosure document, during the fifteen (15) year period
immediately preceding the date of this disclosure document, neither we, our predecessors,
affiliates or any person identified in Item 2 of this disclosure document has been adjudged
bankrupt or reorganized due to insolvency or been a principal officer of any company or a general
partner in any partnership at or within 1 year of the time that such company or partnership was
adjudged bankrupt or reorganized due to insolvency or is otherwise subject to any pending
bankruptcy or reorganization proceeding.
3.
You will not be required to indemnify us for any claims arising out of a breach of the Franchise
Agreement or Area Director Agreement by us or other civil wrongs committed by us.
4.
We will not make any changes to the Operations Manual or Area Director Manuals which would
impose an unreasonable economic burden on you or unreasonably increase your obligations under
the Franchise Agreement or Area Director Agreement.
5.
We will not assign any of our rights under the Franchise Agreement or Area Director Agreement
except to an assignee who, in our good faith judgment, is willing and able to assume our
obligations under the Agreement.
6.
Any release executed in connection with the Franchise Agreement or Area Director Agreement is
subject to the proviso that all rights enjoyed by you and any causes of action arising in your favor
TCBY FDD 03/2014
19
from the provisions of Article 33 of the General Business Law of the State of New York and the
regulations issued thereunder shall remain in force; it being the intent of this proviso that the nonwaiver provisions of Sections 687.4 and 687.5 of the General Business Law of New York State
be satisfied.
7.
You may terminate the Franchise Agreement, Area Director Agreement and any ancillary
agreements upon any other grounds available by law.
8.
The summary in Item 17.w., Choice of Law, is amended to state the following:
Colorado law applies unless governed by applicable federal law. The foregoing choice of law
should not be considered a waiver of any right conferred upon the franchisor or upon Franchisee
or Area Director by the General Business Law of the State of New York.
TCBY FDD 03/2014
20
NEW YORK ADDENDUM TO FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
1.
The following is added after the third sentence in Section 5.2:
However, we will make no changes to the Operations Manual which would impose an unreasonable
economic burden on you or unreasonably increase your obligations.
2.
Section 12.1 is amended by adding the following to the end of that Section:
However, we will make no assignment except to an assignee who, in our good faith judgment, is willing
and able to assume our obligations under this Agreement.
3.
The following language is added at the end of Section 12.3(e):
provided, however, that any release shall not apply to any claims arising under the provisions of Article
33 of the General Business Law of the State of New York.
4.
The following sentence, to the extent required under New York law, is added to the end of Section 15.6:
However, you will not be required to indemnify us for any claims arising out of a breach of the
Agreement by us or other civil wrongs of us.
5.
Section 17.4 is deleted in its entirety, to the extent required under New York law, and the following is
EXCEPT TO THE EXTENT GOVERNED BY THE UNITED STATES TRADEMARK ACT OF 1946
(LANHAM ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL LAW OR MATTERS
ARISING UNDER ARTICLE 33 OF THE GENERAL BUSINESS LAW OF THE STATE OF NEW
YORK WHICH SHALL BE GOVERNED THEREBY, THIS AGREEMENT AND THE
RELATIONSHIP BETWEEN YOU AND US WILL BE GOVERNED BY THE LAWS OF THE
STATE OF COLORADO, EXCEPT THAT ANY STATE LAW RELATING TO (1) THE OFFER AND
SALE OF FRANCHISES, (2) FRANCHISE RELATIONSHIPS, OR (3) BUSINESS OPPORTUNITIES,
WILL NOT APPLY UNLESS THE APPLICABLE JURISDICTIONAL REQUIREMENTS ARE MET
INDEPENDENTLY WITHOUT REFERENCE TO THIS PARAGRAPH.
TCBY FDD 03/2014
21
6.
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
FRANCHISEE(S)
(Signature)
(Signature)
TCBY FDD 03/2014
22
NEW YORK ADDENDUM TO AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
1.
Section 15.1 is amended by adding the following to the end of that Section:
However, we will make no assignment except to an assignee who, in our good faith judgment, is willing
and able to assume our obligations under this Agreement.
2.
The following language is added at the end of Section 15.3(d):
provided, however, that any release shall not apply to any claims arising under the provisions of Article
33 of the General Business Law of the State of New York.
3.
The following sentence, to the extent required under New York law, is added to the end of Section 18.4:
However, you will not be required to indemnify us for any claims arising out of a breach of the
Agreement by us or other civil wrongs of us.
