STORE OPERATING LICENSE AGREEMENT
"DAIRY QUEEN"
STORE OPERATING LICENSE AGREEMENT
THIS AGREEMENT entered into this 18th day of November 1986 , by and between
DAIRY QUEEN OF SOUTHERN ARIZONA, INC., an Arizona corporation, hereinafter
referred to as "Company", and BOWLINS INCORPORATED, a New Mexico Corporation
hereinafter referred to as "Licensee", "Store Owner", "Operator".
I. PREMISES OF THIS AGREEMENT.
1. Licensee hereby agrees that this Agreement is premised upon the
following of facts which are accepted, and specifically agreed upon by Licensee:
a. Company is the exclusive Licensee of Dairy Queen in the territory
comprising the subject matter of this Agreement entitled to use, license, and
permit others to use the trademark and trade name "Dairy Queen" and certain
other trademarks (hereinafter referred to as "derivative trademarks") which are
derived from the words "Dairy Queen" or either of said words or abbreviations
thereof, including by way of example and not limitation trademarks employing the
use of the word "Queen", the letters "Q" or "D.Q."; said "Dairy Queen" trademark
having been registered in the State of Arizona and in the United States Patent
Office as Registrations Nos. 728,531 and 728,894. This Agreement and undertaking
by Licensee includes every single use or derivation of the trademark, the
method, or mode of operation, or any information or material or items derived
therefrom.
b. Company and its predecessors in interest have promoted, developed and
established within said areas a franchise business under said exclusive license,
which comprises the selling of a frozen and/or semi-frozen dairy product in
various forms (including for example such items as buster and dilly bars) under
the trademark "Dairy Queen" from retail stores bearing the trade name "Dairy
Queen", has used the trademark "Dairy Queen" or freezers used in the preparation
of and dispensing of said product and has employed certain other equipment,
items, designs, logos, promotional material, merchandising methods, techniques,
1
standards, requirements, uniforms, supplies, ingredients, methods, and other
techniques, which are to remain the specific property of Company, and, after
this Agreement ends, are to be returned to Company, and for which Licensee has
no right to utilize said items.
c. In entering this Agreement, Licensee agrees that Licensee desires to
engage in the "Dairy Queen" business and further desires to enter into this
written franchise and license agreement with Company for the use of the
trademark and trade name and any derivative trademarks, and to become involved
in a business subject to the covenants set forth herein, the use of the
merchandising methods employed herein, said use by Licensee to be subject to
conditions and controls herein prescribed for the purposes of offering to the
public wholesome products of a uniform quality and standard and of protecting
the interest of all persons engaged in said business.
d. That by entering this Agreement, Licensee specifically agrees to become
subject to all regulations, policies, and standards as set forth by Company from
time to time.
e. Further, Licensee agrees to provide only those services and sell only
those products specifically approved and authorized by Company.
II. LICENSE.
Company hereby grants to Licensee, subject to the terms, conditions and
provisions hereof, and subject to any and all policies of Company to be
enunciated during the term of this Agreement, and any which are in existence at
this time, an exclusive right and license to operate a "Dairy Queen" Store at
the following location only:
17 Miles East of Benson Arizona, on Interstate 10 at Xxxxxxx Road.
-2-
said license to include the rights to:
1. Establish and operate a "Dairy Queen" store employing "Dairy Queen"
merchandising methods, materials, and using the trademark "Dairy Queen", and
said derivative trademark on and in association with the advertising and sale of
the frozen dairy products, and the trade name "Dairy Queen" on the said store
from which the product is sold, and further subject to the further provisions of
this Agreement.
2. To use in said store only approved machines, and items of any and all
kind approved by Company. As to freezers, "Dairy Queen" freezers must be used in
producing and dispensing said "Dairy Queen" products, it being clearly
understood and agreed by Licensee that no approved "Dairy Queen" freezer shall
be moved or caused or permitted to be removed from said authorized location for
the purpose of operating same.
3. Use of the trademark "Dairy Queen" on said approved freezers produced by
authorized manufacturers.
4. Use at the authorized location on, and in association with, production,
packaging, and sale of uniform and approved products and services designated
periodically by Company, involving the related sales promotion programs and
materials approved periodically by Company, and utilizing any form equipment,
uniforms, merchandising means, fixtures, supplies, ingredients, and other items
as approved by Company for use in the storage, preparation, packaging,
merchandising, and sale of such products.
III. LICENSEE'S ACCEPTANCE AND ACKNOWLEDGMENTS.
1. Licensee hereby accepts said License subject to the terms, provisions
and conditions hereof, and agrees to cause one "Dairy Queen" store to be
established and maintained at the
-3-
authorized location and agrees to provide active and continuous supervision and
management upon standards and policies as set by Company. (Large block of
material X'd out on original document) Initialed by AAB & MLH
2. Company is the exclusive licensee of the right to use the trademark
names at the location for and in which the within franchise and license
agreement is operative, and has the exclusive right to grant to Licensee the use
of said trade names.
3. The trade names and trademarks have valuable goodwill to Company, and
are a valued property right, the use of which has been licensed to Company.
4. The authorized location, the Dairy Queen Store, and the use of
trademarks and only in connection with such products as may be specified by
Company and not otherwise, and shall at all times be used and only in a manner
approved by Company. In years of technological change, new products and services
are often developed. It is the specific purpose of this Agreement, that in the
event there are merchandising changes, technological changes, and changes in
merchandising, the approval of Company must be received in writing prior to
offering any such goods, or service. Otherwise, this Agreement will be declared
null and void. As a specific example of the purpose of this provision, Licensee
agrees that it is the purpose of this Agreement that present "Dairy Queen"
products are to be sold to members of the general public from standardized
"Dairy Queen."
-4-
locations. That the "Dairy Queen" locations are built for a specific purpose in
mind, and not for the use or sale or development of such specific items as video
games and arcades. Such uses of the premises are not allowed pursuant to the
terms of this Agreement, and Licensee hereby agrees to same.
5. Licensee shall use no trade name or trademark other than "Dairy Queen"
in said business except with the written consent of Company. Similarly, Licensee
shall link no other trademarks or trade names belonging to others with "Dairy
Queen" in a "Dairy Queen" authorized location. For example, Licensee is only
entitled to sell "Dairy Queen" products or services at their location. They
cannot sell items of food, or otherwise, without the authorization of Company.
See Addendum 4A-1 (AAB & MLH)
6. Licensee specifically agrees that this Agreement , at the sole option
and discretion of Company, may be declared null and void if Licensee breaches
any provisions of this Agreement, and, if after having seven (7) days written
notice of breach by mail, the conditions specified have not been corrected by
Licensee. Then, Company, at its own option, may terminate this Agreement. See
Addendum 4A-II (AAB &MLH)
7. Licensee further and specifically agrees that under no circumstances
breaches of this Agreement, whether continuing or otherwise, at any time, in any
way, be regarded as waived by Company.
8. As to Licensee's obligations, time is always of the essence in this
Agreement.
IV. TERM.
1. The license granted herein shall be for a term of 20 (Twenty) years,
unless sooner terminated in accordance with the provisions hereof.
V. MONETARY AGREEMENTS.
1. Licensee shall pay to Company as a franchise fee, the sum of Four (4%)
Percent (see attached Addendum to "Dairy Queen" License) upon the execution of
this Agreement. Said fee is a fee paid to Company for granting and entering into
this Agreement. Said fee is earned when paid, and is not refundable
-5-
under any circumstances whatsoever.
b. All amounts due and owing shall be paid on a monthly basis and shall be
computed at the end of each month's operation and remittance for same shall be
made to Company on or before the third (3rd) day of the following month
accompanied by reports required by said Company. The computation of said amount
shall be certified and sworn to by Licensee in a manner or form prescribed by
Company and Licensee shall supply to Company all self-supporting or
supplementary materials as Company may require to verify the accuracy of such
remittances. Furthermore, Licensee grants to Company the right to check with any
suppliers, Company's or others, with whom Licensee is doing business to check on
the operation of the business .
c. Payment dates as set forth herein are specifically agreed to be the
dates upon which said items are to be received by the Company. Any payments of
any nature or kind received after the due date subjects Licensee to default. THE
ACCEPTANCE OF LATE PAYMENTS SHALL NOT, UNDER ANY CIRCUMSTANCES BE DEEMED A
WAIVER BY COMPANY OF THE RIGHT TO PROMPT AND APPROPRIATE PAYMENT. Any payments
received after the eighth of any month shall be subject to a late fee equal to
five (5%) percent of the amount of
-6-
said sum due. In addition, any sums paid after the eighth shall be subject to
interest at the rate of one and one-half (1 1/2%) percent per month. In
addition, Licensee agrees to compensate Company for any and all collection
efforts or activities on any payments made after the due dates contained herein.
These expenses shall include office expenses, telephone expenses, expenses of
time and effort of employees to write letters, make phone calls, and attempt
contact with Licensee or Licensee's agents, and shall include any and all costs
and expenses in contacting collection agencies, lawyers, or other personnel in
an attempt to speed payment. The amount of any and all expenses shall be
determined by Company, in Company's sole discretion, and Licensee hereby agrees
to grant Company the right to determine the amount of said expenses, and hereby
agrees to be bound by said decision of Company. Any failures to pay said amounts
as set by Company shall also be regarded as a breach of this Agreement
subjecting Licensee to forfeiture, pursuant to page 18, Section XXII.
d. In addition to any and all other options as required, or allowed by law,
or as provided in this Agreement, Company shall have the right to require
Licensee, if delinquent at any time, to make a pre-payment equal to three
month's royalties as security for the prompt payment of any and all obligations.
e. Company shall further have the option to require Licensee to make
pre-payments on royalty and advertising and merchandising fees by requiring
Licensee to pay a surcharge on each gallon of mix, and on other products and
ingredients used in the conduct of business at the authorized location to the
respective suppliers thereof. Licensee shall pay the surcharge to the suppliers
at the -time of purchase of such commodities. The surcharge shall be established
by Company in such amounts as determined by Company, which amounts shall not
substantially exceed the monthly continuing royalty, advertising, and
merchandising fees due hereunder. The surcharge shall be paid to the supplier or
suppliers for the account of the Company. The amount
-7-
so prepaid and remitted to Company from suppliers will be credited against the
continuing license and advertising and merchandising fees at the end of each
month.
3. Licensee further agrees to pay to Company the amount of not less than
three (3%) percent, nor more than six (6%) percent, of all gross sales,
excluding sales taxes, as and for the promotion and advertising of "Dairy Queen"
products. To this end, Company reserves the sole right in its sole discretion to
establish and organize advertising and promotional programs from time to time.
Payments of advertising and merchandising fund money shall be subject to the
same terms and conditions as royalty fee payments required in this Agreement.
See Addendum 4A-III attach 4. In addition, Licensee agrees to spend additional
monies in merchandising and marketing of their individual "Dairy Queen" store.
4. In addition, Licensee agrees to spend additional monies in merchandising
and marketing of their individual "Dairy Queen" store.
VI. TRANSFER OF AGREEMENT.
1. Company reserves the right to know specifically at all times with whom
Company is doing business. (AAB & MLH)
2. Licensee shall not transfer, assign, encumber, or in any way alienate
this Agreement, or the rights, duties, or obligations under this Agreement
without the written approval of Company.
Licensee shall give Company written notice of intent to sell. Any attempt
to transfer, assign, sell, or alienate without the express written approval of
Company shall immediately breach this Agreement. No party without the express
written permission of Company shall have the right to sell "Dairy Queen"
products at the location specified in this Agreement, or at any other location.
3. If any sale, transfer, or assignment of any nature or kind is agreed
upon by Company, Company is hereby given the right of first refusal to any such
agreed upon transfer or sale. Notwithstanding anything to the contrary contained
above in this part 2 hereof, Licensee hereby grants to Company the right of
first refusal to purchase all of Licensee's right, title and
-8-
interest in and to Licensee's "Dairy Queen" business located at the Authorized
Location in this Agreement in the event Licensee should desire to sell the same.
In such event, Licensee shall notify Company in writing that he has received and
is prepared to accept a good faith offer from a third party who is financially
able and otherwise qualified to become a licensee of Company. The said notice
shall identify proposed purchaser and be signed by Licensee and proposed
purchaser and precisely set forth all of the terms of the written offer which
Licensee shall have received from the proposed purchaser. Company shall then
have thirty (30) days after the receipt of such notice to exercise its right of
first refusal, the same to be in writing and on the same terms and conditions,
MINUS any realtor's fees, as have been offered to Licensee by the proposed
purchaser.
4. In the event of any assignment agreed upon by Company Licensee shall pay
to Company contemporaneously therewith the sum of TWO THOUSAND DOLLARS
($2,000.00) or a sum equal to one-half of the license fees paid for the previous
calendar year, whichever is greater, as and for a transfer fee.
This Agreement may be transferred to any proposed new assignee, transferee,
or purchaser in it's entirety: Should proposed new assignee, transferee, or
purchaser desire to extend the duration of, or modify the terms of this
agreement such modification would be contingent upon and subject to the new
party entering into a new agreement with Company. if, for any reason, Company,
and the proposed assignee, transferee, or purchaser cannot agree to the terms
and conditions of a new contract, then any attempt at assignment, transfer,
sale, no matter how enumerated, shall be void.
