EXHIBIT
10.(ii)(B)(1)
STORE FRANCHISE AGREEMENT
FRANCHISEE recognizes the advantages of the 7-Eleven System and
desires to obtain a franchise for a 7-Eleven Store. In connection
therewith, FRANCHISEE wants to lease the Store and Equipment designated in
Exhibits A and B and operate the Store in a manner which will enhance the 7-
Eleven Image and pursuant to the 7-Eleven System, as from time to time
determined by 7-ELEVEN, in its sole discretion (whether or not any
changes therein are within the present contemplation of the parties).
7-ELEVEN, in reliance on the
representations made by FRANCHISEE, is willing to provide certain training
and continuing services and grant a License and Lease, but only on the
terms of this Agreement, which terms are acceptable to FRANCHISEE and are
acknowledged by the parties to be material and reasonable. Therefore, in
consideration of this Agreement, the parties agree as follows:
1. DEFINITIONS. Defined words in this Agreement and in
the Exhibits have the meanings set forth in Exhibit E or, if not
defined in Exhibit E, the meanings set forth in context.
2. FRANCHISE FEE AND DOWN PAYMENT. FRANCHISEE has paid 7-ELEVEN
a Franchise Fee. FRANCHISEE shall be obligated to pay 7-ELEVEN the amount
of the unpaid balance in the Open Account and has made a Down Payment.
The amounts paid are set forth in Exhibit D.
3. TRAINING AND QUALIFICATION. 7-ELEVEN shall provide its
then current training program for operating a franchised 7-Eleven Store,
including the then current Foodservice training program, (if any), to
FRANCHISEE. If FRANCHISEE is only one individual, the
training program will be provided to FRANCHISEE and one individual that
FRANCHISEE has designated in Exhibit D. 7ELEVEN shall reimburse or pay the
training expenses set forth in Exhibit D. 7ELEVEN at any time may
discontinue training, may decline to certify, or may revoke the
certification of any participant who fails to evidence an
understanding of the training satisfactory to 7-ELEVEN, or otherwise by
acts or omissions, at any time prior to the Effective Date, is, in
any way unsatisfactory to 7-ELEVEN. If participation of a
FRANCHISEE or any participant is discontinued by 7-ELEVEN or 7-ELEVEN
does not certify or revokes the certification of a FRANCHISEE or any
participant: (i) the business relationship, if any, between FRANCHISEE
and 7-ELEVEN shall immediately terminate; (ii) this Agreement shall not
become effective and shall be null and void; and (iii) 7-ELEVEN shall
refund without interest an amount equal to the Down Payment (less any
amount due 7-ELEVEN) and the Franchise Fee.
Notwithstanding the foregoing, in the event that any
participant discontinues training upon FRANCHISEE's initiative, 7-ELEVEN may
deduct from the amounts refunded to FRANCHISEE those training expenses
set forth in Exhibit D which have been reimbursed or paid by 7-
ELEVEN. Any expenses
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incurred or reliance by FRANCHISEE in connection with FRANCHISEE's efforts
to obtain a franchise for a 7-Eleven store, including, but not limited to,
out-ofpocket expenses, other than those which may be reimbursed to
FRANCHISEE pursuant to the terms of this Paragraph, shall be solely at
FRANCHISEE's own risk, upon FRANCHISEE's own judgment, and not in reliance
upon any statements or representations whatsoever.
4. CONDITIONS PRECEDENT. 7-ELEVEN shall use its best efforts to
make the Store available within a reasonable time. As of the date the
Store is available, the following are conditions precedent to the
Effective Date: (i) satisfactory completion of all training by
FRANCHISEE and continued certification of FRANCHISEE until and including
the Effective Date; (ii) availability (and, where possible, the
obtaining) of all licenses, permits, and bonds that are required by any
regulation or law or 7-ELEVEN for the operation of the Store or any
portion thereof; and (iii) the absence of any security interest other
than 7-ELEVEN's Security Interest, any misrepresentation, and any
action that would be or is a breach of this Agreement. If such
conditions have not been met, or the Store is not available within 60
days after satisfactory completion of training, or if the Effective Date is
not within 90 days from the date of this Agreement (or, if the Store is
under construction, 30 days after construction is completed if such date
is later), 7-ELEVEN may, or upon written request shall, refund without
interest the Down Payment (less any amount due 7-ELEVEN), and the
Franchise Fee, and this Agreement shall be null and void.
5. LICENSE. 7-ELEVEN licenses the Service Xxxx, the 7-Eleven
System, and the Trade Secrets, and the Proprietary Products to FRANCHISEE
for use only in connection with operation of the Store pursuant to this
Agreement. 7-ELEVEN shall defend claims arising from FRANCHISEE's use of the
Service Xxxx pursuant to this Agreement. FRANCHISEE acknowledges that: (i)
the License is only for the Store; (ii) FRANCHISEE is not obtaining any
exclusive territory whatsoever; (iii) 7-ELEVEN may locate other stores or
businesses, which may be operated by 7-ELEVEN or by franchisees, wherever
it determines, including in near proximity to the Store; and (iv)
FRANCHISEE will promptly notify 7ELEVEN of any uses of the Service Xxxx,
the Related Trademarks and/or Trade Secrets which appear to be improper and
which come to FRANCHISEE's attention.
6. LEASE. 7-ELEVEN leases the Store and Equipment to FRANCHISEE
for use only in connection with operation of the Store pursuant to
this Agreement. Neither party shall cause a breach of any master lease
referred to in Exhibits A or B. FRANCHISEE shall take all of the
premises leased hereunder subject to all documents of record on the
property and 7-ELEVEN makes no warranty, express or implied, of non-
disturbance. With respect to the Lease, it is the intention of the parties
to create only a landlord-tenant relationship. In the event of a breach of
this Agreement by FRANCHISEE, 7-ELEVEN shall be entitled, in addition
to any other rights under this Agreement: to invoke all rights
and remedies, judicial and otherwise, available to a landlord,
including summary proceedings for possession of leased property, the
right to appointment of a receiver or similar remedies;
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and/or (ii) to terminate, cancel, or declare a forfeiture of the Lease.
On any holding over, after notice of breach or non-renewal and effective
date of termination as given in the notice, FRANCHISEE shall be only a
tenant at sufferance or a trespasser and shall not be entitled to any
notice to quit or vacate.