4.
Section 19.2 is deleted in its entirety, to the extent required under New York law, and the following is
Sections 1051 et seq.) Or other federal law or matters arising under Article 33 of the General Business
Law of the state of New York which shall be governed thereby, this Agreement and the relationship
between you and us will be governed by the laws of the state of Colorado, except that any state law
relating to (1) the offer and sale of franchises, (2) franchise relationships, or (3) business opportunities,
will not apply unless the applicable jurisdictional requirements are met independently without reference
to this paragraph.
5.
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
23
NORTH DAKOTA ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
1.
Covenants not to compete upon termination or expiration of the Franchise Agreement or
Area Director Agreement are generally unenforceable in North Dakota, except as provided by law.
2.
Any release executed in connection with the Franchise Agreement or Area Director
Agreement will not apply to any claims that may arise under the North Dakota Franchise Investment Law.
3.
Any litigation required by the Franchise Agreement or Area Director Agreement will be
conducted in the state where your Store or the territory for your AD Business is or will be located.
4.
With respect to the franchises governed by North Dakota law, we will defer payment of
the initial fees described in Item 5 until we have fulfilled all of our initial obligations under the Franchise
Agreement or Area Director Agreement and you have commenced doing business pursuant to the
Agreement.
5.
With respect to the franchises governed by North Dakota law, any provisions requiring
the franchisee to consent to liquidated damages upon termination shall be void, in keeping with the
provisions of the North Dakota Franchise Investment Law.
TCBY FDD 03/2014
24
NORTH DAKOTA ADDENDUM TO FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the North Dakota Franchise Act and the rules and regulations promulgated thereunder,
the Franchise Agreement is modified as follows:
1.
The following statement is added at the end of Sections 11.2, 12.3(j) and 12.5(c):
Covenants not to compete upon termination or expiration of a franchise agreement are generally
unenforceable in North Dakota, except as provided by law.
2.
The following statement is added at the end of Sections 12.3(e):
(To the extent required under North Dakota law, any release executed in connection herewith will not
apply to any claims that may arise under the North Dakota Franchise Investment Law.)
3.
The following statement is added at the end of Section 13.6:
Notwithstanding the foregoing, nothing in this Section shall be construed to require the franchisee to
consent to liquidated damages in the event of termination.
4.
5.
Section 17.5 is amended, to the extent required under North Dakota law, to provide:
a.
Litigation will occur in the state in which your Store is located.
b.
The judge will have the authority to award exemplary or punitive damages in a proper case.
Section 17.4 is deleted in its entirety, to the extent required under North Dakota law, and the following is
OF 1946 (LANHAM ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL LAW OR
MATTERS ARISING UNDER THE NORTH DAKOTA FRANCHISE INVESTMENT LAW WHICH
SHALL BE GOVERNED THEREBY, THIS AGREEMENT AND THE RELATIONSHIP BETWEEN
YOU AND US WILL BE GOVERNED BY THE LAWS OF THE STATE OF COLORADO, EXCEPT
THAT ANY STATE LAW RELATING TO (1) THE OFFER AND SALE OF FRANCHISES, (2)
FRANCHISE RELATIONSHIPS, OR (3) BUSINESS OPPORTUNITIES, WILL NOT APPLY UNLESS
THE APPLICABLE JURISDICTIONAL REQUIREMENTS ARE MET INDEPENDENTLY
WITHOUT REFERENCE TO THIS PARAGRAPH.
7.
Section 17.6 is deleted in its entirety, to the extent required under North Dakota law.
8.
fees described in Item 5 of the Franchise Disclosure Document are deferred until we have fulfilled all of
our initial obligations under the Franchise Agreement or other documents and you have commenced
doing business pursuant to the Franchise Agreement.
9.
TCBY FDD 03/2014
25
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment in ______
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
FRANCHISEE(S)
(Signature)
(Signature)
TCBY FDD 03/2014
26
NORTH DAKOTA ADDENDUM TO AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the North Dakota Franchise Act and the rules and regulations promulgated thereunder,
the Area Director Agreement is modified as follows:
1.
The following statement is added at the end of Section 17.5:
Covenants not to compete upon termination or expiration of a franchise agreement are generally
unenforceable in North Dakota, except as provided by law.
2.