VII. DEATH OR DISABILITY.
In the event of the death, disability or incapacity of any individual
Licensee or principal officer or director of an incorporated Licensee or partner
in a partnership Licensee, should the decedent's heir or successor in interest,
or the corporation or partnership, as the case may be, wish to continue
-9-
as Licensee hereunder, such person shall apply for Company's consent thereto,
successfully complete Company's training program and pay the applicable transfer
fee, in accordance with this paragraph VII as in any case of a proposed transfer
of Licensee's interest in this agreement.
VIII. BUSINESS NAME.
Licensee shall not use the word "Dairy Queen" as a part of its corporate or
business name unless first approved in writing by Company, and shall use only
the words "Dairy Queen" (and no other words whatsoever) as the trade name on the
store from which the product is sold. See Addendum 4A-1.
IX. FURTHER LICENSEE DECLARATIONS.
1. Licensee agrees that nothing contained herein gives him any right, title
or interest in the trademark and trade name "Dairy Queen" nor in said derivative
trademarks except the right to use same under the terms and conditions of this
Agreement and that Licensee's use thereof inures to the benefit of the owner
hereof. Licensee hereby acknowledges the validity of the trademark and trade
name "Dairy Queen" and any derivative trademarks therefrom and further agrees to
do nothing or use the trademark and trade name or said derivative trademarks in
any way to infringe the rights of Company or Company's licensor. Licensee shall
use only the trademark and trade name "Dairy Queen" and said derivative
trademarks on and in association with the advertising and sale of a frozen dairy
product, and no other product, which shall in quality and mode and condition of
manufacture and sale comply with such standards as may be fixed or approved by
Company. It is further agreed by the parties hereto that in order to promote and
protect the business interests of each of the parties, the good will of the
"Dairy Queen" business and the business interests of other persons engaged in
the "Dairy Queen" business, requires substantial uniformity to be maintained in
the type, standard and quality of the "Dairy Queen" stores, the mix, the
freezers, and products used therein, the conditions of preparation and
merchandising and sale of the
-10-
product. To this end, it is agreed that the rules and controls and policies of
Company, those contained in this Agreement, and enacted by Company shall
prevail. Licensee agrees that the provisions, restrictions, and controls and
agreements provided in this document are all necessary, reasonable, and
desirable for such purposes and that Licensee's "Dairy Queen" business shall be
conducted in accordance with Company's standards and requirements. The standards
and requirements include requirements of quality, production, appearance,
cleanliness, service, merchandising and advertising. The setting forth of
specific items is not in any way meant to limit the specific items to which this
Agreement applies. It is mutually understood and agreed that these controls
include the specific requirements without limiting any general statement or
policy or controls expressed.
2. Licensee further agrees to utilize only such "mix" in the preparation of
"Dairy Queen" products which conforms to the standards prescribed by Company.
Licensee shall strictly observe the product overrun limitations which shall be
made known to Licensee by Company from time to time during this Agreement as
guidance to Licensee in formulating products for sale. "Product overruns" is
defined by the parties as being the amount of air incorporated into the "Dairy
Queen" mix in the course of producing "Dairy Queen" products. To avoid
misunderstanding, Company and Licensee acknowledge that neither shall expect the
other to be agreeable to a product overrun exceeding forty-five (45%) percent.
3. Licensee further agrees to utilize only such supplies used in the
production, handling, serving or garnishing of "Dairy Queen" products and
ancillary lines and related goods conforming to standards prescribed by Company
from time to time.
4. Company shall have the sole right to approve the supplies and
ingredients used in the business.
5. Licensee shall use only approved "Dairy Queen" freezers produced by
authorized manufacturers.
-11-
6. Licensee shall produce and sell the "Dairy Queen" product line only in a
store constructed in accordance with plans furnished by Company and containing
approved "Dairy Queen" signs; said plans -to remain the property of Company at
all times; and shall maintain the store in a high state of repair, cleanliness
and sanitation at all times. Before any store for the sale or distribution of
"Dairy Queen" is constructed, the location thereof shall be subject to -the
approval, in writing, of Company. Licensee further agrees to acquire the right
to use or to commence promptly the construction of one such building at the
authorized location herein above described and complete or contract for the
completion of the same on or before July 1, 1987. AAB & MLH Upon completion of
said building Licensee shall, at his own expense, install freezers and equipment
therein in a manner approved by Company. The parking area shall be black-topped
or paved in a manner approved by Company. No material alterations to or changes
in said building or premises shall be made during the period of this contract or
any renewal hereof without the prior approval in writing by the Company.
7. Licensee shall hire and supervise efficient, competent, sober and
courteous operators and employees wearing uniform Company dress for the purpose
of operating the business. Licensee shall set their wages and commissions, and
pay all such wages and commissions due them with no liability therefor on the
Company. Licensee shall require all its employees to work in clean uniforms
approved by the Company but furnished at the cost of Licensee or the employee as
Licensee may determine.
8. Licensee agrees at all times to repaint the buildings on said premises
at least annually and to maintain said buildings and said entire premises in a
high state of repair, cleanliness and sanitation. Should Licensee's "Dairy
Queen" store be rated other than the highest rating given by any local, state or
federal sanitation or health authorities, said store shall immediately be closed
and such steps or measures shall be
-12-
taken by Licensee as may be necessary to obtain the highest rating before it is
reopened for business. Any such closing shall be regarded as a material breach
of this Agreement. it is agreed between the parties that cleanliness and
sanitation are two of the most important ingredients in general public
acceptance of "Dairy Queen" products. Any action by any authority closing a
"Dairy Queen" store is regarded as a serious dereliction by Licensee.
9. Licensee further covenants that in the event Company standards are not
met, the store may be closed until steps are taken to remedy this situation, or
at Company's option, this Agreement may terminate, as to page 18, Section XXII.
10. All Advertising, cartons, containers, wrappers, and paper goods used in
the advertising, sale and distribution of the "Dairy Queen" products shall,
where practicable, indicate that it is produced and sold on the authority of
Company and shall be subject to approval by Company before being used.
11. All portions of "Dairy Queen" products sold or offered for sale shall
comply with requirements established from time to time by Company as to weight,
size, and appearance and all such products shall be processed in strict
accordance with the formula and methods furnished by Company.
12. From time to time as Company shall deem desirable, Company may place a
qualified representative at Licensee's place of business to train, instruct, and
familiarize employees thereof with the standard business methods and procedures
of Company, or, may require Licensee or any supervisory or operating employee of
Licensee to spend a reasonable amount of time at another like place of business
designated by Company for the purpose of observing, receiving training and
instruction, and practicing standard business methods and procedure.
13. Licensee further agrees, that at any time Company may send a
representative to Licensee's location to review documents, records, the physical
facilities, and the operation of the business.
-13-
14. Licensee agrees to comply with all applicable federal, state, local,
county, and municipal laws, statutes, ordinances and regulations pertaining to
the conduct of the "Dairy Queen" business and the sale of the "Dairy Queen"
products.
15. As noted previously, Licensee agrees that technology may develop new
forms of amusement such as video games. Nothing in this Agreement authorizes the
use of any items developed by time, or technology, or ingenuity, which are not
authorized by this Agreement, or by Company in writing.
See Addendum 4A-1.
16. Licensee further agrees to appear at and attend the annual Company
store operator's meeting and convention, and to appear and attend at any and all
conferences, meetings, or other functions as are designated by Company.
X. SIGNS.
1. Licensee shall prominently identify the store with one or more of the
'trademarks specified by Company, and with no other name or xxxx, said signs
shall as to color, lettering, size, design and general appearance be approved by
Company prior to construction and erection.
2. Licensee shall at his own expense cause such signs to be constructed,
erected, and maintained throughout the term of this Agreement. All signs must be
approved by Company.
3. Company is hereby given the right to designate any additional signs to
be placed at the premises, at Licensee's expense. Such signs shall include,
where appropriate, highway signs and other similar sign items. Company shall be
the sole arbiter of when such signs, or additional signs, are appropriate or in
need of maintenance.
XI. FREEZERS.
All approved "Dairy Queen" freezers used in producing and dispensing the
"Dairy Queen" product shall have a nameplate fastened thereto identifying the
same as "Dairy Queen" freezers, and shall be first approved by Company for use
in "Dairy Queen" stores.
XII. RELATED GOODS.
1. Licensee may sell in said "Dairy Queen" store
-14-
only such products permitted and approved in writing by Company.
2. No food, sandwiches, hamburgers, cigarettes, potato chips, gum, or other
like products are to be sold from said "Dairy Queen". See Addendum 4A-I. (AAB &
MLH)
3. Similarly, no unauthorized including games are to be allowed. See
Addendum 4A-1. (AAB & MLH)
XIII. BUSINESS HOURS.
1. Licensee shall operate its "Dairy Queen" business during a period of at
least nine (9) consecutive months in each calendar year and such place of
business shall be opened to the public at least twelve (12) hours during each
day of said period. Acts of God, war, strikes or riots preventing Licensee from
temporarily complying with the foregoing shall exempt compliance therewith.
2. Licensee shall close said "Dairy Queen" business for a period of not
less than two (2) weeks of each calendar year for the purpose of necessary
maintenance and repairs - painting and general cleaning. See Addendum 4A-IV
attached (AAB & MLH)
XIV. INSPECTION.
Company, or its authorized representative, shall have the right to inspect
the premises, and every portion of its operation for the purpose of making
inspections to ascertain if all the provisions of this Agreement are being
observed. Furthermore, Company is entitled to test, sample, and inspect all
supplies, products, and materials of all kinds, the preparation and formulation
thereof, and the conditions of sanitation and cleanliness in the production,
handling, and serving thereof.
XV. RECORDS AND REPORTS.
Licensee agrees to keep a complete set of books and records from which all
sums payable under this Agreement may be determined. Such books and records
shall include a monthly profit and loss statement reflecting the operations of
Licensee's business, copies of which Licensee shall furnish
-15-
to Company within twenty-five (25) days after the end of each month's operation.
The aforesaid books, records, and financial statements shall be maintained by
Licensee on forms meeting the specifications of Company. All such records shall
be open and available to Company for inspection at all times. Company shall have
the right to cause an audit of the business of Licensee to be made for a
determination of gross sales- if any statement of gross sales previously
submitted by Licensee to Company shall be found to be incorrect by audit or
otherwise, in an amount in excess of two (2%) percent of gross sales, Licensee
shall be subject to immediately pay the cost of such audit as well as any
additional fees found to be payable by Licensee to Company; and may be subject
to termination, otherwise, the cost of audit shall be paid by Company.
XVI. LITIGATION.
As between Company and Licensee, Company shall control all litigation
relating to the trademark and trade name "Dairy Queen" and said derivative
trademarks and shall be the sole judge as to whether or not suit shall be
instituted for the infringement thereof, the expense for any such litigation in
the territory stated herein shall be borne by Company and Licensee and any
others, in manner and extent to be agreed upon in each instance by the said
parties. Licensee shall promptly notify Company of any such use or infringement
of which he becomes aware.
XVII. LIABILITY INSURANCE.
Licensee hereby waives all claims against Company for damages to property
or injuries to persons arising out of the operation of said business, and
Licensee shall indemnify and save Company harmless of and from any damages or
injury to property or persons arising from or growing out of the operations of
said business in any way, or the consumption of the product hereof. Licensee
further covenants and agrees to purchase and maintain in full force and effect,
at Licensee's sole expense, liability insurance in an amount of not less than
-16-
$300,000.00 insuring both parties hereto from liability for any and all such
damage or injury and Licensee further agrees to deliver to Company a certificate
evidencing the existence of such insurance coverage and Licensee's compliance
with the provisions of this paragraph.
XVIII. COMPETITIVE LICENSE.
Company shall not license the establishment of any competitive business
under said trademarks and trade name within the protected area covered by this
Agreement during the term hereof. Similarly, Licensee shall not license,
establish, or operate any competitive business within the protected area covered
by this Agreement during the term hereof without written consent of Company.
XIX. PAYMENT OF DEBTS.
Licensee covenants and agrees to pay promptly when due, all taxes and
assessments that may be assessed against said premises or equipment used in
connection with Licensee's "Dairy Queen" business, all liens and encumbrances of
any kind and character created or placed upon or against any of said property,
as well as all accounts and other indebtedness of every kind incurred by
Licensee in the conduct of said business; and should Licensee default in making
any such payment, Company shall be authorized to pay same and Licensee covenants
promptly to reimburse Company on demand of such payment. By undertaking any such
payments, Company is not under any circumstances obligating itself to pay any
said sums, but is doing so only to protect Company's good name and Licensee
under this Agreement. Company, by doing so, shall not be undertaking or
sustaining any liability for any such debts or obligations or liabilities in any
way, shape or form.
XX. INDEPENDENT CONTRACTOR.
It is agreed and understood that Licensee is an independent agency, and
independent contractor, not in any manner the agent or employee of Company, nor
has Company any interest in the business of Licensee except to the extent set
forth in this Agreement.
-17-
XXI. INDEMNITY.
Licensee agrees to save and hold Company harmless from any loss, damage or
liability incurred by Company by reason of any violation of this Agreement by
Licensee.
XXII. NOTICES OF BREACH.
1. In the event that Company determines that Licensee has failed to meet
the requirements and specifications established in this Agreement, or any of the
terms and conditions hereof, Company shall notify Licensee in writing of that
fact, and shall set forth the terms and conditions to be corrected. If Licensee
fails to correct such problems, violations, or conditions within seven (7) days
from the date of (Return Receipt Requested) mailing of said notice by certified
mail/to the address of the authorized location, Company shall thereupon have the
right to cancel and terminate this Agreement.