7. TERM. The License, Lease, and continuing obligations of
the parties shall begin on the Effective Date and continue for a term
expiring upon the date l0 years following the Effective Date, unless earlier
terminated pursuant to the terms of Paragraph 28 hereof.
8. 7-ELEVEN CHARGE. FRANCHISEE shall pay 7-ELEVEN the 7-Eleven
Charge for the License, Lease, and continuing services. The 7-Eleven Charge
shall be due and payable each Collection Period with respect to the
Receipts from that Collection Period at the time the deposit of such
Receipts is due, and that portion of the Receipts from each Collection
Period allocable to the 7-Eleven Charge shall be deemed to be paid to 7-
Eleven at the time of the deposit of such Receipts; provided that, in the
event that the Receipts deposited for any given Collection Period are
insufficient to discharge the 7-Eleven Charge for that Collection Period,
subsequent Receipts shall be applied first to discharge any such
deficiency and then to the current 7-Eleven Charge. In the event that any
such deficiency remains at the end of an Accounting Period, the deficiency
shall be charged to FRANCHISEE's Open Account. Failure to discharge
the 7-Eleven Charge allocable to a given Collection Period from the
Receipts for that Collection Period shall not be a Material Breach so long
as FRANCHISEE properly accounts for, expends, and deposits the Receipts from
such Collection Period in accordance with the terms of this Agreement.
The 7-Eleven Charge account reflected in the Financial Summaries may be
reconciled on a monthly or other periodic basis at which time appropriate
adjustments may be made for Assured Gross Income, changes in hours of
operation, or other items necessitating an adjustment to the total 7-
Eleven Charge for the Accounting Period.
9. FRANCHISEE'S DRAW. If FRANCHISEE is not in breach of
this Agreement, 7-ELEVEN shall: (i) weekly remit to FRANCHISEE the amount
provided in Exhibit D; (ii) within l0 business days (Monday through Friday)
after the end of each Accounting Period, inform FRANCHISEE of the available
Monthly Draw and Excess Investment Draw for the Accounting Period; and
(iii) remit to FRANCHISEE, upon FRANCHISEE's written request, within l0
days after receipt of such request, that amount of Monthly Draw or Excess
Investment Draw, or both, specified by the FRANCHISEE in such request,
provided that the total amount so requested by FRANCHISEE shall not exceed
the greater of the available Monthly Draw or Excess Investment Draw.
10. DAILY DEPOSITS, BOOKKEEPING RECORDS AND FINANCIAL SUMMARIES.
7- ELEVEN shall have the right, under the terms hereof, to maintain, as
part of its records and in accordance with this Agreement, Bookkeeping
Records on FRANCHISEE's operation of the Store. FRANCHISEE may perform
or obtain any additional bookkeeping FRANCHISEE desires. Either party
may inspect records pertaining to the operation of the Store prepared or
obtained by the other, where maintained, and during normal business
hours. FRANCHISEE shall: (i)
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properly date and timely submit the Cash Report; (ii) deposit the Receipts
for each Collection Period within 24 hours after the end of the Collection
Period, in the Bank or night depository designated by 7-ELEVEN, except
cash expended by FRANCHISEE from that day's Receipts for Purchases or
Operating Expenses, which Purchases and/or Operating Expenses shall be
properly reported and accompanied by invoices reflecting such payment;
and (iii) deliver to 7ELEVEN, at those times specified by 7-ELEVEN,
written verification by the Bank of such deposit which verification must
be dated as of the business date next following the end of the
Collection Period. If requested by 7-ELEVEN, FRANCHISEE shall deliver
the Receipts (net of cash expenditures for authorized Purchases and
Operating Expenses) to 7-ELEVEN rather than depositing such Receipts in
the Bank. Amounts deposited by FRANCHISEE or delivered by FRANCHISEE
to 7-ELEVEN may be withdrawn from the Bank by or otherwise used for the
benefit of 7-ELEVEN at any time, without payment by 7-ELEVEN of interest
or other compensation to FRANCHISEE.
FRANCHISEE shall prepare and furnish to 7-ELEVEN, on forms and at
times acceptable to and as requested by 7-ELEVEN: (i) daily summaries of
Purchases; (ii) daily reports of Receipts; (iii) weekly time and wage
authorizations for FRANCHISEE's Store employees; (iv) all information
requested by 7-ELEVEN regarding the vendors from which FRANCHISEE makes
purchases; and (v) all such additional reports as 7-ELEVEN may require
from time to time. FRANCHISEE also shall deliver or furnish to 7-ELEVEN
copies of bank drafts, vendor and other receipts, invoices for
Purchases, and receipts and bills for Operating Expenses, and keep
7-ELEVEN currently advised in writing of all of FRANCHISEE's actual
retail selling prices (which FRANCHISEE shall solely select) and of
all discounts, allowances, and/or premiums received by FRANCHISEE.
FRANCHISEE shall retain and make available to 7-ELEVEN any records
or other documents relating to the operation of the Store that 7ELEVEN
requests that FRANCHISEE retain and/or make available.
If FRANCHISEE is not in breach of this Agreement, 7-ELEVEN shall:
(i) provide Financial Summaries for FRANCHISEE for the Store prepared
from the Bookkeeping Records in the form of an income statement and a
balance sheet for each Accounting Period or any portion thereof as 7-
ELEVEN may deem necessary and for each calendar year, payroll checks for
FRANCHISEE's Store employees, draw checks, and merchandise reports; (ii)
timely pay on behalf of FRANCHISEE, upon approval and submission to 7-
ELEVEN, bank drafts and invoices for Purchases (as verified by vendor
statements), bills for Operating Expenses, and the payroll for
FRANCHISEE's Store employees; and (iii) assist FRANCHISEE in the
preparation and filing of business tax reports and returns (except
FRANCHISEE's income tax and related returns) to the extent the information
is available from the Bookkeeping Records.
FRANCHISEE authorizes 7-ELEVEN to collect discounts and allowances,
not deducted from the face of invoices, and to charge FRANCHISEE for the
market value of any premiums FRANCHISEE receives based upon purchases.