The following statement is added at the end of Sections 15.3(d):
(To the extent required under North Dakota law, any release executed in connection herewith will not
apply to any claims that may arise under the North Dakota Franchise Investment Law.)
3.
Section 19.2 is deleted in its entirety, to the extent required under North Dakota law, and the following is
Sections 1051 et seq.) or other federal law or matters arising under the North Dakota Franchise
Investment Law which shall be governed thereby, this Agreement and the relationship between you and
us will be governed by the laws of the state of Colorado, except that any state law relating to (1) the offer
and sale of franchises, (2) franchise relationships, or (3) business opportunities, will not apply unless the
applicable jurisdictional requirements are met independently without reference to this paragraph.
4.
Section 19.3 is deleted in its entirety, to the extent required under North Dakota law.
5.
until we have fulfilled all of our initial obligations under the Area Director Agreement or other documents
and you have commenced operating your AD Business.
6.
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
27
RHODE ISLAND ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
The following paragraph is added to the end of Item 17 of the disclosure document:
19-28.1-14 of the Rhode Island Franchise Investment Act provides that “A provision in a franchise
agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the
laws of another state is void with respect to a claim otherwise enforceable under this act.”
TCBY FDD 03/2014
28
RHODE ISLAND ADDENDUM TO FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the requirements of the Rhode Island Franchise Investment Act and the rules and
regulations promulgated thereunder, the Franchise Agreement of TCBY Systems, LLC is modified as follows:
1.
Section 17.4 is hereby deleted in its entirety, to the extent required under Rhode Island law, and the
following is substituted in its place:
OF 1946 (LANHAM ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL LAW
AND EXCEPT WITH RESPECT TO MATTERS ARISING UNDER THE RHODE ISLAND
FRANCHISE INVESTMENT ACT, WHICH MATTERS SHALL BE GOVERNED THEREBY,
THIS AGREEMENT, THE FRANCHISE AND THE RELATIONSHIP BETWEEN COMPANY
AND FRANCHISEE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
COLORADO, EXCEPT THAT ANY STATE LAW RELATING TO (1) THE OFFER AND
SALE OF FRANCHISES, (2) FRANCHISE RELATIONSHIPS, OR (3) BUSINESS
OPPORTUNITIES, SHALL NOT APPLY UNLESS THE APPLICABLE JURISDICTIONAL
REQUIREMENTS ARE MET INDEPENDENTLY WITHOUT REFERENCE TO THIS
PARAGRAPH.
2.
Section 17.5 is hereby deleted in its entirety, to the extent required under Rhode Island law.
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
FRANCHISEE(S)
(Signature)
(Signature)
TCBY FDD 03/2014
29
RHODE ISLAND ADDENDUM TO AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the requirements of the Rhode Island Franchise Investment Act and the rules and
regulations promulgated thereunder, the Area Director Agreement of TCBY Systems, LLC is modified as
follows:
1.
Section 17.4 is hereby deleted in its entirety, to the extent required under Rhode Island law, and the
following is substituted in its place:
Sections 1051 et seq.) or other federal law and except with respect to matters arising under the Rhode
Island Franchise Investment Act, which shall be governed thereby, this Agreement and the relationship
between you and us will be governed by the laws of the state of Colorado, except that any state law
relating to (1) the offer and sale of franchises, (2) franchise relationships, or (3) business opportunities,
will not apply unless the applicable jurisdictional requirements are met independently without reference
to this paragraph.
Dated:____________________
TCBY SYSTEMS, LLC
By
Its
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
30
VIRGINIA ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
As a supplement to the information described in this disclosure document, the following additional paragraph is
added to Item 5:
“The Virginia State Corporation Commission’s Division of Securities and Retail Franchising
requires us to defer payment of the initial franchise fee or initial territory fee and other initial
payments owed by franchisees or area directors to the franchisor until the franchisor has
completed its pre-opening obligations under the Franchise Agreement or Area Director
Agreement.”
The following paragraph is added to Item 17:
“Pursuant to 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 grounds for default or
termination stated in the Franchise Agreement or Area Director Agreement do not contain
“reasonable cause,” as the term may be defined in the Virginia Retail franchising Act or the laws
of Virginia, that provision may not be enforceable.”
TCBY FDD 03/2014
31
VIRGINIA ADDENDUM TO FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Virginia Retail Franchising Act and the rules and regulations promulgated
1.