XXIII. MODERNIZATION.
1. Because business advances, and because society changes, and methods of
doing business change, it is the duty of Licensee to modernize, refurbish, the
building, equipment, signage, and all other items as may be reasonably necessary
to permit the business to conform to the standards then existing, and to cause
such repairs or remodeling, at his expense as are necessary to keep Licensee in
compliance with all of the terms and conditions of this Agreement. Failure to do
so will be regarded as a breach of this Agreement.
2. In any event, at the time of any proposed transfer, the Licensee must
modernize, refurbish, and/or replace building, equipment and any other items
from the store as are necessary to be in compliance with the requirements of the
Company as then existing.
XXIV. BANKRUPTCY.
In the event that Licensee shall be declared insolvent or bankrupt, or in
the event a receiver be appointed, or that any proceedings taken by, for, or
against Licensee under any provision of the Federal Bankruptcy Act or any
amendment
-18-
thereof, or make an assignment for the benefit of creditors under any State law,
this Agreement shall be terminated and all rights of Licensee shall be forfeited
forthwith to the Company.
XXV. NON-COMPETE CLAIMS.
Neither Licensee nor any principal of an incorporated Licensee shall
directly or indirectly engage in any competitive business with the protected
area of the authorized location for a period of two and one-half (2 1/2 ) years
after the date of termination by either party with or without cause. Licensee
shall not assert any claim or cause of action against Company after one (1) year
following the effective date of termination of this Agreement.
XXVI. TERMINATION.
1. Termination by Licensor.
Upon termination of this Agreement:
a. All rights of Licensee to the use of the trademarks and all other rights
and licenses granted herein, including a right to license and conduct the "Dairy
Queen" business at the authorized location shall revert to Company without
further act or deed of any party.
b. Any right, title and interest of Licensee in, to and under this
operating Agreement shall become the property of Company. Licensee shall
immediately cease all use and display of trademarks, materials, and any and all
ancillary items, services, or products, and shall pay all sums due to Company or
its affiliate or whose payment by Company or its affiliate has guaranteed.
c. Company shall have first option to purchase any and all freezers of any
kind whatsoever owned by Licensee and used by him in the production of the
"Dairy Queen" product at and for an amount equal to the original price paid for
each such freezer less fifty (50%) percent for use and depreciation for first
year. Less twenty (20%) percent per year after first twelve (12) month period.
-19-
2. Termination by Licensee.
Licensee shall not be entitled to terminate this agreement for cause unless
he shall have given Company written notice of the grounds for such termination
and Company shall have failed to cure such grounds to the reasonable
satisfaction of Licensee within thirty (30) days of Company's receipt of such
notice. As a condition to Licensee or his successor terminating this Agreement
without cause at any time, Licensee shall pay to Company an amount equal to two
times the License Fees payable to Company in respect to (1) the last twelve (12)
months of the store's active operations, or (2) the entire period the store has
been open for business, whichever is the shorter period.
XXVII. MISCELLANEOUS CLAUSES.
1. In the event at any time one or more clauses of this Agreement shall be
held to be void by any Court, such clauses shall be deemed to be separable and
the remainder of this Agreement shall be deemed to be valid and in full force
and effect.
2. Any waiver by Company of any breach by Licensee shall not be deemed to
be a waiver of any subsequent breach nor an estoppel to enforce its right for
any subsequent breach.
3. This Agreement constitutes the agreement between the parties, and is the
sole agreement between the parties, and embodies all prior agreements and
negotiations with respect to the "Dairy Queen" business. Licensee agrees that
there are no representations of any kind made by Company except as contained
herein.
4. If Licensee consists of two or more individuals, such individuals shall
be jointly and severally liable, and references to Licensee in this Agreement
shall include all such individuals.
5. This Agreement shall be binding upon and inure to the benefit of the
administrators, executors, heirs, successors, and assigns of the parties.
-20-
XVIII. ADMINISTRATIVE AND PROMOTIONAL-PEES.
1. Licensee acknowledges and agrees that Company may compensate itself
and/or its affiliated companies for the expense of administering and promoting
the sales promotion programs set forth herein.
XXIX. DIFFERENT FORMS OF LICENSE AGREEMENTS.
l. Licensee acknowledges that he is aware of the fact that some existing
licensees of Company operate under different forms of Agreement and that
consequently, Company's obligations and rights with respect to the various
licensees may differ.
XXX. RULES OF COMPANY.
1. Company is the sole judge of that which is compatible with the sale of
"Dairy Queen" products, and Licensee shall not look beyond Company in such
matters as rules and controls. These matters are left to the sole discretion of
Company, and Licensee hereby specifically agrees.
IN WITNESS WHEREOF, the parties have caused the foregoing "Dairy Queen"
Store Operating License Agreement to be executed all as of the date first above
written.
DAIRY QUEEN OF SOUTHERN ARIZONA, INC.
ATTEST: First Party
Signature Illegible By /s/ Xxxxxxx X. Xxxxxxx
------------------------- -------------------------------------
Xxxxxxx X. Xxxxxxx President
WITNESS:
Signature Illegible BOWLINS INCORPORATED, a New Mexico Corp.
-------------------------- ----------------------------------------
LICENSEE
WITNESS:
Signature Illegible BY: /s/ X. X. Xxxx, Exec. V. Pres.
-------------------------- ------------------------------------
LICENSEE
-21-
ADDENDUM TO LICENSE AGREEMENT
IT IS AGREED BY THE PARTIES THAT THIS ADDENDUM DATED THIS 18th DAY OF November,
1986 SHALL BECOME A PART OF THE ATTACHED LICENSE AGREEMENT. THE FRANCHISEE
ACKNOWLEDGES THAT HE HAS HAD AT LEAST TEN (10) BUSINESS DAYS PRIOR TO THE
EXECUTION BY THE PROSPECTIVE FRANCHISEE OF ANY BINDING FRANCHISE OR OTHER
AGREEMENT, OR AT LEAST TEN (10) BUSINESS DAYS PRIOR TO THE PAYMENT OF ANY
CONSIDERATION BY THE FRANCHISEE, WHICHEVER OCCURS FIRST, A COPY OF THE OFFERING
CIRCULAR, TOGETHER WITH A COPY OF THE LICENSE AGREEMENT RELATING TO THE
FRANCHISE.
DAIRY QUEEN OF SOUTHERN ARIZONA, INC.
ATTEST: Franchisor
/s/ Xxxxx X. Skripkan By /s/ Xxxxxxx X. Xxxxxxx
------------------------- --------------------------------------
President Xxxxxxx X. Xxxxxxx
WITNESS:
/s/ Xxxxx X. Xxxxxxxx XXXXXX'X INCORPORATED, a New Mexico Corp.
------------------------- -----------------------------------------
Licensee and Franchisee
WITNESS:
/s/ Xxx Xxxxxxx BY: /s/ X. X. Xxxx, Exec. V. Pres.
------------------------- -------------------------------------
Licensee and Franchisee
ADDENDUM TO "DAIRY QUEEN" LICENSE AGREEMENT
NO. 4
This Addendum made and entered into, in duplicate, at Douglas Arizona, on this
18th day of November, 1986 by and between DAIRY QUEEN OF SOUTHERN ARIZONA, INC.,
and Arizona Corporation, hereinafter called "company", and XXXXXX'X
INCORPORATED, a New Mexico Corporation of Albuquerque, New Mexico, hereinafter
called "Licensee".
WHEREAS, the parties hereto have executed a "DAIRY QUEEN LICENSE AGREEMENT"
(duplicate copy of which agreement is attached hereto) dated 18 November 1986,
and covering the following "Authorized Location". 17 Miles East of Benson,
Arizona, on Interstate 10 at Xxxxxxx road Cochise (County) Arizona (State).
WHEREAS, the parties hereto wish to amend such agreement heretofore executed to
provide for a single combination Franchise Fee and Royalty Fee in consideration
of the rights granted Licensee under said Agreement and in lieu of the separate
Franchise Fee and Royalty Fee provided for in said Agreement:
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, it is agreed by and between the parties hereto as follows:
1. Paragraph 5 of the said "Dairy Queen" License Agreement, between the
parties hereto, is amended to read as follows;
Licensee shall pay to Company, as a total combined Franchise Fee and
Royalty Fee in respect of the rights granted Licensee under the terms of said
"Dairy Queen" License Agreement, a sum computed upon a percentage of the total
combined gross retail sales, exclusive of sales taxes, of all products sold
under said License Agreement, the same to be computed in accordance with the
following schedule:
Four Percent (4%) of all gross sales in each calendar year.
Gross Sales shall include sales of every kind and nature from and in
connection with said store, including the sale of "Dairy Queen" products and all
other products and related goods which may be authorized for sale therein.
IN WITNESS WHEREFOF, the parties have caused the forgoing Amendment to be
executed all as of the date first above written.
DAIRY QUEEN OF SOUTHERN ARIZONA, INC.
ATTEST: an Arizona Corporation.
/s/ Xxxxx X. Skripkan By: /s/ Xxxxxxx X. Xxxxxxx
------------------------- -------------------------------------
Xxxxxxx X. Xxxxxxx President
WITNESS:
/s/ Xxxxx X. Xxxxxxxx XXXXXX'X INCORPORATED, a New Mexico Corp.
------------------------- -----------------------------------------
WITNESS:
/s/ Xxx Xxxxxxx BY: /s/ X. X. Xxxx, Exec. V. Pres.
------------------------- -------------------------------------
LICENSEE
ADDENDUM TO "DAIRY QUEEN" LICENSE AGREEMENT
NO. 4A
This Addendum made and entered into, in duplicate, at Douglas, Arizona, on
this 18th day of November, 1986, by and between DAIRY QUEEN OF SOUTHERN ARIZONA,
INC., an Arizona Corporation, hereinafter called "Company", and XXXXXX'X
INCORPORATED of 000 Xxxxxxxxx XX, Xxxxxxxxxxx, Xxx Xxxxxx, 00000 hereinafter
called "Licensee".
WHEREAS, the parties hereto have executed a "DAIRY QUEEN LICENSE AGREEMENT"
(triplicate copy of which agreement is attached hereto) dated this 18th day of
November 1986, and covering the following "Authorized Location":
17 Miles East of Benson on Interstate 10 at Xxxxxxx road
I.
WHEREAS, the parties have mutually agreed to the following:
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is agreed by and between the parties hereto as follows:
DAIRY QUEEN OF SOUTHERN ARIZONA, INC., acknowledges with XXXXXX'X
INCORPORATED that at present there is already a system of food and gift items
offered to the public in their establishment. it is fully understood that upon
the opening of the Dairy Queen/Xxxxxxx unit, the old food line now in operation
will be discontinued entirely and only the Xxxxxxx authorized food line will be
sold from the Dairy Queen unit only.
HOWEVER, it is mutually understood and agreed upon, since Licensee operates
a full line novelty and curio business in a store building with gasoline and
other automotive items sold on the premises with said store building adjoining
Licensee's DAIRY QUEEN operation, the sales in Licensee's merchandise, novelty
and curio plus gasoline and automotive items shall not be subject to the sales
continuing License fees or promotional fees as is provided in said DAIRY QUEEN
LICENSE AGREEMENT.
II
WITH RESPECT TO: Page 5, Article 6, of the DAIRY QUEEN LICENSE AGREEMENT,
notification of any breach or default must be by Certified Mail, Return Receipt
Requested, to the Licensee at:
Xxxxxx'x Incorporated
000 Xxxxxxxxx, XX
Xxxxxxxxxxx, XX 00000
And Licensee shall have at least seven (7) days to cure such default.
III
WITH RESPECT TO: Page 8, Section V, paragraph 3, of the DAIRY QUEEN LICENSE
AGREEMENT, Company agrees to waive the payment of promotion and advertising fees
by the Licensee, upon demonstration by the Licensee that he is providing outdoor
advertising through the use of billboards located along Interstate 10 in
Arizona, such advertising being to the mutual benefit of both Company and
Licensee.
IV
WITH RESPECT TO: Page 15, Section XIII, paragraph 2,: IT IS FURTHER AGREED
that such closing shall be at the Licensee's option, but the necessary repairs,
maintenance, painting, and cleaning shall be promptly accomplished to the
satisfaction of the Company on a regular and routine basis.
IN WITNESS WHEREOF, the parties have caused the foregoing Amendment to be
executed all as of the date first written above. DAIRY QUEEN OF SOUTHERN
ARIZONA, INC. ATTEST: Franchisor
By: /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxxx
----------------------------- -------------------------------------
Xxxxxxx X. Xxxxxxx - President
XXXXXX'X INCORPORATED
000 Xxxxxxxxx, XX
XXXXXX: Xxxxxxxxxxx, XX 00000
BY: /s/ X. X. Xxxxxxxx BY: /s/ X. X. Xxxx, Exec. V. Pres.
----------------------------- ------------------------------------
"MR. XXXXX"
STORE SUBLICENSE AGREEMENT
BETWEEN STATE OR DISTRICT OPERATOR AND STORE OPERATOR
THIS AGREEMENT is executed in quadruplicate this 18TH day of November 1986,
by and between DAIRY QUEEN OF SOUTHERN ARIZONA, INC. (hereinafter referred to as
LICENSOR), and XXXXXX'X INCORPORATED, a New Mexico Corporation (hereinafter
referred to as LICENSEE): WHEREAS, LICENSEE is the operator of the DAIRY QUEEN*
store located at 17 Miles East of Benson on Interstate 10 at Xxxxxxx road
(hereinafter referred to as LOCATION), under and by virtue of written authority
granted by LICENSOR; and
WHEREAS, LICENSOR has been licensed the exclusive right and license within
its DAIRY QUEEN Franchise Territory to use and to sub-license the use of the
following described trademarks, hereinafter referred to as TRADEMARKS:
(a) The words "MR. XXXXX" and "MR. XXXXX KISS," and
(b) The fanciful caricature used in connection with "MR. XXXXX" and "MR.