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11. OPEN ACCOUNT AND FINANCING. As part of the
Bookkeeping Records, 7-ELEVEN shall establish and maintain an Open Account
for FRANCHISEE. FRANCHISEE's draw, Purchases, Operating Expenses, and
amounts owed by FRANCHISEE to 7-ELEVEN which relate directly or
indirectly to operation of the Store, shall be charged to the Open
Account. All Receipts deposited or delivered to 7-ELEVEN shall be
credited to the Open Account, and any amounts due from 7-ELEVEN to
FRANCHISEE may be credited to the Open Account. The balance in the Open
Account shall be computed on a monthly basis or at any time during an
Accounting Period as 7-ELEVEN may deem necessary, shall be computed in a
manner 7-ELEVEN may determine to be appropriate, and shall be reflected
in the Financial Summaries prepared by 7-ELEVEN for each Accounting Period
or any portion thereof as 7-ELEVEN may deem necessary. All Receipts
shall be credited to the Open Account for the Accounting Period during
which the Cash Report relating to those Receipts is dated (provided such
Receipts are properly deposited in the Bank or delivered to 7-ELEVEN
as provided herein); and all Purchases, Operating Expenses and amounts
owed by FRANCHISEE to 7-ELEVEN shall be charged to the Open Account for
the Accounting Period during which invoices, reports or information
thereon is received by 7-ELEVEN (regardless of when paid by 7-ELEVEN on
behalf of FRANCHISEE).
If FRANCHISEE is not in breach of this Agreement, and so long as 7-
ELEVEN has a first lien on the Inventory and the Security Interest, 7-
ELEVEN will finance (as a loan) any unpaid balance in the Open Account.
FRANCHISEE shall execute a security agreement and financing statement(s)
and such renewal or continuation financing statements or other documents
relating to the Security Interest as are requested by and acceptable to 7-
ELEVEN. If, at any time, in 7-ELEVEN's sole opinion, there has been a
Material Breach by FRANCHISEE or 7ELEVEN believes its Security Interest
is threatened 7-ELEVEN may discontinue the financing described above and
the unpaid balance in the Open Account shall be immediately due and
payable. FRANCHISEE may obtain financing other than from 7-ELEVEN.
The unpaid balance in the Open Account at the beginning of
each Accounting Period (the amount financed by 7-ELEVEN) shall bear
interest for that Accounting Period at the rate specified in Exhibit D.
A credit balance reflected in the Open Account at the end of an
Accounting Period shall bear interest for the number of days in the
current Accounting Period, at the rate specified in Exhibit D, which
interest will be credited to the Open Account; provided, however, 7-
ELEVEN may, at its option, limit the credit balance amount upon which 7-
ELEVEN will pay interest upon notice to FRANCHISEE.
12. AUDITS. 7-ELEVEN shall cause at least one Audit to be
made each calendar or other designated quarter and, upon FRANCHISEE's
request, shall provide additional Audits for a fee of an amount equal to
.5% of the Retail Book Inventory. 7-ELEVEN shall have the right,
in 7-ELEVEN's discretion, to enter the Store and cause Audits to be made:
(i) upon 72 hours notice during normal business hours; (ii) without
notice, within 24 hours after 7-ELEVEN learns of a Robbery,
Burglary, theft, or mysterious
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disappearance of Inventory, Receipts, and/or cash register fund, or
casualty; or (iii) without notice if Net Worth is less than the
minimum determined pursuant to Paragraph 13 hereof, or if the last audit
provided by 7-ELEVEN reflected an Inventory Overage or Inventory
Shortage of more than an amount equal to 1% of the Retail Book
Inventory. FRANCHISEE may cause Audits to be made by a reputable
company upon 24 hours notice to 7-ELEVEN. Both parties shall receive
copies of the report on each Audit. Audits shall be binding 24 hours
after receipt of such report unless either party gives notice that such
party believes the Audit to be incorrect. If such notice is given,
either party may cause a re-audit to be made within 24 hours. If any such
re-audit for FRANCHISEE becomes binding and results in an adjustment in
any Inventory Shortage or Inventory Overage reflected by the last 7-
ELEVEN Audit of more than 1% of the Retail Book Inventory reflected
by such last Audit, the reasonable cost of such Audit shall be
borne by 7-ELEVEN. The parties acknowledge that accurate Audits may
be made while the Store is open for business.
13. LOAN REPAYMENT REQUIREMENT. FRANCHISEE shall repay
the financing provided by 7-ELEVEN pursuant to this Agreement. If
FRANCHISEE (i) is not a Previous Franchisee; (ii) is a Previous
Franchisee who is executing this Agreement as the result of a request by 7-
ELEVEN that FRANCHISEE change locations; (iii) is a Previous Franchisee
and is paying 100% of the current Franchisee Fee (or, in the case of a
Previous Franchisee taking by assignment and paying less than 100% of
the then current Franchise Fee pursuant to certain rights granted to the
assignor); or (iv) is a Transferring Franchisee; then FRANCHISEE's
minimum Net Worth shall be that amount determined in accordance with
the following schedule:
LOAN REPAYMENT
SCHEDULE---TIME PERIOD MINIMUM NET WORTH
----------- -----------------
From the first day through the last $10,000
day of the first Year of Operation
From the first day through the last An amount equal to thirty day
of the second Year of Operation percent (30%) of Total Assets
From the first day through the last An amount equal to thirty-five
day of the third Year of Operation percent (35%) of Total Assets
From the first day through the last An amount equal to forty day
of the fourth Year of Operation percent (40%) of Total Assets
From the first day through the last An amount equal to forty-five
day of the fifth Year of Operation percent (45%) of Total Assets
From the first day through the last An amount equal to fifty day
of the sixth Year of Operation percent(50%) of Total Assets
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From the first day through the last An amount equal to fifty-five
day of the seventh Year of Operation percent (55%) of Total Assets
From the first day through the last An amount equal to sixty day
of the eighth Year of Operation percent(60%) of Total Assets
From the first day through the last An amount equal to sixty-five
day of the ninth Year of Operation percent (65%) of Total Assets
From the first day through the last An amount equal to seventy
day of the tenth Year of Operation percent(70%) of Total Assets.
and thereafter, so long as
FRANCHISEE operates the Store.