Section 6.1 of the Franchise Agreement is amended to provide:
“The Virginia State Corporation Commission’s Division of Securities and Retail Franchising requires us
to defer payment of the initial franchise fee and other initial payments owed by franchisees to the
franchisor until the franchisor has completed its pre-opening obligations under this Agreement.”
TCBY SYSTEMS, LLC
FRANCHISEE(S)
By:
Its:
(Signature)
(Signature)
TCBY FDD 03/2014
32
VIRGINIA ADDENDUM TO AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
In recognition of the Virginia Retail Franchising Act and the rules and regulations promulgated
1.
Section 5.1 of the Area Director Agreement is amended to provide:
“The Virginia State Corporation Commission’s Division of Securities and Retail Franchising requires us
to defer payment of the initial territory fee and other initial payments owed by area directors to the
franchisor until the franchisor has completed its pre-opening obligations under this Agreement.”
Dated:____________________
TCBY SYSTEMS, LLC
By:
Its:
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
33
WASHINGTON ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT
TCBY SYSTEMS, LLC
1.
In any litigation involving a franchise purchased in Washington, the litigation site shall be either in the
state of Washington, or in a place mutually agreed upon at the time of the litigation.
2.
In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act,
Chapter 19.100 RCW, shall prevail.
3.
A release or waiver of rights executed by you shall not include rights under the Washington Franchise
Investment Protection Act except when executed pursuant to a negotiated settlement after the agreement
is in effect and where the parties are represented by independent counsel. Provisions such as those which
unreasonably restrict or limit the statute of limitations period for claims under the Act, or rights or
remedies under the Act may not be enforceable.
4.
Transfer fees are collectable to the extent that they reflect our reasonable estimated or actual costs in
effecting a transfer.
TCBY FDD 03/2014
34
WASHINGTON ADDENDUM TO FRANCHISE AGREEMENT
TCBY SYSTEMS, LLC
1.
In any litigation involving a franchise purchased in Washington, the litigation shall take place either in the
state of Washington, or in a place mutually agreed upon by the parties, to the extent required under
Washington law.
2.
3.
4.
5.
fees described in Item 5 of the Franchise Disclosure Document are deferred until you have received our
initial training and open your Store for business.
6.
It shall be an unfair or deceptive act or practice or an unfair method of competition and therefore unlawful
and a violation of this chapter for any person to:
(i)
Refuse to renew a franchise without fairly compensating the franchisee for the fair market value,
at the time of expiration of the franchise, of the franchisee’s inventory, supplies, equipment, and
furnishings purchased from the franchisor, and good will, exclusive of personalized materials
which have no value to the franchisor, and inventory, supplies, equipment and furnishings not
reasonably required in the conduct of the franchise business: Provided, That compensation need
not be made to a franchisee for good will if (i) the franchisee has been given one year’s notice of
nonrenewal and (ii) the franchisor agrees in writing not to enforce any covenant which restrains
the franchisee from competing with the franchisor: Provided further, That a franchisor may offset
against amounts owed to a franchisee under this subsection any amounts owed by such franchisee
to the franchisor.
(ii)
Terminate a franchise prior to the expiration of its term except for good cause. Good cause shall
include, without limitation, the failure of the franchisee to comply with lawful material provisions
of the franchise or other agreement between the franchisor and the franchisee and to cure such
default after being given written notice thereof and a reasonable opportunity, which in no event
need be more than thirty days, to cure such default, or if such default cannot reasonably be cured
within thirty days, the failure of the franchisee to initiate within thirty days substantial and
continuing action to cure such default: Provided, That after three willful and material breaches of
the same term of the franchise agreement occurring within a twelve-month period, for which the
franchisee has been given notice and an opportunity to cure as provided in this subsection, the
franchisor may terminate the agreement upon any subsequent willful and material breach of the
same term within the twelve-month period without providing notice or opportunity to cure:
Provided Further, That a franchisor may terminate a franchise without giving prior notice or
opportunity to cure a default of the franchisee: (i) Is adjudicated a bankrupt or insolvent;
(ii) makes an assignment for the benefit of creditors or similar disposition of the assets of the
TCBY FDD 03/2014
35
franchise business; (iii) voluntarily abandons the franchise business; or (iv) is convicted of or
pleads guilty or no contest to a charge of violating any law relating to the franchise business.