XXXXX KISS"; and
WHEREAS, LICENSOR'S said right and license to use said TRADEMARKS is
limited solely to DAIRY QUEEN stores owned or franchised by it, in connection
with a particular and unique semi-frozen confection, of the nature generically
of what is sometimes known in the trade as a slush drink and novelty confection,
made in accordance with prescribed secret formulae, standards and specifications
(hereinafter sometimes referred to as PRODUCT); and
WHEREAS, the parties are desirous of providing for a sublicense of
TRADEMARKS so that LICENSEE is authorized and entitled to use TRADEMARKS at
LOCATION in a manner which is consistent and uniform with the use of TRADEMARKS
at other DAIRY QUEEN stores throughout the country; and
WHEREAS, the parties agree and acknowledge that TRADEMARKS are a valuable
and subsisting property right, that PRODUCT is a unique and superior confection
heretofore sold at retail only in DAIRY QUEEN stores, and that the provisions
herein respecting the standards and specifications for PRODUCT and for the use
of TRADEMARKS are reasonable and necessary to protect their respective rights,
and the rights of those having superior and similar rights therein.
NOW, THEREFORE, in consideration of the premises and of the mutual
undertakings and obligations herein set forth, it is agreed:
1. LICENSOR hereby licenses to LICENSEE the exclusive privilege to use
TRADEMARKS, provided that such is limited solely to use at LOCATION in
connection with PRODUCT and is subject to the provisions hereof.
2. Nothing herein shall be understood to be a sale, assignment or grant to
LICENSEE of any right, title or interest in and to TRADEMARKS.
3. For this license, LICENSEE shall pay to LICENSOR, or to whoever is
designated in writing by LICENSOR to receive payment in LICENSOR'S behalf, a
service fee as specified in Exhibit 1 hereto. LICENSEE understands and agrees
that the AMERICAN DAIRY QUEEN CORPORATION (from which LICENSOR has received its
rights in and to TRADEMARKS) may buy and sell some or all of the ingredients,
equipment, or containers used in the making of PRODUCT and in so doing may
realize some profit.
(To be filled Out in Quadruplicate) *Reg. U.S. Xxx. Off., Am. D. Q. Corp.
4. LICENSEE admits and agrees not to contest the validity or ownership of
TRADEMARKS or LICENSOR'S superior right to the use thereof during the duration
of this agreement and for a period of two (2) years after the termination of
this agreement.
5. LICENSEE'S use of TRADEMARKS on PRODUCT enclosure and on advertising and
promotional literature with respect thereto, will conform in every respect to
samples which LICENSOR provides to LICENSEE or expressly approves in writing.
6. LICENSEE acknowledges that it is of the utmost importance that PRODUCT
sold at LOCATION under TRADEMARKS shall conform strictly to said prescribed
standards and specifications emanating through, from or provided by LICENSOR for
the quality, flavor, appearance and texture of PRODUCT, for the ingredients used
in the production of PRODUCT, for the equipment necessary, including dispensing
freezers, to make PRODUCT at LOCATION, and for the containers in which PRODUCT
is sold, as determined from time to time. A copy of the current standards and
specifications is attached and made a part hereof as Exhibit 2. PRODUCT
purchased by LICENSOR or its representatives from LICENSEE or from any store
licensed hereunder during the normal course of business shall be considered as
representative of PRODUCT sold by LICENSEE in determining LICENSEE'S conformance
with said standards and specifications. Failure on LICENSEE'S part to conform to
said standards and specifications shall constitute a material breach of this
agreement entitling LICENSOR to terminate the same upon giving thirty (30) days
written notice. This paragraph, however, shall not be construed to mean that
LICENSEE is required to purchase any of the ingredients, or equipment, or
containers used in making and selling PRODUCT from LICENSOR or from sources
designated by LICENSOR, if there is another source or sources available which
can provide ingredients, or equipment, or containers - -which satisfy LICENSOR'S
standards and specifications. Said standards and specifications may include
suggestions as to retail prices for PRODUCT sold at LOCATION, but, if so, such
are no more than suggestions, are not binding or mandatory, and nothing herein
or therein contained shall require or obligate LICENSEE or anyone licensed
hereunder in any way to sell PRODUCT at any price other than that which the
seller voluntarily determines.
7. Each reproduction, publication and use of TRADEMARKS pursuant hereto
shall bear the statutory notice of trademark registration adjacent thereto, as
required or approved by LICENSOR.
8. Any use which LICENSEE may make of TRADEMARKS shall inure to the benefit
of LICENSOR.
9. This license shall be in effect until terminated by mutual agreement of
the parties, provided that LICENSOR shall have the right to terminate this
license upon giving thirty (30) days prior written notice to LICENSEE if
LICENSEE (a) fails to carry out any of the provisions of this agreement, or (b)
ceases or refuses for any reason to continue to participate in the DAIRY QUEEN
service programs of the AMERICAN DAIRY QUEEN CORPORATION or its affiliated
companies. LICENSEE shall have the right to terminate this license and to cease
using TRADEMARKS and PRODUCT effective at the end of any calendar year upon
giving at least thirty (30) days prior written notice to LICENSOR.
10. In the event that LICENSOR'S rights in and to TRADEMARKS and PRODUCT
are terminated for any reason, whether by LICENSOR'S own action or otherwise,
this agreement and LICENSEE'S rights hereunder shall automatically terminate.
11. Upon the expiration or termination of this license for any reason,
LICENSEE will promptly and completely cease and desist in the use of TRADEMARKS
or of any similar trademark, as well as the secret formulation for the base of
PRODUCT.
12. LICENSEE admits and acknowledges that it enters into this agreement
freely and voluntarily, understanding all the provisions hereof, and
understanding further that it is not necessary for it to enter into this
agreement in order to continue to enjoy any existing right and interest licensed
to it by LICENSOR in connection with LOCATION.
13. LICENSEE is fully and solely responsible for any and all claims made on
account of injuries to persons or otherwise, arising from or as a result of the
manufacture, use, or consumption of PRODUCT sold at LOCATION and shall hold
LICENSOR completely harmless therefrom.
14. The waiver of any breach hereof shall not be effective to waive any
subsequent breach hereof.
-2-
15. The authorization hereby granted to LICENSEE to use and sell TRADEMARKS
and PRODUCT at LOCATION is limited as provided herein and does not include, by
implication or otherwise, authorization to use or sell any other non-DAIRY QUEEN
product or non-DAIRY QUEEN trademark not previously approved by LICENSOR.
16. This agreement is to be governed by and interpreted in accordance with
the laws of the State of Illinois, embodies the entire agreement and
understanding of the parties relating to the subject matter hereof, and may be
amended or modified only by an instrument executed by both parties. The making,
execution and delivery hereof has been induced by no representation, statement,
warranty, or agreement other than expressed herein.
17. This agreement is binding on the successors and assigns of the parties,
and LICENSEE shall not assign or lease this agreement or any of the rights
granted hereunder without prior written consent of LICENSOR.
IN WITNESS WHEREOF the parties hereto have caused their signature affixed
the day, month and year first above written. ARIZONA, INC.
DAIRY QUEEN OF SOUTHERN ARIZONA, INC.
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
LICENSOR - Xxxxxxx X. Xxxxxxx
XXXXXX'X INCORPORATED, a New Mexico Corp.
-----------------------------------------
LICENSSEE
BY: /s/ X. X. Xxxx, Exec. V. Pres.
-----------------------------------------
LICENSEE
-3-
DESCRIPTION OF EXHIBITS
TO STORE SUBLICENSE AGREEMENT
BETWEEN STATE OR DISTRICT
OPERATOR AND STORE OPERATOR
Exhibit 1: Statement of amount of and method of computing
service fee; to which should be added a designation
by LICENSOR of who is authorized to collect service
fees paid pursuant to the agreement.
(See attached Draft of Exhibit 1)
Exhibit 2: Copy of current standards and specifications for
PRODUCT, including such for ingredients, processing,
equipment, and containers.
EXHIBIT # 1
LICENSEE shall pay a service fee on the Mr. Xxxxx products with said
service fee paid in the following manner. Mr. Xxxxx sales shall be included with
the reported gross sales figures each month and paid on the net sales at the
royalty rate of 6-5-4% or flat 4%, depending on contract type.
LICENSOR may from time to time in writing specify some other person or
entity to whom or which said service fee shall be paid by LICENSEE.
EXHIBIT # 2
STANDARDS AND SPECIFICATIONS FOR
"MR. XXXXX" PRODUCTS
The following standards and specifications are effective until further written
notice from the American Dairy Queen Corporation. The "Mr. Xxxxx" license
agreements to which this exhibit pertains require strict compliance with the
standards and specifications here set forth. Should any store operator have any
question about the interpretation of the standards and specifications, he is
requested to contact either American Dairy Queen Corporation or his regional
franchise operator from whom he received his rights to use the "Mr. Xxxxx" and
"Mr. Xxxxx Kiss" trademarks.
The sources for approved freezers and for approved base and concentrated
flavors, which are recommended below, are the only sources of such which are
known at this time and which when used as provided herein will produce "Mr.
Xxxxx" products meeting the required standards of quality, taste, appearance,
temperature, texture, and consistency. If and when other sources of freezers, or
of base and concentrated flavors become known to or are made known to American
Dairy Queen Corporation, these sources will be reviewed to ascertain if their
product satisfies these standards and specifications. If so, these sources will
be added to those approved below.
I-FREEZER:
Freezers approved for dispensing "Mr. b4isty" products are those
manufactured for this purpose by the following manufacturers: X. X.
Xxxx and Son, East Moline, Illinois, and Stoelting Bros. Manufacturing
Company, Kiel, Wisconsin. The steps in maintaining, cleaning and
operating the freezers of either of said manufacturers must be adhered
to as stated in the manufacturer's instructions. The additional steps
for the -operation of an approved freezer which are stated below must
also be complied with.
II-"MR. XXXXX" BASE INGREDIENT AND FLAVORED CONCENTRATES:
The unflavored base ingredient to be used in making "Mr. Xxxxx"
products is made in accordance with the secret formulae and
specifications of the owner of the "Mr. Xxxxx" and "Mr. Xxxxx Kiss"
trademarks. Only the base ingredient so made may be used in making
products sold under these trademarks. American Dairy Queen Corporation
has arranged for the manufacture of such base ingredient, and the
store operator will know he has the proper base ingredient if the
label thereon indicates that it is approved by American Dairy Queen
Corporation. The foregoing also applies to the flavored concentrates
for use in making flavored "Mr. Xxxxx" products. At this time, both
the approved base ingredient and the approved flavored concentrates
are available through American Dairy Queen Corporation. If and when
the owner of the trademarks authorizes a different or additional
source for either the base ingredient or the flavored concentrates,
these standards and specifications will be-modified accordingly.
III-"MR. XXXXX" PRODUCTS FORMULA AND SPECIFICATIONS:
A.-LIQUID BASE:
1. UNFLAVORED BASE INGREDIENT AND ADDITION OF FLAVORS UPON
SERVING:
(a) To five (5) pounds of sugar,
(b) Add one (1) pint of approved unflavored base
ingredient.
(c) Add sufficient water to make five (5) gallons of mix.
(d) Stir the resulting mix thoroughly and place into an
approved dispensing freezer.
(e) Add desired flavor upon serving as follows:
(i) Place the correct amount of the desired flavored
concentrate in the bottom of the cup in the
proportions indicated below, and
(ii) Fill the balance of the cup with the unflavored
mix dispensed from the approved freezer.
(f) The proportions of the desired flavor concentrate to be
added upon serving are:
"MR. XXXXX" "MR. XXXXX KISS"
----------- ----------------
(i) Four (4) oz. Cup: (sample size) (i) Quart Container:
1/2 pumpstroke (1/8 oz.) 6 pumpstrokes (1 1/2 oz.)
(ii) Nine (9) oz. Cup: Fill to 24 oz. Level with
1 pumpstrokes (1/4 oz.) unflavored mix.
(iii) twelve (12) oz. Cup:
1 1/2 pumpstrokes (3/8 oz.)
(iv) sixteen (16 oz. Cup:
2 pumpstrokes (1/2 oz.)
2. PREFLAVORING TO SERVE ONE FLAVOR DIRECT FROM DISPENSER
FREEZER:
"Mr. Xxxxx" products may be preflavored in order to serve a
single-flavored product directly from the freezer, at the
option of the store operator, in accordance with the
following: add twenty (20) ounces of approved flavored
concentrate to five (5) gallons of unflavored mix made as
specified above stir thoroughly, and place in an approved
freezer.
IV-FREEZER OPERATION:
Proper sanitation instructions for use in the dispensing freezer are
available from the authorized freezer manufacturers; however, all
freezers will be cleared and sanitized at least weekly. The operating
temperature of the freezing compartment must be within one (1o)
degree, more or less, of twenty-seven (27o) degrees at all times.