FRANCHISEE acknowledges that the term of this Agreement shall
be determined in accordance with the provisions of Paragraph 7 hereof, and
may be less than ten years.
If FRANCHISEE is (i) a Renewing Franchisee; or (ii) a Previous
Franchisee paying less than 100% of the current Franchise Fee (except
as otherwise provided in this paragraph); and, in either case,
FRANCHISEE's previous Agreement included a Loan Repayment Schedule, that
Loan Repayment Schedule is deemed incorporated into this Agreement by
reference as if set out verbatim herein, and FRANCHISEE's minimum Net
Worth shall be determined by reference to that schedule, beginning at the
same level on such schedule as was applicable upon the last effective day
of FRANCHISEE's previous Agreement.
If FRANCHISEE is (i) a Renewing Franchisee; or (ii) a Previous
Franchisee paying less than 100% of the current Franchise Fee (except
as otherwise provided in this paragraph); and, in either case,
FRANCHISEE's previous Agreement did not include a Loan Repayment Schedule,
FRANCHISEE's minimum Net Worth from the first day until the last day of
the first Year of Operation, shall be an amount equal to 70% of Total
Assets as of the last effective day of FRANCHISEE's previous Agreement,
and thereafter through the remaining term of the Agreement, shall be an
amount equal to 70% of Total Assets, determined and adjusted annually as
herein set out.
Notwithstanding the foregoing, in no event shall FRANCHISEE be
required, at any time during the first Year of Operation, to maintain a
Minimum Net Worth greater than 85% of total assets (as reflected on
the Bookkeeping Records-Balance Sheet prepared for each Accounting Period
by 7-ELEVEN for the Store) for the immediately preceding Accounting
Period.
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14. MERCHANDISING AND INVENTORY. On or before the Effective
Date, 7-ELEVEN shall: (i) procure an initial Inventory (which, except
for consigned merchandise, FRANCHISEE shall purchase for an amount equal
to the Cost Value of the initial Inventory); (ii) debit FRANCHISEE's Open
Account for any prepaid Operating Expenses; (iii) assist FRANCHISEE in
cleaning and stocking the Store; and (iv) provide such other services as
are required to make the Store ready to open for business.
Thereafter, FRANCHISEE shall select, purchase from Bona Fide
Suppliers, and stock merchandise that is adequate to provide
customers with a type, quantity, quality, and variety consistent with the
7-Eleven Image, and shall carry in the store at all times the Proprietary
Products listed on Exhibit G to this Agreement (the importance of which
to the 7-Eleven System FRANCHISEE hereby acknowledges). The items listed
on Exhibit G may be changed by 7-ELEVEN from time to time, but no more
than twice each calendar year, effective on the first day of the
Accounting Period beginning 30 days after notice to FRANCHISEE. Any
items for which specifications are set forth in Exhibit G or the
Foodservice Operations Manual shall meet or exceed those
specifications. As to items (such as frozen carbonated beverages,
prepared coffee, fountain beverages, deli products, etc.) which are
customarily sold in standardized containers, FRANCHISEE shall use only
standardized containers which conform to the type, style, and
quality, and, where deemed appropriate by 7-ELEVEN, bear the
distinctive identification designated by 7-ELEVEN and which are properly
accounted for pursuant to the Agreement. 7-ELEVEN shall recommend vendors,
merchandise, and supplies, and suggest retail selling prices. FRANCHISEE
is not required to purchase merchandise or supplies from 7-ELEVEN or
vendors it recommends (provided that Proprietary Products and items
bearing the Service Xxxx shall be purchased by FRANCHISEE only from
sources authorized by 7-ELEVEN to produce or deal in such items), to
purchase merchandise recommended by 7-ELEVEN (except for FRANCHISEE's
obligation to carry at all times the Proprietary Products listed on
Exhibit G to this Agreement), or to sell merchandise at retail selling
prices suggested by 7-ELEVEN.
15. 7-ELEVEN'S INDEMNITY. Except as otherwise provided herein,
7-ELEVEN shall be responsible for all fire and casualty loss or damage to
the Store building and Equipment (specified in Exhibit B) unless caused
by the intentional acts of FRANCHISEE or FRANCHISEE's agents or employees,
and shall indemnify FRANCHISEE to the extent and from those losses
specified in Exhibit C. This indemnification may be cancelled, and it
and any related definition may be changed by 7-ELEVEN once during each
calendar year, effective on the first day of the Accounting Period
beginning 30 days after notice to FRANCHISEE.
16. FRANCHISEE'S INDEMNITY AND INSURANCE. FRANCHISEE shall
be responsible for and indemnify 7-ELEVEN from all losses, except
those specifically the responsibility of or indemnified by 7-ELEVEN.
FRANCHISEE may obtain insurance in addition to the contractual
indemnification described in Exhibit C. FRANCHISEE shall notify 7-ELEVEN
if FRANCHISEE obtains any such insurance policy, and such policy
shall name 7-ELEVEN as an additional insured. 7-ELEVEN shall have no
obligation to process claims for FRANCHISEE. If FRANCHISEE has obtained
such insurance, it shall be primary, and 7-ELEVEN's
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indemnity shall be secondary to that insurance except for insurance
coverage specifically endorsed to cover losses over and above the
contractual indemnification. FRANCHISEE shall maintain worker's
compensation insurance, including employer's liability coverage, with a
reputable insurer or with a state agency, satisfactory to 7-ELEVEN,
evidence of which (if with an insurer, reflecting that the premium has been
paid and that 30 days prior notice to 7ELEVEN is required for any
cancellation or change) shall be deposited with 7ELEVEN. FRANCHISEE shall
promptly report to 7-ELEVEN all casualty losses and other events covered by
indemnification or FRANCHISEE's insurance.