Upon termination for good cause, the franchisor shall purchase from the franchisee at a fair
market value at the time of termination, the franchisee’s inventory and supplies, exclusive of
(i) personalized materials which have no value to the franchisor; (ii) inventory and supplies not
reasonably required in the conduct of the franchise business; and (iii) if the franchisee is to retain
control of the premises of the franchise business, any inventory and supplies not purchased from
the franchisor or on his express requirement: Provided, That a franchisor may offset against
amounts owed to a franchisee under this subsection any amounts owed by such franchisee to the
franchisor.
Dated:____________________
TCBY SYSTEMS, LLC
By:
Its:
Dated:____________________
FRANCHISEE(S)
(Signature)
(Signature)
TCBY FDD 03/2014
36
WASHINGTON ADDENDUM TO AREA DIRECTOR AGREEMENT
TCBY SYSTEMS, LLC
1.
In any litigation involving a franchise purchased in Washington, the litigation shall take place either in the
state of Washington, or in a place mutually agreed upon by the parties, to the extent required under
Washington law.
2.
3.
4.
5.
until you have received our initial training and commenced operation of your AD Business.
6.
It shall be an unfair or deceptive act or practice or an unfair method of competition and therefore unlawful
and a violation of this chapter for any person to:
(i)
Refuse to renew a franchise without fairly compensating the franchisee for the fair market value,
at the time of expiration of the franchise, of the franchisee’s inventory, supplies, equipment, and
furnishings purchased from the franchisor, and good will, exclusive of personalized materials
which have no value to the franchisor, and inventory, supplies, equipment and furnishings not
reasonably required in the conduct of the franchise business: Provided, That compensation need
not be made to a franchisee for good will if (i) the franchisee has been given one year’s notice of
nonrenewal and (ii) the franchisor agrees in writing not to enforce any covenant which restrains
the franchisee from competing with the franchisor: Provided further, That a franchisor may offset
against amounts owed to a franchisee under this subsection any amounts owed by such franchisee
to the franchisor.
(ii)
Terminate a franchise prior to the expiration of its term except for good cause. Good cause shall
include, without limitation, the failure of the franchisee to comply with lawful material provisions
of the franchise or other agreement between the franchisor and the franchisee and to cure such
default after being given written notice thereof and a reasonable opportunity, which in no event
need be more than thirty days, to cure such default, or if such default cannot reasonably be cured
within thirty days, the failure of the franchisee to initiate within thirty days substantial and
continuing action to cure such default: Provided, That after three willful and material breaches of
the same term of the franchise agreement occurring within a twelve-month period, for which the
franchisee has been given notice and an opportunity to cure as provided in this subsection, the
franchisor may terminate the agreement upon any subsequent willful and material breach of the
same term within the twelve-month period without providing notice or opportunity to cure:
Provided Further, That a franchisor may terminate a franchise without giving prior notice or
opportunity to cure a default of the franchisee: (i) Is adjudicated a bankrupt or insolvent;
(ii) makes an assignment for the benefit of creditors or similar disposition of the assets of the
franchise business; (iii) voluntarily abandons the franchise business; or (iv) is convicted of or
TCBY FDD 03/2014
37
pleads guilty or no contest to a charge of violating any law relating to the franchise business.
Upon termination for good cause, the franchisor shall purchase from the franchisee at a fair
market value at the time of termination, the franchisee’s inventory and supplies, exclusive of
(i) personalized materials which have no value to the franchisor; (ii) inventory and supplies not
reasonably required in the conduct of the franchise business; and (iii) if the franchisee is to retain
control of the premises of the franchise business, any inventory and supplies not purchased from
the franchisor or on his express requirement: Provided, That a franchisor may offset against
amounts owed to a franchisee under this subsection any amounts owed by such franchisee to the
franchisor.
Dated:____________________
TCBY SYSTEMS, LLC
By:
Its:
Dated:____________________
AREA DIRECTOR(S)
(Signature)
(Signature)
TCBY FDD 03/2014
38
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 TCBY Systems, LLC (“TCBY”) offers you a franchise, TCBY must provide this disclosure document to you 14 calendar
days before you sign a binding agreement with, or make a payment to, TCBY or its affiliate in connection with the proposed
franchise sale. Iowa, New York, Oklahoma and Rhode Island require that TCBY gives you this disclosure document at the
earlier of the first personal meeting or 10 business days (or 14 calendar days in Iowa) before the execution of the franchise or
other agreement or the payment of any consideration that relates to the franchise relationship. Michigan and Washington
require that TCBY gives you this disclosure document at least 10 business days before the execution of any binding franchise
or other agreement or payment of any consideration, whichever occurs first.