V-APPROVED CUPS AND CONTAINERS:
"Mr. Xxxxx" products may be served only in cups and containers which
are imprinted with the Mr. Xxxxx" trademarks in the format and style
appearing on cups and containers approved or distributed by or
obtained through American Dairy queen Corporation or an approved
source. Samples of such format style will be furnished by American
Dairy queen Corporation upon request.
VI-ADVERTISING AND DISPLAY MATERIALS:
The approved format for signs, posters and other advertising materials
to promote "Mr. Xxxxx" products shall be as appear in signs, posters
and advertising materials approved or distributed by or obtained
through American Dairy Queen Corporation. Samples thereof will be
provided upon request.
The above standards and specifications supersede any previously issued by the
Dairy Queen national Development Company and American Dairy Queen Corporation.
AMERICAN DAIRY QUEEN CORPORATION
By: Signature Illegible
------------------------------------
President
"FOOD SERVICE ADDENDUM"
TO "DAIRY QUEEN" STORE OPERATING LICENSE AGREEMENT
Food Service Addendum entered into this 18th day of November, 1986 between
DAIRY QUEEN OF SOUTHERN ARIZONA, INC. of the City of Xxxxxxx County of Cochise
and State of Arizona, hereinafter referred to as "Licensor", and XXXXXX'X INC.,
a New Mexico Corp. of the City of Albuquerque County of Bernalillo and State of
New Mexico hereinafter referred to as "Licensee":
WHEREAS, Licensor is a licensee of American Dairy Queen Corporation
(hereinafter referred to as "American") in certain areas of the right to license
others to use a distinctive food service system (the "System") identified by the
"Xxxxxxx" or other trademarks owned by American and listed on Xxxxxxxx X,X0,X0
(hereinafter collectively referred to as "Trademarks"); and,
WHEREAS, Licensor has been licensed by American to develop, promote and
establish the System as an adjunct to the "Dairy Queen" business conducted
within Licensor's Territory, and to license "Dairy Queen" sublicensees to use
the System and one or more of the Trademarks designated periodically by American
to identify the System and its various products; and,
WHEREAS, Licensor and Licensee are parties to a certain "Dairy Queen"
Franchise and/or License Agreement executed by Licensee and Licensor or its
predecessor whereby Licensee is authorized to operate a "Dairy Queen" retail
store (hereinafter referred to as "the Store") at the address set forth in
Paragraph 2.1 of this Addendum; and,
WHEREAS, Licensor and Licensee each desire that all products sold under the
System or any of the Trademarks consistently conform to the quality standards of
the System as well as the highest expectations of consumers;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants herein contained, the parties hereby agree as follows:
1. AMENDMENT.
1.1 Coordination of Agreements. This Amendment shall be attached to,
made a part of and wholly merged into that certain "Dairy Queen" Franchise,
License or 0perating Agreement dated the 18th day of November 1986, between
the undersigned parties (the "Agreement"). The Agreement, supplemented by
this Addendum, is to remain in full fore and effect and is to be deemed
superseded by this Amendment only to the extent necessary to implement the
terms hereof in connection
APPENDIX "B-2" - 28 March 1986
with Licensee's use of the System for the "food service" aspect of his
business, and in respect to the sales promotion program fees to also
include the dairy product sales as outlined in Paragraph 6.3. The Agreement
shall continue to govern the "dairy products" aspect of Licensee's
business. As used herein, the term "dairy products" and references to
Licensee's "Dairy Queen" business as conducted prior to execution of this
Addendum refer to frozen or semi-frozen or other dairy or confectionery
products and the "Dairy Queen" trademarks, now or hereafter created, whose
use is licensed to Licensee by the Agreement. The term "food service" and
references to the "System" defined herein and licensed hereunder refer to
all other prepared or ready-to-eat foods, and the related "Dairy Queen",
"Xxxxxxx" and other trademarks, including beverages, now or hereafter
created, whose use is licensed to Licensee by this Addendum or that are
registered for foods or restaurant services other than those defined above
as "dairy products" and related marks. In all other cases and for all
purposes the Agreement and this Addendum shall be construed and treated as
a single instrument and, to the extent that they are not inconsistent
therewith, all the terms and provisions hereinafter contained shall be
defined and interpreted in conjunction with all of the terms and provisions
of said Franchise and/ or License Agreement.
1.2 Preservation of Right. The license granted by this Addendum shall
continue until terminated by either Licensee or Licensor in accordance with
the provisions of this Amendment. Under no circumstances shall this
Addendum remain in effect after any termination or expiration of the
Agreement. Upon any termination or expiration of this Addendum, Licensee
shall revert to no lesser nor greater status or rights than Licensee is
entitled to under the Agreement as it existed immediately prior to the
execution of this Addendum. Each party shall have the same rights and
duties in respect to the "Dairy Queen" trademark as each had immediately
prior to execution of this Addendum. Termination or expiration of the
Agreement in accordance with its terms, however, shall automatically
terminate this addendum without further notice or action of either party.
2. LICENSE. Licensor hereby grants to Licensee, subject to all the terms,
conditions and provisions hereof, the right and license to:
2.1 Store Identification. Use the Trademarks at or about the Store
located at: 17 Miles East of Xxxxxx on Interstate 10 at Xxxxxxx Road on and
in association with the advertising, promotion and sale of all uniform and
approved food service products and services as Licensor periodically may
authorize. See Xxxxxxxx "X", "X-0" or "A-2" attached hereto.2.2 Trademark
Usage. Use the Trademarks at the Store on and in association with the
uniform equipment, supplies, containers and ingredients for the food
service and other products approved periodically by Licensor, and to use
one or more of the Trademarks designated periodically by American on
signage used to identify the Store.
-2-
2.3 Business Method. Employ in the business of the Store the
merchandising, sales promotion programs and business methods and techniques
developed and approved by American and adopted and approved by Licensor.
2.4 Assistance. Receive the assistance and services of Licensor
provided for in this Addendum.
3. ACCEPTANCE OF LICENSE. Licensee hereby accepts the above license from
Licensor subject to all the terms, provisions and conditions hereof and agrees
to implement the System as Licensee's sole food service system and menu within
ninety days of the date of this Addendum. Licensee further expressly
acknowledges and agrees:
3.1 Trademark Ownership. American is the owner of all right, title and
interest in and to the Trademarks together with the good will, associated
with or attributable to the Trademarks, of the business with which said
Trademarks have been and are used at and about Licensee's Store. Said
trademarks are valuable property rights owned by American. Licensee shall
not contest or challenge American's ownership or registration of the
Trademarks.
3.2 Trademark Use. The Trademarks shall be used only on or with such
products and services as may be approved or specified by Licensor and shall
at all times be used only in a manner approved by Licensor.
3.3 Location of Use. Licensee's right to the use of the Trademarks is
specifically limited to the site of the Store under the Agreement, and in
connection with sales promotion programs approved by Licensor.
3.4 Other Marks. Licensee shall use no other trademarks, trade names
or service marks in the food service business at the Store except those
authorized periodically by Licensor except with the prior written consent
of Licensor.
3.5 Changes in Marks. Licensee acknowledges that Licensor shall have
the right and power in its sole discretion within the Territory to select,
adopt, alter, amend or discontinue the use of one or more words, phrases,
trademarks, trade names, service marks or the like, heretofore or hereafter
in use in connection with the food service business hereby licensed to
Licensee, from time to time as Licensor may deem expedient or as may be
required by American; and Licensee further acknowledges that no such usage,
terminology, or adoption, change or discontinuance thereof, shall in any
manner or degree have any effect upon the remainder of this Addendum or
upon Licnesee's original "Dairy Queen" franchise agreement. Any such new or
altered word(s), trademarks, trade names or service marks or the like shall
be deemed subsumed under the definition of the Trademarks hereinabove
contained. Licensor engages that it will not make an unreasonable number of
such changes, or make such changes at unreasonably close intervals.
-3-
3.6 Authorized Trademarks. Licensor shall keep Licensee informed by
means of revisions to the attached Xxxxxxxx X,X0,X0, which is hereby
incorporated herein, as to the full list of currently authorized food
service trademarks, trade names and service marks. Licensee shall, upon
notice of any alteration therein, forthwith conform his operations to such
enumeration as revised.
3.7 Business Identification. Licensee shall not use the Trademarks or
any of them as a part of his corporate or business name and shall use in
connection with his food service business only one or more of the
Trademarks as may be designated periodically by American as the trade name
on the store from which the said food service products and services are
sold, but Licensee shall also display the "Dairy Queen" Trademark on said
store.
3.8 Business Method. Licensee shall adopt and follow in good faith the
systems, programs and methods prescribed for Licensee's food service
operation pursuant to this Addendum.
3.9 Conflicts of Interest. Neither Licensee nor any person owning an
interest directly or indirectly in Licensee shall directly or indirectly
operate or permit to be operated or hold any interest (other than 1% or
less of the outstanding stock or debt of any class of any public company)
in any restaurant or fast-food business other than one authorized by this
Amendment without the prior written consent of Licensor.
4. TRADEMARK STANDARDS AND REQUIREMENTS. Licensee agrees that nothing
herein contained gives him any right, title or interest in the Trademarks except
the right to use the same under the terms and conditions of this Addendum and
that Licensee's use thereof inures to the benefit of American. American and
Licensor have the right to distribute for their own account products identified
by the Trademarks through other methods of distribution that may be established
periodically.
4.1 Uniform Use of Marks. Licensee shall confine his use of the food
service Trademarks to the sales promotion programs and sale of food service
products and services which shall in quality, mode and conditions of
manufacture and sale, comply with such reasonable standards as are
established or approved from time to time by Licensor. In order to promote
and protect the business interests of each of the parties, the value of the
"Dairy Queen" business and the business interests of other persons engaged
in such business, Licensee shall adhere to system standards of uniformity
prescribed by Licensor in the type, standard and quality of stores,
equipment, supplies and ingredients used therein, and the conditions of
preparation and the procedures employed in the sale of said products and
services. Licensor shall not make an unreasonable number of changes with
respect to such matters.
-4-
4.2 Uniform Facilities. Licensee agrees that the food service business
hereunder shall be conducted in accordance with Licensor's uniform
requirements with respect to quality, production, appearance, cleanliness,
service, merchandising and sales promotion standards. Licensee acknowledges
and agrees that substantial uniformity in facilities, products, services
and operations are essential to the conduct of a system such as the "Dairy
Queen" system, and therefore further agrees to honor and implement
recommendations of Licensor directed to enhancing and furthering such
uniformity.
4.3 Equipment and Supplies. Licensee agrees to purchase and use in the
operation of the food service portion of Licensee's Store, only equipment,
supplies and ingredients which are approved by Licensor. Nothing herein
shall be construed as an attempt to limit unreasonably the sources from
which Licensee may procure equipment, supplies, and ingredients. Rather it
is the intention of the parties that such items conform to Licensor's
standards and specifications of consistent quality and uniformity. Nothing
contained herein shall be deemed to require Licensor to approve an
inordinate number of suppliers of a given item or service which in the
reasonable judgment of Licensor would result in higher cost generally to
Licensor's licensees or prevent effective and economical supervision of
suppliers by Licensor. Requests for approval of additional suppliers shall
be in writing and shall contain such information as Licensor may reasonably
request. Licensor reserves the right to charge back to Licensee or the
proposed supplier all reasonable expenses incurred in considering requests
for approval.
4.4 Approved Adaptations. Complete and detailed uniformity under many
varying conditions may not be possible or practical and Licensor reserves
the right and privilege, at Licensor's sole discretion and as Licensor may
deem in its best interests to vary standards for any other licensee based
upon the peculiarities of a particular site or circumstance, density of
population, business potential, population of trade area, existing business
practices or any other condition which Licensor deems to be of importance
to the successful operation of such licensee's business. Licensee shall not
by entitled to any variation from specifications or standards prescribed
hereunder by reason of any variation granted to any other person. Licensee
acknowledges that he is aware that other licensees of Licensor or American
operate under a number of different forms of agreement and that,
consequently, the obligations and rights of the parties to such agreements
may differ materially in certain instances from those provided herein.
Licensee further agrees that any requirement, standard or specification
prescribed hereunder is subject to reasonable periodic modification or
recession by Licensor or American to adapt the System to changing
conditions and competitive circumstances.
4.5 Litigation. In the event any person who is not a licensee of
Licensor or American, uses or infringes upon the Trademarks, American shall
control all litigation and shall be the sole judge as to whether or not
suit shall be instituted, prosecuted or settled, the terms of settlement
and whether or not any other action is taken. Licensee
-5-
shall promptly inform Licensor of any litigation or threatened litigation
by or against Licensee which arises out of the operation of Licensee's
business or pertains to the Trademarks. Thereafter, Licensee shall keep
Licensor informed of the status of any such litigation or threatened
litigation and cooperate with any action reasonably undertaken by Licensor
or American with respect thereto.
4.6 Notice of Potential Profit. American and Licensor hereby advise
Licensee that American, Licensor and/or the affiliates of either of them
may from time to time make available to Licensee goods, products and/or
services for use in Licensee's Store on whose sale American, Licensor
and/or such affiliates may make a profit. American and Licensor further
advise Licensee that American, Licensor or the affiliates of either of them
may from time to time receive consideration from suppliers and/or
manufacturers in consideration of rights licensed or services rendered to
such persons. Licensee agrees that American, Licensor and/or such
affiliates shall be entitled to said profits and/or consideration.