17. FRANCHISEE'S ADDITIONAL COVENANTS. FRANCHISEE shall:
(i) devote his best efforts to the business of the Store and maximization
of the Store's sales and gross profit, and shall make himself or herself
available to meet with 7-ELEVEN at reasonable times, upon request by 7-
ELEVEN; (ii) cause the Store to be designated only (and open for
business for at least the hours) as specified in Exhibit D, identified
only by the Service Xxxx, and operated only pursuant to the 7-ELEVEN
System and, where applicable, in accordance with those standards set
forth in the Foodservice Operations Manual, in a manner that will
enhance the 7-ELEVEN Image; (iii) maintain at all times the minimum Net
Worth specified in Paragraph 13 hereof; (iv) permit 7-ELEVEN access to
all of the Store, Equipment, Inventory, Receipts, cash register fund,
cash register readings, amusement machine, banking and other equipment
readings, money order blanks, bank drafts, and Store supplies at any time
and for any continuous time during Normal Operating Hours; (v) cause all
sales of Inventory to be properly recorded at the time of sale at the
retail prices set by FRANCHISEE and generally offered by FRANCHISEE to
customers of the Store; (vi) wear, and cause Store employees to wear,
apparel approved by 7ELEVEN while working in the Store; (vii) comply with
those minimum standards of operation for the Foodservice Facility as are
set forth in the Foodservice Operations Manual; and (viii) cause all Store
employees to be certified by 7ELEVEN as qualified to work in the
Foodservice Facility prior to beginning work therein and prominently
display the certificates evidencing each employee's certification.
FRANCHISEE shall not at any time: (i) use, or claim any right to (except
pursuant to the terms of this Agreement) the Service Xxxx or any other
trade indicia, including the Related Trademarks, or the goodwill represented
by any of them or the 7-Eleven System, the Trade Secrets, or any
copyright, copyrighted material or advertising owned or licensed by 7-
Eleven; (ii) challenge or contest the validity or enforceability of any
trade indicia, or rights therein, or any copyright, or copyrighted work,
owned, used or licensed by 7-ELEVEN; (iii) make any unauthorized
disclosure of any of the Trade Secrets; (iv) use any work which is
substantially similar to a work subject to a copyright owned or
licensed by 7-ELEVEN; or (v) use any name, xxxx, trade dress or other
visual or audible material which is likely to cause confusion with or
dilute the distinctiveness of trade indicia owned or licensed by 7-
ELEVEN or commit any other act which may adversely affect or be detrimental
to 7-ELEVEN, other FRANCHISEES, or any rights of 7-ELEVEN in or to the
Service Xxxx, such trade indicia, including the Related Trademarks, the 7
Eleven Image, the 7-Eleven System, the Trade Secrets or any copyrights
or advertising. FRANCHISEE acknowledges that any breach of any of the
terms of
9
the covenants contained in the preceding sentence will result in
irreparable injury to 7-ELEVEN and that 7-ELEVEN is entitled to
injunctive relief to prevent any such breach.
In the event that FRANCHISEE fails to comply with the quality or
other reasonable operating standards as from time to time established by
7-ELEVEN and set out in the Foodservice Operations Manual, 7-ELEVEN shall
give notice of such breach to FRANCHISEE. If FRANCHISEE fails to cure
any such breach after notice by 7-ELEVEN and a reasonable opportunity
to cure, 7-ELEVEN may perform or cause to be performed any necessary
action to remedy such failure and charge FRANCHISEE's Open Account for the
cost of such curative action. If, after having received two
previous notices and opportunities to cure, FRANCHISEE receives a third
notice of breach, 7-ELEVEN may, in its sole discretion (i) remove
such portions, or all, of the Foodservice Facility as 7-ELEVEN deems
appropriate, and charge FRANCHISEE's Open Account for the cost of such
removal and of restoring the Store to its previous condition, or (ii)
pursue all other remedies available to it under this Agreement.
Notwithstanding the foregoing or anything in this Agreement to the
contrary, in the event that FRANCHISEE's breach involves a grievous
failure to comply with any of the standards set forth in the
Foodservice Operations Manual intended to protect the health of persons
consuming items prepared in the Foodservice Facility, or with federal,
state, or local health regulations, 7-ELEVEN may, in its sole
discretion, cause FRANCHISEE to immediately cease the service of any
or all items from the Foodservice Facility, and FRANCHISEE shall not
resume such service until such time as that breach has been cured to the
sole satisfaction of 7-ELEVEN.
7-ELEVEN may enter upon the premises and take possession of the
Store, Equipment, Inventory, Receipts, cash register fund, money order
blanks, bank drafts, and Store supplies and continue the operation of
the Store for the benefit and account of FRANCHISEE (or
applicable heirs or legal representatives) pending the expiration or
termination of this Agreement, or resolution of any dispute if: (i)
the Store is not open for operation as provided in Exhibit D; (ii) a
FRANCHISEE dies or becomes incapacitated (except as otherwise provided in
Exhibit F -- "Survivorship"); or (iii) in the opinion of 7-ELEVEN, a
divorce, dissolution of marriage, or felony proceeding involving a
FRANCHISEE jeopardizes the operation of the Store or the 7-Eleven Image.
FRANCHISEE, on behalf of himself, his heirs, and his legal
representatives, consents to such operation of the Store by 7-ELEVEN,
and releases and indemnifies 7-ELEVEN from any liability arising in
connection with its operation of the Store pursuant to the terms of this
Paragraph 17.
18. MAINTENANCE AND UTILITIES. Except to the extent
otherwise assumed by 7-ELEVEN, FRANCHISEE shall be responsible for all
maintenance, repairs, replacements, janitorial services, and expenses
relating to the Store and Equipment, including: (i) maintenance of the
Store, Equipment, other property in the Store, and landscaped areas in a
clean, attractive, orderly, safe, and sanitary condition (and, where
applicable, in accordance with those minimum standards set forth in the
Foodservice Operations Manual) and in good repair and operating
condition, reasonable wear and tear excepted; (ii)
10
replacement of light bulbs, ballasts, vault doors, glass, and door closers
on the Store and Equipment; and (iii) cleaning of the parking lot and walk
areas (including snow and ice removal), and interior of the Store.
Except to the extent otherwise assumed by 7-ELEVEN or provided
pursuant to the terms of any master lease of the Store, FRANCHISEE shall
have contracts with reputable firms for maintenance of the Store and
Equipment, and, if determined by 7-ELEVEN to be appropriate or
necessary, for the landscaped areas outside the Store. Contracts for
maintenance of the Store and Equipment shall either be those available
through 7-ELEVEN, or shall cover services comparable to those provided
under contracts available through 7-ELEVEN. Contracts for maintenance
of the Store and Equipment must not include any maintenance services on
the HVAC Equipment.