If TCBY 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 those state administrators listed on Exhibit A.
The franchisor is TCBY Systems, LLC located at 8001 Arista Place, Suite 600, Broomfield, CO 80021. Its telephone number
is (720) 599-3300.
Issuance Date: March 26, 2014, as amended July 16, 2014. See state effective dates page for state effective dates.
TCBY’s franchise sellers involved in offering and selling the franchise to you are listed below (with address and telephone
number), or will be provided to you separately before you sign a franchise agreement:
TCBY authorizes the respective state agencies identified on Exhibit A to receive service of process for TCBY in the
particular state.
I have received a disclosure document with an issuance date of March 26, 2014, as amended July 16, 2014, that included the
following Exhibits:
H. Lease Addendum
A. State Administrators/Agents for Service of Process
I. Operating Procedures Manual Table of Contents
B. Franchise Agreement (with Schedules and Exhibits)
J. Confidentiality Agreement
C. Other Concepts Store Addendum to Franchise
K. Franchisee Information
Agreement
L. Financial Statements
D. Area Director Disclosure Addendum to Franchise
M. Guarantee of Performance
Agreement
N. Assignment, Assumption and Consent
E. Area Director Agreement (with Exhibits)
O. Renewal Addendum to Franchise Agreement
F. Term Purchase Addendum
P. State Specific Addenda to Disclosure Document,
G. Sublease Agreement; Assignment and
Franchise Agreements, and Area Director Agreement
Assumption of Sublease Addendum
Date:
(Do not leave blank)
(Print Name of Prospective Franchisee (For Entity))
By:
Its:
Signature
(Print Name of Prospective Franchisee (For Individuals))
Signature
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 TCBY Systems, LLC (“TCBY”) offers you a franchise, TCBY must provide this disclosure document to you 14 calendar
days before you sign a binding agreement with, or make a payment to, TCBY or its affiliate in connection with the proposed
franchise sale. Iowa, New York, Oklahoma and Rhode Island require that TCBY gives you this disclosure document at the
earlier of the first personal meeting or 10 business days (or 14 calendar days in Iowa) before the execution of the franchise or
other agreement or the payment of any consideration that relates to the franchise relationship. Michigan and Washington
require that TCBY gives you this disclosure document at least 10 business days before the execution of any binding franchise
or other agreement or payment of any consideration, whichever occurs first.
If TCBY 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 those state administrators listed on Exhibit A.
The franchisor is TCBY Systems, LLC located at 8001 Arista Place, Suite 600, Broomfield, CO 80021. Its telephone number
is (720) 599-3300.
Issuance Date: March 26, 2014, as amended July 16, 2014. See state effective dates page for state effective dates.
TCBY’s franchise sellers involved in offering and selling the franchise to you are listed below (with address and telephone
number), or will be provided to you separately before you sign a franchise agreement:
TCBY authorizes the respective state agencies identified on Exhibit A to receive service of process for TCBY in the
particular state.
I have received a disclosure document with an issuance date of March 26, 2014, as amended July 16, 2014, that included the
following Exhibits:
A. State Administrators/Agents for Service of Process
B. Franchise Agreement (with Schedules and Exhibits)
C. Other Concepts Store Addendum to Franchise
Agreement
D. Area Director Disclosure Addendum to Franchise
Agreement
E. Area Director Agreement (with Exhibits)
F. Term Purchase Addendum
G. Sublease Agreement; Assignment and
Assumption of Sublease Addendum
H.
I.
J.
K.
L.
M.
N.
O.
P.
Lease Addendum
Operating Procedures Manual Table of Contents
Franchisee Information
Financial Statements
Guarantee of Performance
Assignment, Assumption and Consent
Renewal Addendum to Franchise Agreement
State Specific Addenda to Disclosure Document,
Franchise Agreements, and Area Director Agreement
Date:
(Do not leave blank)
(Print Name of Prospective Franchisee (For Entity))
By:
Its:
Signature
(Print Name of Prospective Franchisee (For Individuals))
Signature

FRANCHISE DISCLOSURE DOCUMENT

Transcription

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