5. PRODUCT AND OPERATIONS STANDARDS. The following provisions shall control
with respect to products and operations of Licensee's food service operations:
5.1 Authorized Product Line. Licensee's food service business at the
Store shall be confined to the preparation and sale of only such products
as Licensor periodically designates and approves. The Store shall not be
used for any other business than the food service business licensed
hereunder and Licensee's current "Dairy Queen" business, and Licensee shall
not offer for sale therefrom any other product or service of any
description without the written consent of Licensor. Specifically but
without limiting the foregoing, alcoholic or intoxicating beverages shall
not be sold or offered for sale or otherwise handled upon said premises.
RE: Section 1, Paragraph 4 of page 1, Addendum 4A to the "Agree
5.2 Approved Menu. Attached hereto as Appendix B is the currently
approved menu for Licensee's food service business. Licensor may from time
to time make reasonable modifications to said approved menu provided said
modifications are made in respect to all licensees which have this or a
comparable agreement and are located in similar marketing areas. In
addition, Licensee may from time to time request variation from the
currently approved menu. Proposal for such variation shall be submitted in
writing to Licensor for its approval and shall be in the form (if any)
prescribed by Licensor. Said proposal shall contain sufficient information
to permit Licensor to evaluate the proposal fairly and fully. Such
variations shall only be made with the prior written consent of Licnesor.
5.3 Authorized Ingredients, Formulas, Supplies, Preparation. Licensee
shall use in preparing food service products only such ingredients,
formulas and supplies as specified by Licensor and in such portions, sizes,
appearance and packaging as set forth in the most current "Store Management
Operations Manual" and "Product Preparation Charts". Licensee acknowledges
and agrees that these may be changed
-6-
from time to time by Licensor and that Licensee is obligated to conform to
the requirements as so changed from time to time. All other supplies,
including containers, eating utensils, napkins and all other customer
service materials and promotional items of all descriptions and types shall
meet the reasonable standards of uniformity and quality as now or hereafter
are approved by Licensor for the Territory. Licensee shall be furnished
with current lists of approved equipment, supplies, ingredients, services
and applicable standards of uniformity and quality.
5.4 Serving and Promotional Items. All sales promotion material,
customer "good will" items, cartons, containers, wrappers and paper goods,
eating and serving utensils, customer convenience items (including napkins,
baby bibs, and disposable containers) used in the sales promotion, sale and
distribution of all food service products shall, where practicable, contain
one or more of the Trademarks authorized for use by Licensee as appropriate
to the product in question, and indicate that it is produced and sold under
the authority of American and shall be subject to approval by American
before being used.
5.5 Health and Sanitation. Licensee's food service business shall be
operated and maintained at all times in compliance with any and all
applicable health and sanitary standards prescribed by Licensor and by
governmental authority including any standards prescribed by Licensor that
are more restrictive than those set by governmental authority. In addition
to complying with such standards, if the Store shall be subject to any
sanitary or health inspection by any governmental authorities under which
it may be rated in one or more than one classification, it shall be
maintained and operated so as to be rated in the highest available health
and sanitary classification with respect to each governmental agency
inspecting the same.
5.6 Inspection. Licensor, American or their authorized representative
shall have the right to enter Licensee's Store at all reasonable times
during the business day for the purpose of making periodic inspections to
ascertain if all the provisions of this Addendum are being observed by
Licensee and to inspect Licensee's Store, lands and equipment, and to test,
sample and inspect his supplies, ingredients and products, as well as the
storage, preparation and formulation thereof and the conditions of
sanitation and cleanliness in the storage, production, handling and serving
thereof.
6. START SALES PROMOTION PROGRAMS AND FEES.
6.1 Sales Promotion Programs and Payment of Administrative Expenses.
Licensee shall cooperate in sales promotion programs of approved food
service products. To this end Licensor reserves the right to establish and
organize sales promotion programs from time to time and Licensee agrees to
pay to Licensor a sales promotion program fee as set forth in Paragraph 6.3
hereof. Licensee acknowledges and agrees that Licensor has had in the past,
and shall have in the future, the discretion to determine expenditures of
funds collected in respect to sales promotion programs and as to the timing
and selection of the promotional materials and programs for which
-7-
said expenditures are made, provided, however, that Licensor shall make a
good faith effort to expend such funds in the general best interests of
participating licensees. Licensor shall expend sales promotion funds as
provided herein. Licensee acknowledges and agrees that Licensor may
compensate itself and/or its affiliated companies for the expense of
administering and promoting such food service sales promotion programs.
Licensor shall advise Licensee annually of the receipts and expenditures of
sales promotion programs and of Licensor's expense of administering and
promoting said programs.
6.2 Approved Materials. Licensee shall use only such sales promotion
program materials or other advertising materials as are furnished, approved
or made available by or through Licensor and/or American. Said materials
shall be used only in a manner prescribed by Licensor and/or American.
6.3 Sales Promotion Program Fee. Licensee shall pay to Licensor a
sales promotion fee to be expended in accordance with the provisions of
Paragraph 6.1. The sales promotion fee shall be a sum equal to not less
than 3% nor more than 6% of Licensee's gross retail sales (net of sales
taxes), including both dairy product and food service sales, from
Licensee's Store. Licensor shall notify Licensee of the exact percentage by
January of each year. (Except no notification will be given with respect to
any year for which the percentage is to be unchanged from the preceding
year). Such percentage shall be the same as that to be employed during such
succeeding year by the majority of "Dairy Queen" licensees within the
marketing area as determined by Licensor within which Licensee's Store is
located. This sales promotion fee (and the license fee provided for in
Paragraph 9.1) are in addition to, and not in lieu of, any fees (other than
sales promotion or advertising fees) required to be paid pursuant to
Licensee's above-referenced "Dairy Queen" franchise agreement; the sales
promotion fee herein provided for shall supersede and replace any sales
promotion or advertising fees required to be paid by Licensee to Licensor
under any other such franchise or License agreement. RE: Section III of
page 2, Addendum 4A to the "Agreement
6.4 Yellow Pages. Licensee shall, if requested by Licensor, list
separately, or participate in a listing, in the Yellow Pages of his local
telephone directory containing such copy as may reasonably be specified by
Licensor. The cost of such listing shall be paid by Licensee, or by
Licensee and other participating licensees in the case of a joint listing.
Licensor shall not specify an unreasonably expensive listing.
7. FACILITY STANDARDS. The following shall control with respect to
Licensee's facilities at his Store:
7.1 Store Facility. Licensee agrees that the food service facilities
shall be constructed and equipped in accordance with Licensor's currently
approved specifications and standards for building, equipment, signage,
fixtures, location and design and accessory features.
7.2 Future Alteration. Any replacement, reconstruction, addition or
modification in building, interior or exterior decor or image, equipment or
signage, to be made after consent is granted by Licensor for the
-8-
initial plans, whether at the request of Licensee or of Licensor, shall be
made in accordance with written specifications which have received the
prior written consent of Licensor, which shall not be unreasonably
withheld.
7.3 Maintenance. The building, equipment and signage employed in the
conduct of Licensee's food service business shall be maintained in
accordance with specific lists prepared by Licensor and based upon periodic
inspections of the premises by Licensor's representatives. Within a period
of ninety (90) days after the receipt of any particular maintenance list,
Licensee shall effect the items of maintenance designated therein including
the repair of defective items and/or the replacement of unrepairable or
obsolete items of equipment and signage. Routine maintenance shall be
conducted in accordance with general schedules published by Licensor or
American and made available to Licensee.
7.4 Relocation. Should it become necessary, on account of
condemnation, sale or other cause, including expiration or cancellation of
lease, to relocate the entire Store, Licensor shall grant Licensee
authority to do so at a site, acceptable to Licensor, that is within a
radius of 1,000 meters of the Authorized Location, is reasonably suited for
a "Dairy Queen" retail store, does not infringe on rights of another
licensee, is reasonably distant from other "Dairy Queen" retail stores, and
provided that the new retail store is constructed, equipped and fully ready
to be opened for business within one year after discontinuing operation of
a "Dairy Queen" Store at the Authorized Location, all in accordance with
the current standards of American and Licensor at that time. If the need to
relocate the Store is attributable to the voluntary act or omission of
Licensee, Licensee's right to relocate the Store as provided herein shall
be void and Licensee's interest in this Agreement shall be abandoned unless
Licensee shall have given Licensor notice of his intent to relocate not
less than sixty (60) days prior to closing the Store, shall have procured a
site acceptable to Licensor within 60 days after closing the prior Store,
and shall have opened the new retail Store for business within 180 days of
such closure.
7.5 Modernization and Refurbishment Upon Transfer. Each and every
transfer of any interest in this Agreement or business conducted hereunder
is expressly conditioned upon Licensee promptly effecting such items of
modernization, refurbishing and/or replacement of building, equipment,
fixtures and signage as may be reasonably necessary to permit the same to
conform to the standards then prescribed by American for similarly situated
new "Dairy Queen" store operations. Licensee acknowledges and agrees that
the requirements of this Paragraph are both reasonable and necessary to
insure continued public acceptance and patronage of the "Dairy Queen"
system, and to avoid deterioration or obsolescence in connection with the
operation of the business.
-9-
8. PERSONNEL AND SUPERVISION STANDARDS. The following shall control with
respect to personnel, training and supervision:
8.1 Training. Licensee shall, at Licensee's expense, attend and
complete American's training program, at Minneapolis, Minnesota, (or at
another location designated by Licensor) prior to opening of Licensee's
food service operations. If Licensee operates the Store principally through
a hired manager, Licensee shall, at Licensee's expense, also cause such
person to attend and complete American's or Licensor's training program.
Under no circumstances shall Licensee permit management of the Store's
operations on a regular basis by a person who has not successfully
completed American's or Licensor's training program.
8.2 Staffing. Licensee shall hire and supervise efficient, competent,
sober and courteous persons as his employees for the operation of his food
service business and set and pay their wages, commissions and incentives
with no liability therefor on American or Licensor. Licensee shall require
all his employees to work in clean uniforms approved by Licensor but
furnished at the cost of Licensee or his employees as Licensee may
determine. No employee of Licensee shall be deemed to be an employee of
Licensor or American for any purpose(s) whatsoever.
8.3 Internal Training Program. Licensor shall provide or make
available to Licensee an in-store training program for all store employees.
Licensee shall train and periodically re-train all store employees using
the training aids made available by Licensor. American periodically will
revise such training materials and aids and it or Licensor will make the
same available for purchase by Licensee.
8.4 Attendance at Meetings. Licensee, or Licensee's manager, at
Licensee's expense, shall attend at least one national, regional or
approved local marketing area meeting each year which American originates
for and on behalf of "Dairy Queen" operators to set forth new methods and
programs in store operation, training, management, sales and sales
promotion programs. Licensor further strongly recommends that key employees
of Licensee also attend such meetings.
9. FEES, REPORTING AND FINANCIAL MANAGEMENT.
9.1 Continuing Franchise License Fee. During the full term of this
Operating Agreement, and in consideration of the rights licensed hereunder,
Licensee shall pay to Licensor as license fee in respect to the rights
licenses herein a sum equal to: 4 (four) % of gross retail sales, exclusive
of retail sales taxes, of all products, goods and wares of every kind and
nature sold from, or in connection with the food service portion of,
Licensee's "Dairy Queen" Store, including, but without limiting the
generality of the foregoing, sales of all products under any of the
Trademarks as well as sales of other food service merchandise whether or
not identified by other brand names.
9.2 Computations and Remittances. All amounts due and owing hereunder
shall be computed at the end of each month's operation and remittance
-10-
for the same shall be made to Licensor on or before the tenth day of the
following month accompanied by the reports provided for in Paragraph 9.4
hereof. The computation of said amounts shall be certified by Licensee in
the manner and form specified by Licensor and Licensee shall supply to
Licensor such supporting or supplementary materials as Licensor may
reasonably require to verify the accuracy of such remittances.
9.3 Surcharge Method of Pre-collection. At Licensor's option, Licensor
may require Licensee to pay to suppliers of food service products and
ingredients a surcharge on all units of such commodities purchased by
Licensee. Said surcharge shall be established by Licensor at a reasonable
rate so as to approximate the amount of license fee and sales promotion fee
which will be payable by Licensee. Said surcharge shall be paid to said
supplier or suppliers for the account of Licensor, and be regarded by the
parties as a method of pre-collection of said license and sales promotion
fees. The amounts so collected shall be credited by Licensor against the
license and sales promotion fees due from Licensee to Licensor at the end
of each month's operations. Licensor shall submit to Licensee on Licensor's
choice of a monthly or quarterly basis a reconciliation of Licensee's
license and sales promotion fees account setting forth the credit to
Licensee's account from amounts collected for Licensor by suppliers by way
of the aforesaid surcharge method. Should Licensee fail to submit reports
in accordance with Paragraph 9.4, Licensor may make said reconciliation of
amounts due in conformance with its best judgment as to amounts due and
Licensor's reconciliation shall be conclusive as to the amounts due
Licensor from Licensee unless within a period of ten (10) days after
mailing of said reconciliation to Licensee by Licensor, Licensee provides
evidence in a form satisfactory to Licensor of the correct amounts due.
Licensee shall pay such amounts, if any, determined to be owed pursuant to
Licensor's reconciliation within ten (10) days after a mailing of notice to
Licensee by Licensor. If Licensor determines that Licensee has over-paid
license or sales promotion fees on the surcharge basis, Licensor shall
remit to Licensee an amount equal to the excess fees collected at the time
the monthly or quarterly reconciliation is provided Licensee.