Contracts for maintenance of the Store and Equipment, other than
those available through 7-ELEVEN, shall provide for the performance of
services, including preventative maintenance services, comparable to
those services available from 7-ELEVEN at the time such contract is
entered, and be with reputable, financially responsible firms,
which (i) maintain adequate insurance and bonding; (ii) have personnel
who are factory trained to service equipment of the type in the Store;
and (iii) maintain an adequate supply of parts for the Equipment and
tools. Contracts for landscape maintenance shall be with reputable,
financially responsible firms. FRANCHISEE shall provide 7ELEVEN with a
copy of any contract for maintenance which it enters with any outside
maintenance firm.
If the Store, the Equipment, or the landscape is not so maintained,
and such condition continues 72 hours after notice or exists upon
expiration or termination, 7-ELEVEN may cause such maintenance to
be performed at FRANCHISEE's expense and/or may obtain maintenance
contracts for the Store and Equipment and charge the FRANCHISEE for same.
7-ELEVEN shall, when it deems necessary: (i) repaint and repair the
interior and exterior of the Store; (ii) replace Equipment, including, but
not limited to, cash registers and point-ofsale computers; (iii) replace
plate glass in front windows and front doors; (iv) repair the floor
covering, exterior walls, roof, foundation, and parking lot; (v) maintain
the structural soundness of the Store; (vi) pay for sewer, water, gas,
heating oil, and electricity for operation of the Store; and (vii) maintain
the HVAC Equipment; and FRANCHISEE hereby consents to such actions by 7-
ELEVEN. 7-ELEVEN may charge the FRANCHISEE for any of the foregoing
repairs, if, in 7-ELEVEN's opinion, such repairs are occasioned by
FRANCHISEE's abuse or neglect. FRANCHISEE shall not modify, alter, or add
to the Store or Equipment or discontinue use pursuant to the 7-Eleven
System of any of the Equipment without the prior written consent of 7-
ELEVEN.
19. TAXES. 7-ELEVEN shall pay all real and personal property
taxes on the Store and Equipment (specified in Exhibits A and B).
FRANCHISEE shall be solely responsible for and pay all other taxes,
including, but not limited to, sales, inventory, payroll, business, and
income taxes.
11
20. ADVERTISING. 7-ELEVEN shall provide FRANCHISEE
with advertising materials included in the 7-Eleven System and may
arrange such advertising of the Service Xxxx, the Related Trademarks,
merchandise sold by 7Eleven Stores, or the 7-Eleven System as 7-ELEVEN in
its sole opinion desires. FRANCHISEE shall properly utilize the Foodservice
point-of-sale support and layouts designated by 7-ELEVEN in
accordance with the design of the Foodservice Facility. 7-ELEVEN may,
at its cost and in its discretion, at any time add to or change the signage
in the Foodservice Facility. FRANCHISEE may be requested to participate in
the costs of certain programs. FRANCHISEE may engage in such
advertising as FRANCHISEE desires if that advertising accurately
portrays any use of the Service Xxxx or the 7-Eleven System, does not
jeopardize the 7-Eleven Image, pertains only to operation of the Store, is
in compliance with all applicable laws, and does not breach any
agreement binding on either party. Any advertising or display of the
Service Xxxx by FRANCHISEE must have the prior approval of 7-ELEVEN.
21. INDEPENDENT CONTRACTOR. FRANCHISEE shall be an
independent contractor and shall control the manner and means of the
operation of the Store and exercise complete control over and
responsibility for all labor relations and the conduct of FRANCHISEE's
agents and employees, including, but not limited to, the day-to-day
operations of the Store and all Store employees. FRANCHISEE and
FRANCHISEE's agents and employees shall not (i) be considered or held out
to be agents or employees of 7-ELEVEN or (ii) negotiate or enter any
agreement or incur any liability in the name or on behalf of, or that
purports to bind, 7-ELEVEN. No actions taken by FRANCHISEE or
FRANCHISEE's agents or employees shall be deemed to be actions obligating
7ELEVEN. FRANCHISEE acknowledges that nothing herein shall create a
fiduciary or similar relationship with 7-ELEVEN.
22. NONWAIVER. No act or omission by either party shall waive
any right under or breach by the other of this Agreement unless such
party executes and delivers a written waiver. The waiver by either party
of any right under or breach of this Agreement shall not be a
waiver of any subsequent or continuing right or breach. Specifically,
but not by way of limitation, the acceptance of the 7-Eleven Charge shall
not be a waiver of any pre-existing breach of the Lease provisions of this
Agreement, regardless of 7ELEVEN's knowledge of such pre-existing breach at
the time of acceptance of such payment.
23. DISCLOSURE. FRANCHISEE consents to disclosure by 7-ELEVEN
to anyone of any information relating to this Agreement or contained in
the Bookkeeping Records or Financial Summaries.
24. FORCE MAJEURE. Neither party shall be liable in damages
to the other for any failure or delay in performance due to any
governmental act or regulation, war, civil commotion, earthquake, fire,
flood, or other disaster, or similar event, or for any other event
beyond such party's control, if such party shall take all reasonable
steps to mitigate damages caused by such failure or delay.
12
25. NOTICES. Notices shall be in writing and (i) delivered in
person; (ii) mailed return receipt requested and postage paid; or (iii)
delivered to FRANCHISEE's designee, as set forth in a written notice to
7-ELEVEN thereof or, if FRANCHISEE's designee cannot be promptly located,
to an employee of FRANCHISEE at the Store, followed by mailing of such
notice to FRANCHISEE, return receipt requested and postage paid. All
notices by mail shall be addressed as follows: if to FRANCHISEE, to
the address of the Store or the address shown on the signature page; and
if to 7-ELEVEN, to the address shown on the signature page. Addresses may
be changed by notice. Notices delivered to FRANCHISEE's designee or to
an employee of FRANCHISEE shall be deemed received 24 hours after
such delivery. Notices by mail shall be deemed received 3 days after
mailing. Notwithstanding the foregoing, in the event of the death of
FRANCHISEE, if (i) there is no surviving FRANCHISEE, (ii) the FRANCHISEE
has not properly given notice to 7-ELEVEN of a person whom the
FRANCHISEE believes is qualified and wishes to have the opportunity
to franchise the Store after the death of FRANCHISEE, and (iii) there is no
heir of FRANCHISEE known to 7-ELEVEN, notices may be given by publication
of such notices in a newspaper of general circulation in the county where
the Store is located, for a period of five days, to be published not less
than five nor more than twenty days after 7-ELEVEN learns of the death of
FRANCHISEE.