9.4 Records and Reports. Licensee shall keep true records from which
all sums payable under this Agreement and the dates of accrual thereof may
be readily determined including but not limited to a monthly statement or
profit and loss; an annual balance sheet, statement of profit and loss and
statement of changes in financial position; records of purchases, special
sales and promotions, check registers, sales tax returns, daily cash
register tapes or similar records showing all sales and such other related
information as Licensor may reasonably specify. Licensee shall make written
reports to Licensor in such form as Licensor periodically may reasonably
prescribe, within ten (10) days after the end of each month's operation
setting forth such information and data as may by reasonably necessary to
determine the sums payable to Licensor by Licensee during said month. In
addition to the foregoing and in addition to such other information as
Licensor may from time to time reasonably require, said monthly report
shall accurately set forth the gross retail
-11-
sales of the Store as well as the total of number of gallons of mix, the
total number of pounds of meat, and the quantity of other basic commodities
used by the Store during said month and the sources where said mix, meat
and other commodities were purchased. For the purpose of said reports, the
date of use of such mix, meat and other commodities shall be deemed to be
the date of receipt at the Store.
9.5 Inspection and Audit. Licensee shall keep all books and records
relating to the Store at a location where they shall be readily accessible
to Licensor and American. Licensor, American or the authorized
representative of either shall have the right at all times during the
business day to enter the premises where Licensee's books and records
relative to the Store are kept, and to inspect, copy and audit such books
and records. In the event that any such inspection or audit reveals an
understatement of Licensee's gross sales, continuing license fees or sales
promotion fee of 2-1/2% or more, or a variance of 5% or more from other
data reported to Licensor in respect to any other material item, in
addition to any other rights it may have, Licensor or American may conduct
such further periodic audits and/or inspections of Licensee's books and
records as it reasonably deems necessary for up to two years thereafter and
such further audits and/or inspections shall be at licensee's sole expense,
including professional fees, travel and living expenses directly related
thereto.
9.6 Financial Responsibility and Insurance. Licensee hereby waives all
claims against Licensor and American for damages to property or injuries to
persons arising out of the operation of Licensee's business and Licensee
shall indemnify and save Licensor and American harmless of and from any
damage or injury to property or persons arising from or growing out of the
operations of Licensee's business. Licensee further agrees to purchase and
maintain in full force and effect, at Licensee's expense, public liability
insurance in an amount not less than $500,000 or such greater amount as
Licensor periodically may reasonably specify taking into account inflation,
risk levels or other factors deemed important by Licensor, insuring both
parties hereto, and American, by name, from liability for any and all such
damage or injury and waiving the insurer's rights or subrogation against
Licensor and American. Licensee agrees to deliver to Licensor periodically
a certificate evidencing the existence of such insurance coverage and which
provides that Licensor will be given not less than thirty (30) days written
notice of material change of or termination or cancellation of the policy.
9.7 Offsets. Licensee waives any and all existing and future claims
and offsets against any amounts due hereunder, which amounts shall be paid
when due. Licensor and American shall be entitled to apply or cause to be
applied against amounts due to either of them or any of their respective
affiliated companies any amounts which may from time to time be held by
either of them or their respective affiliates on Licensee's behalf or be
owed to Licensee by Licensor or American or their respective affiliates.
All amounts owed by Licensee to Licensor hereunder shall bear interest from
their due date(s) until paid at the lesser of 18% per annum or the maximum
contract rate of interest permitted by the law of the state of the
Authorized Location of Licensee's Store.
-12-
10. RESOLUTION OF DISPUTES; TERMINATION. Except as qualified below, in the
event of any dispute between the parties hereto arising under, out of, in
connection with or in relation to this Agreement, said dispute shall be settled
in a court of law. However, at the agreement of both parties, said dispute shall
be submitted by the parties to binding arbitration in accordance with the Rules
and Procedures and under the auspices of the American Arbitration Association.
The arbitration shall take place at the capital of the state of the Authorized
Location of Licensee or at such other place as may be mutually agreeable to the
parties. The decision of the arbitrators shall be final and binding on all
parties. Notwithstanding the foregoing, Licensee recognizes that his Store is
one of a large number of stores similarly situated and selling to the public
similar products, and hence the failure on the part of a single licensee or
sublicensee to comply with the terms of his Agreement could cause irreparable
damage to Licensor, American and/or to some or all other "Dairy Queen"
licensees. Therefore, it is mutually agreed that in the event of a breach or
threatened breach of any of the terms of this Addendum by Licensee, Licensor
shall forthwith be entitled to an injunction restraining such breach and/or to a
decree of specific performance without having to show or prove any actual
damage, together with recovery of reasonable attorney's fees and other costs
incurred in obtaining said equitable relief, until such time as a final and
binding determination is made by the arbitrators and/or the court of law. The
foregoing equitable remedy shall be in addition to, and not in lieu of, all
other remedies or rights which Licensor might otherwise have by virtue of any
breach of this Agreement by Licensee. Licensor also reserves the right to
commence a civil action against Licensee or take other appropriate action to
collect sums of money due to Licensor, and to compel Licensee to compile and
submit required reports to Licensor or to permit inspections or audits
authorized by this Addendum. The prevailing party in any action or proceeding
hereunder shall be entitled to recover its reasonable attorney's fees and costs
therein.
10.1 Breach of Contract. Licensee shall be in default hereunder if he
does any act that manifests his intent to abandon the license granted
herein, or if Licensor reasonably determines that Licensee has breached any
of the terms of this Addendum, which without limiting the generality of the
foregoing shall include making any false report to Licensor; failure to pay
when due any amounts required to be paid to Licensor or American or the
affiliates of either whether pursuant to this Addendum or to any third
party as required by this Addendum; conviction of Licensee of any felony or
misdemeanor which brings or tends to bring the Trademarks or the "Dairy
Queen" system into disrepute or impairs or tends to impair the goodwill of
the Trademarks, failure to abide by "Dairy Queen" system standards and
requirements in connection with the operation of Licensee's business or
failure to meet any requirements or specifications established with respect
to product quality, physical property, conditions or equipment or materials
used, products manufactured, menu or use of approved products, packages or
promotional materials. Failure of Licensee to pay to Licensor any past due
amount owed within seven (7) days of Licensor's written notice of default
therein shall be construed as Licensee's voluntary abandonment of this
Addendum and the food service business operated hereunder.
-13-
10.2 Termination by Licensor. Except as hereinafter provided, failure
of Licensee to cure a default by Licensee hereunder within seven (7) days
from the date of a written notice of default mailed or delivered to
Licensee, which notice states such default, shall give Licensor good cause
to terminate this Addendum. Termination shall be accomplished by mailing or
delivering to Licensee written notice of termination, which notice shall
state the grounds therefore and shall be effective (i) immediately in any
case of voluntary abandonment of this Addendum by Licensee or conviction of
Licensee of an offense directly related to the business conducted
hereunder; or (ii) sixty (60) days after the date of such notice of
termination in all other cases; provided, however, that notwithstanding any
other provision of this Paragraph 10, this Addendum may be terminated
immediately upon failure of Licensee to cure within twenty-four (24) hours
of notice thereof any default under this Addendum which materially impairs
the good will associated with any of the Trademarks. In addition to the
foregoing, this Addendum may be terminated by Licensor upon any ground or
by any shorter period of notice (but not less than seven days except as
provided above) as may be expressly permitted from time to time by
applicable law or regulation. The provisions of any applicable law or
regulation prescribing permissible grounds, or minimum periods of notice,
for termination of this franchise shall supersede any provision of this
Addendum that is less favorable to Licensee than such law or regulation.
This Addendum shall terminate automatically without notice or any act by
any party upon any termination or expiration of Licensee's "Dairy Queen"
franchise agreement referred to in Paragraph 1.1.
10.3 Loss of Lease; Failure to Reopen. Subject to the provisions of
Paragraph 7.4 hereof, any termination of the land or building lease for
Licensee's Store, or any failure to rebuild or repair and reopen for
operation Licensee's destroyed or damaged store within one year of the date
of occurrence of such destruction or damage, shall be construed as
Licensee's voluntary abandonment of this franchise and Addendum.
11. TERMINATION CONSEQUENCES. Upon termination of this Addendum:
11.1 Reversion of Rights. All rights, title and interest of Licensee
in and to @his Addendum shall become the property of Licensor.
11.2 Discontinuation of Use of Marks. All of Licensee's rights to the
use of the Trademarks and the right and license to conduct the franchised
food service business shall revert to Licensor and Licensee shall
immediately cease all use of all such Trademarks and pay all monies due at
said date. Licensee shall promptly and at his own expense remove or
obliterate all store signage and displays furnished to Licensee by Licensor
and shall remove or obliterate any signage or displays at Licensee's Store
or in his possession bearing any of said Trademarks or names or material
confusingly similar to any of said Trademarks.
11.3 Termination by Licensee. Refer to "Dairy Queen" Store Operating
License Agreement, page 20, Section XXVI Termination, paragraph 2
Termination by Licensee.
-14-
12. MISCELLANEOUS.
12.1 Severability. In the event at any future time one or more clauses
of this Addendum shall be held to be void or unenforceable for any reason
by any court of competent jurisdiction, such clause or clauses shall be
deemed to be separable and the remainder of this Addendum shall be deemed
to be valid and in full force and effect and the terms of this Addendum
shall be equitably adjusted so as to compensate the appropriate party for
any consideration lost because of the elimination of such clause or
clauses.
12.2 Waivers. Any waiver by Licensor of any breach by Licensee shall
not be deemed to be a waiver of any other or subsequent breach nor an
estoppel to enforce its rights in respect of any other or subsequent
breach.
12.3 Joint Liability; Pronoun References. If Licensee consists of two
or more individuals, such individuals shall be jointly and severally liable
and references to Licensee in this Addendum shall include all such
individuals. Reference to Licensee as male shall also include a female
licensee, partnership or corporation or any other business entity as
relevant in the context.
12.4 Conformance with Law. This Addendum shall be deemed to be amended
from time to time as may be necessary to bring any of its provisions into
conformity with valid applicable laws or regulations.
12.5 Transfer Prohibited. This Addendum is not assignable or
transferable in whole or in part to any party except in connection with a
transfer or assignment of the "Dairy Queen" franchise referred to in
Paragraph 1.1 to which Licensor has given its prior written consent.
Regarding transfer fee as set forth in the "Agreement", gross sales amounts
shall include all gross sales of "Dairy Queen" Soft Serve Products and
Xxxxxxx Food line, in computing transfer fee.
12.6 Entire Agreement. Subject to the exceptions set forth in this
Addendum, this Addendum constitutes the sole agreement between the parties
with respect to its subject and embodies all prior agreements and
negotiations with respect to the System. There are no representations of
any kind except as contained herein. Paragraph captions are for ease of
reference and do not alter or limit the provisions of this Addendum.
12.7 Relationship. Licensee is an independent contractor and is not in
any manner the agent, partner or employee of Licensor nor has Licensor any
interest in, or power over, the business of Licensee, except to the limited
extent expressly set forth in this Agreement.
-15-
12.8 Parties Bound. This Agreement shall be binding upon, and inure
solely to the benefit of, the administrators, executors, heirs, successors
and assigns of the parties. No person who is not a named party to this
Agreement is, or is intended to be, a beneficiary hereof.
IN WITNESS WHEREOF, the parties hereto have executed the foregoing Addendum
the date first above written.
ATTEST: LICENSOR:
DAIRY QUEEN OF ARIZONA, INC.
/s/ Xxxxx X. Skripkan By /s/ Xxxxxxx X. Xxxxxxx
-------------------------- -------------------------------------
Xxxxxxx X. Xxxxxxx, President
WITNESS: LICENSEE:
/s/ Xxxxx X. Xxxxxxxx XXXXXX'X INCORPORATED, a New Mexico Corp.
-------------------------- -----------------------------------------
/s/ Xxx Xxxxxxxx By: /s/ X. X. Xxxx, Exec. V. Pres.
-------------------------- -------------------------------------
ACCEPTED:
AMERICAN DAIRY QUEEN CORPORATION
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Its V.P.
----------------------------------
D.Q.S.A., INC. Form Food Service
Appendix "B-2" 28 March 1986
-16-
ADDENDUM TO LICENSE AGREEMENT
IT IS AGREED BY THE PARTIES THAT THIS ADDENDUM DATED THE 18th DAY OF November ,
1986 , SHALL BECOME A PART OF THE ATTACHED LICENSE AGREEMENT.
THE FRANCHISEE ACKNOWLEDGES THAT HE HAS HAD AT LEAST TEN (10) BUSINESS DAYS
PRIOR TO THE EXECUTION BY THE PROSPECTIVE FRANCHISEE OF ANY BINDING FRANCHISE OR
OTHER AGREEMENT, OR AT LEAST TEN (10) BUSINESS DAYS PRIOR TO THE PAYMENT OF ANY
CONSIDERATION BY THE FRANCHISEE, WHICHEVER OCCURS FIRST, A COPY OF THE OFFERING
CIRCULAR, TOGETHER WITH A COPY OF THE LICENSE AGREEMENT RELATING TO THE
FRANCHISE.
ATTEST
DAIRY QUEEN OF SOUTHERN ARIZONA, INC.
ATTEST: Franchisor
/s/ Xxxxx X. Skripkan By /s/ Xxxxxxx X. Xxxxxxx
----------------------------- --------------------------------------
President - Xxxxxxx X. Xxxxxxx
WITNESS:
/s/ X. X. Xxxxxxxx XXXXXX'X INCORPORATED, a New Mexico Corp.
----------------------------- -----------------------------------------
Licensee and Franchisee
/s/ Xxx Xxxxxxx By: /s/ X. X. Xxxx, Exec. V. Pres.
----------------------------- -------------------------------------
Licensee and Franchisee
----------------------------- -----------------------------------------
Licensee and Franchisee
APPENDIX "A"
Licensee has the right to use the following trademarks and service marks in
accordance with the attached Operating Agreement.
This Appendix "A" may be amended by Company from time to time in order to make
available additional trademarks or service marks or to delete those which become
unavailable. Licensee agrees to use only those trademarks and service marks
which are then currently authorized.
DAIRY QUEEN(TM) DQ'(TM)
XXXXXXX(TM) THE ELLIPSE DESIGN(TM)
MR. XXXXX(TM) BROWNIE DELIGHT(TM)
MR. XXXXX KISS(TM) THE CONE WITH THE CURL ON TOP(TM)
LET'S ALL GO TO THE DAIRY QUEEN(TM) DESIGN: THE CONE WITH THE CURL ON TOP(TM)
FIESTA(TM) QUEEN'S CHOICE AND DESIGN(TM)
FULL MEAL DEAL(TM) DOUBLE DELIGHT(TM)
CHILI DOG SPLIT(TM) STARKISS(TM)
PEANUT BUSTER' PARFAIT(TM) BIG "O"(TM)
FUDGE NUT BAR(TM) IT'S A REAL TREAT'(TM)
BANANA SUPREME(TM) DQ CHIPPER SANDWICH(TM)
WE TREAT YOU RIGHT(TM) BLIZZARD(TM)
MORE BURGER THAN BUN(TM) CHOCOLATE PEANUT BUTTER CRUNCH(TM)
SUPER DOG TV(TM) XX. XXXXXX(TM)
ROYAL BANANA SPLIT(TM) CHOCOLATE CHIP COOKIE SANDWICH(TM)
SNAK DEAL(TM) CHOCOLATE MOUNTAIN SUNDAY(TM)
BUSTER BAR(TM) BIG CONE AND DESIGN(TM)
DILLY' BAR(TM) DQWICH(TM)
DILLYWICH
Each of the above trademarks and/or service marks must be used only in the
manner specified by the Company and in connection with the goods and/or services
specified by the Company. No deviations will be permitted.
1/22/86
Reg. U.S. Xxx. Office Am D.O. Corp., "Trademark, Am. D.Q. Corp.
DATE: 11/18/86 INITIALS: M.L.H. C.C.B.
---------------- ------------------- ------------------
(Licensor) (Licensee)
Date: 11/18/86 Initials:
---------- ----------
(Licensee)
APPENDIX "B"
Dairy Queen/Xxxxxxx
(Please attach to copy of current operating agreement)
(Licensee)
Below is listed the approved menu of Company for Dairy Queen", /Xxxxxxx' stores
which is in current use and effect. Licensee is authorized to use this menu in
accordance with the attached Operating Agreement.
This Appendix "B" may be amended by Company from time to time in order to make
available additional products or to delete those which become unavailable.
Licensee agrees to use only those products which are then currently authorized
for use in Dairy Queen/Xxxxxxx stores.
Licensee shall use in preparing products only such ingredients, formulas and
supplies as are specified by Company and in such portions, sizes. appearance and
package as set forth in Company's most current "Store Management Operations
Manual" and "Product Preparation Charts."
National Required National Required National Required
Xxxxxxx Food Items Dairy Queen, Soft Serve Items Beverage Items
------------------ ----------------------------- --------------
Homestyle Hamburgers: Cones A minimum of three carbonated
Single Dipped Cones soft drinks**
Double Sundaes Mr. Xxxxx(R)*
Triple Shakes/Malts
w/Lettuce and Tomato Float National Optional
w/Cheese Mr. Xxxxx(R) Float* Beverage Items
Freeze --------------
Hot Dog Mr. Xxxxx(R) Freeze* Soft Drinks (32 oz.)
w/Chili Banana Split Milk
w/Cheese Peanut Buster(R) Parfait Coffee
Fish Fillet Sandwich Double Delight(TM) Hot Chocolate
w/Cheese Home Pak: Iced Tea
Chicken Breast Fillet Sandwich Pint Lemonade
w/Cheese Quart Diet Soft Drinks**
French Fries Half Gallon
Large Novelties:
Small Dilly(R) Bar
Onion Rings Buster Bar(R) and/or Fudge Nut Bar(TM)
DQ(R) Sandwich and/or Dillywich(R)
National Optional Mr. Xxxxx Kiss(R) * and/or Starkiss(R)
Xxxxxxx(R) Food Items
---------------------
Super Dog(TM)
w/Chili National Optional
w/Cheese Dairy Queen Soft Serve Items
Chili Dog Split(R) ------------------------------
Quarter Pound Hot Dog: Hot Fudge Brownie Delight(R)
w/Chili Strawberry Shortcake
w/Cheese Banana Supreme(R)
Polish Sausage Shake'N Sundae
Barbecue Sandwich Parfait
Chili Bowl Soda
Nachos Sundae 11 oz.
Chopped Pork Loin Fritter DQ Chipper Sandwich(R) or
Chicken Nuggets DQ Chocolate Xxxx Xxxxx Sandwich(R)
Beef Nuggets DQ Push
Fried Mushrooms Blizzard(R)***
Turnover Low-Fat Soft Frozen Yogurt***
Biscuit Breakfast*** Dairy Queen(R) Frozen Cakes***
Traditional Breakfast*** Queen's Choice(R) Premium Hard
Salad Bar*** Ice Cream***
* Mr. Xxxxx, contract stores only.
** All carbonated drinks must be of high quality in national distribution and
made by a primary manufacturer.
*** These items are Optional menu additions to be sold only by Dairy Queen or
Dairy Queen/Xxxxxxx store operators who have been certified to do so by
American Dairy Queen Corporation or a Territory Operator for store
franchise owners franchised directly by them in their respective areas. The
product weights/portions for these items are specified in the respective
product preparation procedures from ADQC.
1/22/86 Note: The Dairy Queen soft serve and Xxxxxxx food and beverage
items listed on the National Optional menu, shown above, may be
sold by Licensee it Licensee desires to do so, but are not
required to be sold.
Reg. U.S. Xxx. Off., Am. D.O. Corp.
"QUEEN'S CHOICE" HARD ICE CREAM
PRODUCT ADDENDUM
LICENSEE: XXXXXX'X INCORPORATED DATE: 18 November 1986
--------------------------------------------- ----------------
STORE ADDRESS: 17 Miles East of Benson, Arizona on Interstate 10
-----------------------------------------------------------------
at Xxxxxxx Road.
-----------------------------------------------------------------
DAIRY QUEEN OF SOUTHERN ARIZONA, INC. (DQSA) has been authorized by
AMERICAN DAIRY QUEEN CORPORATION (ADQ) to use the "Dairy Queen" hard ice cream
products identified by the brand name and trademark "Queen's Choice" and/or
such. other brand name(s) or trademarks) as may be authorized periodically by
ADQ.
You, the undersigned Licensee(s) have read and do understand and agree to
all the criteria outlined by DQSA necessary in implementing the hard ice cream
program "Queen's Choice,, into your present Dairy Queen Store. Now, therefore,
You, as a Licensee of DQSA, are authorized to use only ADQ approved
products, equipment, and packaging for the hard ice cream program. This is an
addendum to your existing "Dairy Queen" License Agreement specified below and
the sale of the hard ice cream products shall in all respects be subject to the
terms and conditions of that Agreement except as modified herein.
The undersigned hereby agrees that it will truthfully represent the nature
and quality of the hard ice cream products to the consumer and will take all
affirmative action necessary to comply with all federal, state, and local laws,
ordinances, and regulations relating to the labeling, advertising, and sales of
hard ice cream products.
DQSA hereby notifies Licensee that the "Queen's Choice" hard ice cream
program is License Fee bearing to DQSA, and shall be the sum Of 4% of total
gross sales, exclusive of sales tax, of the "Queen's Choice" hard ice cream
product. The method of collection of said License Fee shall be exactly as on the
soft-serve DAIRY QUEEN in the original License Agreement that is attached to and
made a part of and mentioned below.
In the matter of Advertising relating to "Queen's Choice" hard ice cream,
if and when "Queen's Choice" hard ice cream shall be declared a regular system
menu item by ADQ (cease being classified a "test" product item and declared a
full fledged regular system-wide Dairy Queen food product, optional or
otherwise), then and at that time the advertising of said item shall be handled
in somewhat the same manner as current Dairy Queen License Agreement Stores are
handling the advertising of their other Dairy Queen products, to wit:
Licensee shall pay to DQSA are not less than 3% nor more than 5% of such
sales, excluding sales taxes, toward the promotion and advertising of said
product. Licensee further agrees to participate and cooperate in the said
advertising and promotion of said product. To this end DQSA reserves the right
in its sole discretion to establish and organize advertising and promotional
programs to be conducted during the year and shall further notify Licensee of
advertising fee to be paid by him during such period. Payment of such
advertising fee shall be made to DQSA on or before the 3rd day of each calendar
month with respect to said gross sales during the previous calendar month. It is
further understood and agreed upon that the 3 (three) year Supplemental "Queen's
Choice" ADI Sale, Promotion Pledge will stay in effect and is a required pledge
for all Dairy Queen Stores regardless of when they begin with the Hard Ice Cream
Program. R.E: Section III, page 2 Addendum 4A to the 'Agreement".
DAIRY QUEEN OF SOUTHERN ARIZONA, INC.
By /s/ Xxxxxxx X. Xxxxxxx XXXXXX'X INCORPORATED
-------------------------------- ----------------------------------------
President - Xxxxxxx X. Xxxxxxx Licensee
BY: /s/ X. X. Xxxx, Exec. V. Pres.
------------------------------------
Licensee
SUPPLEMENTAL
"Queen's Choice"
ADI Sales Promotion Pledge
LICENSEE: XXXXXX'X INCORPORATED DATE: 18 November 1986
--------------------------------------------- ----------------
STORE ADDRESS: 17 Miles East of Benson, Arizona, on
-------------------------------------
Interstate 10 at Xxxxxxx Road
-----------------------------
STORE NUMBER: ADI # 0212
------------------------------------------- -----------------
PLEDGE EFFECTIVE DATES: November 1986 to November 1989
---------------------------- ----------------------
Month Year Month Year
12 months fully or partially open during fiscal year.
--------------------
The undersigned understands that the preliminary introduction of the new
optional "Queen's Choice" Hard Ice Cream Program is intended to be completed
over a period of two or more years to provide appropriate lead time for bringing
manufacturing on line, developing initial customer acceptance, and providing a
solid base of support for a system-w4-de introduction of the program. As a
demonstration to American Dairy Queen Corporation ("ADQ") and Dairy Queen of
Southern Arizona, Inc. ("DQSA") of the high level of initial advertising
supporter the "Queen's Choice" Hard Ice Cream Program which the undersigned is
prepared to make, and as an inducement to ADQ and DQSA to establish and collect
similar pledges for the Supplemental "Queen's Choice" ADI Sales Promotion
Program from other stores in the undersigned's ADI, and as an inducement to
other licensees within the ADI to pledge support for said program, the
undersigned represents that he has familiarized himself with DQSA Bulletin
41984-5 dated August 2, 1984, describing the "Queen's Choice" Hard Ice Cream
Program, that he will participate in the program upon introduction in his ADI in
accordance with said DQSA Bulletin, and the undersigned pledges, effective the
date of introduction of the program in his ADI, to participate in a special
advertising program to support the "Queen's Choice" product introduction for a
period of the remaining portion of DQSA's fiscal year ending December 31, during
which the program becomes effective in the undersigned's ADI and for the three
succeeding fiscal years. The undersigned recognizes that "Queen's Choice" Hard
Ice Cream is a new and optional product line which may not receive sufficient
customer acceptance to be continued by ADQ and DQSA as an approved optional.
product line, and that ADQ and DQSA reserve the right to discontinue the
"Queen's Choice" Hard Ice Cream Program on sixty (60) days prior notice to the
undersigned if the sales of hard ice cream in the system represent less than two
percent (2%) of total retail sales in the system. In the vent of such
discontinuance, this pledge shall terminate.
For the time period specified above, the undersigned agrees to pay to DQSA as a
supplemental advertising fee an amount equal to the greater of $ 100.00** per
month; or an amount equal to not less than three percent (3%), nor more than
five percent (5%) of the undersigned's gross retail sales (net of retail sales
tax) of hard ice cream products sold by the undersigned. DQSA will determine and
notify the undersigned of the exact percentage prior to the introduction date
and thereafter prior to December 31 of each year, except for any year for which
the Percentage is to be unchanged from the preceding year. The aforesaid amounts
shall be paid to DQSA monthly, along with such reports and reporting data as
DQSA may from to time require. The undersigned understands that the amounts
collected pursuant to this pledge will be expended by DQSA as specified in
Bulletin #1984-5 dated August 2, 1984 RE: Section III, page 2, Addendum 4A to
the "Agreement".
DAIRY QUEEN OF SOUTHERN ARIZONA, INC. LICENSEE:
/s/ Xxxxxxx X. Xxxxxxx XXXXXX'X INCORPORATED
-------------------------------------- --------------------------------------
President - Xxxxxxx X. Xxxxxxx
BY: /s/ X. X. Xxxx, Exec. V. Pres.
----------------------------------