26. RENEWAL OF FRANCHISE. Upon the Expiration Date of
the Agreement, other than termination by FRANCHISEE or by mutual
agreement of FRANCHISEE and 7-ELEVEN, 7-ELEVEN will renew the
franchise, provided the following conditions have been met: (i) 7-
ELEVEN, in its sole discretion unilaterally elects to keep the Store
open as a 7-Eleven Store; (ii) renewal and continued operation of the
Store is permitted by law; (iii) the FRANCHISEE has met the Current
Standards, described below, current at the time of notice (given
approximately two years in advance of the Expiration Date), as
determined by 7-ELEVEN, utilizing the then current Operational Review;
(iv) the FRANCHISEE is not in Material Breach of the Agreement on the
Expiration Date; (v) the FRANCHISEE has had a Net Worth in an amount
equal to that required by Paragraph l3 hereof, for the one (l) year
immediately prior to the Expiration Date; (vi) the FRANCHISEE executes and
delivers to 7-ELEVEN the then current class of Agreement available for
renewal of franchises, but with no franchise or renewal fee, and a
mutual termination and release of this Agreement; (vii) the
FRANCHISEE has not been served with three or more notices of Material
Breach of the Agreement within the two (2) years prior to the Expiration
Date; and (viii) the FRANCHISEE has completed any additional training
requested by 7-ELEVEN, provided that, 7-ELEVEN shall bear those same types
of costs for such training as are set forth in Exhibit D, and in
reasonable amounts.
Approximately two (2) years prior to the Expiration Date, the
FRANCHISEE will be notified in writing of these renewal conditions, and
FRANCHISEE shall participate in an Operational Review, which will be
performed to determine whether FRANCHISEE's operation meets the Current
Standards. The FRANCHISEE will then be informed in writing of those
areas of FRANCHISEE's operation which do not meet the Current
Standards. Thereafter, FRANCHISEE shall continue to participate in the
Operational Review process, and 7-ELEVEN will provide FRANCHISEE with
quarterly status reports on whether or not FRANCHISEE
13
is meeting Current Standards. In the event that a FRANCHISEE's operation
is determined not to be in compliance with the Current Standards, the
FRANCHISEE will be so advised approximately six (6) months (or such longer
period as may be required by applicable law) prior to the
Expiration Date and the FRANCHISEE will have the opportunity to sell
his or her interest in the franchise for a premium in accordance with
the provisions contained in the Agreement, within that six (6) month
period (or such longer period as may be required).
In the event that 7-ELEVEN is not, at the time of such renewal,
offering a current form of Store Franchise Agreement, and is not at
that time attempting to effect a registration of a current form of
Store Franchise Agreement, then, if permitted by applicable law, 7-
ELEVEN will renew the franchise on the same terms and conditions as set
forth herein.
27. ASSIGNMENT. FRANCHISEE's interest under this Agreement
shall not be encumbered, transferred, or assigned in any way,
partially or completely, unless, as conditions precedent: (i)
FRANCHISEE authorizes 7ELEVEN to provide the transferee with, and
the transferee executes, a disclosure form containing a waiver and a
release by the transferee of any claim against 7-ELEVEN for any amount
paid to, or representation made by, FRANCHISEE; (ii) the transferee
is offered, and executes, at 7-ELEVEN's option, the then current form
of the "7-Eleven Store Franchise Agreement" or an assumption of this
Agreement (in either event providing for the then current initial
investment, 7-Eleven Charge, Franchise Fee and all other current
terms), completes the then required training, and is otherwise
determined to be qualified in 7-Eleven's sole opinion; (iii)
FRANCHISEE executes, at 7-ELEVEN's option, a mutual termination and
release of this Agreement, or an assignment of this Agreement and
release, and an indemnity for any claim by the transferee; (iv) any
amount due 7-ELEVEN is paid in full and arrangements satisfactory to 7-
ELEVEN are made for the payment of any amount which may become due
upon delivery of final Financial Summaries, including, at 7-ELEVEN's
option, the payment of all premium monies, to be received by
FRANCHISEE for the franchise, into the Open Account; (v) the Agreement
has not been terminated and no termination is pending; and (vi) 7-ELEVEN
shall have been given at least 5 business days (Monday through Friday)
written right of first refusal by FRANCHISEE, upon the same terms.
All documents must be acceptable to the parties. Subsequent to the
assignment of FRANCHISEE's interest under this Agreement, FRANCHISEE shall
have no further right, claim or interest in or to the franchise, the
Store, or any assets used or acquired in conjunction therewith.
28. TERMINATION. This Agreement may be terminated by 7-
ELEVEN (subject to FRANCHISEE's right to cure as set forth below) for the
occurrence of any one or more of the following events (each of
which FRANCHISEE acknowledges is a Material Breach and constitutes good
cause for termination):
a. Upon 45 calendar days notice to FRANCHISEE, and subject
to FRANCHISEE's right to cure as set forth herein, in the event that:
(i)
14
FRANCHISEE fails to operate the Store at least the hours set forth in
Exhibit D or otherwise agreed to, in writing, prior to said reduction,
unless said reduction in hours of operation: (A) is the result of
governmental regulation, (B) does not result in less than the hours of
operation required for a Minimum Hour Operation, and (C) is not directly
or indirectly caused by FRANCHISEE's acts or failure to act; (ii)
FRANCHISEE fails to use standardized trademarked containers; (iii)
FRANCHISEE fails to comply with any agreement (including a master lease
pertaining to the Store or Equipment) to which 7-ELEVEN is a party and a
copy of the pertinent provisions of which has been provided to FRANCHISEE
prior to the execution of this Agreement, or with the usual and normal
terms of any lease transaction 7-ELEVEN may enter into regarding the
Store or Equipment; (iv) FRANCHISEE fails to use the Store or Equipment
solely in connection with FRANCHISEE's operation of the store; (v)
FRANCHISEE fails properly to maintain the Store and Equipment; (vi)
FRANCHISEE fails to obtain the prior written consent of 7-ELEVEN to make
additions to the Store or Equipment or discontinue use pursuant to the 7
Eleven System of any of the Equipment; (vii) FRANCHISEE fails to remit
insurance proceeds to 7-ELEVEN, which proceeds are due and owing to 7
ELEVEN pursuant to the terms of this Agreement; (viii) FRANCHISEE fails to
indemnify 7-ELEVEN as required under the terms and conditions of
Paragraph 16 of this Agreement; (ix) FRANCHISEE fails to provide any
records or reports required by 7-ELEVEN or fails to cooperate in
obtaining information from FRANCHISEE's vendors; (x) FRANCHISEE fails to
comply with any provisions of Paragraph 33 hereof; or (xi) FRANCHISEE
fails to comply with the quality or other reasonable operating standards
as from time to time established and set forth in the Foodservice
Operations Manual, where applicable.
b. Upon 30 calendar days notice to FRANCHISEE, and subject to
FRANCHISEE's right to cure as set forth herein, in the event that: (i)
Net Worth is less than the minimum determined pursuant to Paragraph 13 of
this Agreement, but more than an amount equal to one-half of the dollar
amount of FRANCHISEE's minimum Net Worth or $l0,000, whichever is
greater;(ii) FRANCHISEE improperly uses, through advertising or
otherwise, or jeopardizes the Service Xxxx, the Related Trademarks, or
the goodwill represented by any of them, or copyrights or advertising
owned or licensed by 7-ELEVEN, the Store, the 7-Eleven System, or the 7
Eleven Image; (iii) FRANCHISEE purchases or sells any Proprietary Product
or other product bearing the Service Xxxx which has been obtained from a
source not authorized to produce or deal in such goods, the purchase of
which by FRANCHISEE has been duly reported to 7-ELEVEN; (iv) FRANCHISEE
fails to pay timely any taxes or debts connected with the Store which
FRANCHISEE is obligated to pay or a tax lien is imposed upon the
FRANCHISEE which affects the Store; (v) FRANCHISEE fails to maintain
worker's compensation coverage; (vi) FRANCHISEE fails to maintain an
Inventory of a type, quantity, quality and variety consistent with the 7
Eleven Image or fails to carry in the Store at any time any of the
Proprietary Products listed on Exhibit G to this Agreement, as may be
amended from time to time; (vii) FRANCHISEE fails to notify 7-ELEVEN in
15
an accurate and timely manner of discounts, allowances or premiums
received by FRANCHISEE, or FRANCHISEE's retail selling prices; (viii)
FRANCHISEE fails to obtain or continue any license, permit, or bond
necessary, in 7-ELEVEN's opinion, for FRANCHISEE's operation of the
Store; (ix) FRANCHISEE violates or fails to comply with any governmental
law, rule, regulation, ordinance or order relating to the operation of
the Store (specifically including, but not limited to, those relating to
the sale of alcoholic beverages); (x) FRANCHISEE fails to repay the loan
from 7-ELEVEN in accordance with this Agreement in the event the unpaid
balance in the Open Account becomes immediately due and payable; (xi)
FRANCHISEE fails to pay the 7-Eleven Charge when due.
c. Upon 30 calendar days notice to FRANCHISEE, and with no right
to cure, in the event that: (i) a voluntary or involuntary petition in
bankruptcy is filed by or against FRANCHISEE, FRANCHISEE makes an
assignment for the benefit of creditors, or a receiver or trustee is
appointed; (ii) FRANCHISEE attempts to encumber, transfer, or assign, in
part or in whole, any interest under the Agreement in breach of the terms
and conditions set forth in Paragraph 27 of this Agreement; (iii)
FRANCHISEE is convicted of, or pleads "Nolo Contendere" to, a felony not
involving moral turpitude; (iv) FRANCHISEE fails to maintain an
independent contractor relationship with 7-ELEVEN; (v) FRANCHISEE
purchases or sells any Proprietary Product or other product bearing the
Service Xxxx which has been obtained from a source not authorized to
produce or deal in such goods, the purchase of which by FRANCHISEE has
not been duly reported to 7-ELEVEN; or (vi) FRANCHISEE misrepresents,
misstates, or fails or omits to provide material information required as a
part of the qualification process.
d. Upon 3 Business Days (excluding weekends and legal holidays)
notice to FRANCHISEE, and subject to FRANCHISEE's right to cure as set
forth herein, in the event that: (i) FRANCHISEE's Net Worth is less than
the minimum determined pursuant to Paragraph 13 of this Agreement and
less than an amount equal to one-half of the dollar amount of
FRANCHISEE's minimum Net Worth or $10,000, whichever is greater; (ii)
FRANCHISEE fails to properly record, deposit, deliver, or expend and
report Receipts or to deliver deposit slips, cash reports and all
supporting documents, receipts for cash purchases, and invoices or other
reports of Purchases; (iii) FRANCHISEE, at any time during Normal
Operating Hours, fails to permit any Audit provided for in Paragraph 12
of this Agreement or denies access to any part of the Store, Equipment,
Inventory, Receipts, cash register fund, cash register receipts or
readings, amusement machine, banking and other equipment readings, money
order blanks, bank drafts, or Store supplies.
e. Upon 3 Business Days notice to FRANCHISEE, and with no right to
cure, in the event that: (i) FRANCHISEE vacates, deserts or otherwise
abandons the Store, provided that immediately upon 7-ELEVEN's
determination that the Store has been abandoned, 7-ELEVEN may take
possession of the Store pursuant to the provisions of Paragraph 17 hereof
16
and operate the Store for FRANCHISEE's benefit during such notice period;
or (ii) a FRANCHISEE is convicted of, or pleads "Nolo Contendere" to any
charge which involves moral turpitude.
Unless otherwise specified, and if FRANCHISEE has not previously
been served with two notices of termination for any Material Breach
within the three (3) years prior to the occurrence of a third Material
Breach, FRANCHISEE shall have the right to cure any Material Breach set
forth above prior to the expiration of the notice period for termination
due to that Material Breach (or such shorter period as may be imposed by
law or by any agreement to which 7-ELEVEN is a party), by taking such
actions as 7-ELEVEN may reasonably determine to be necessary to
restore 7-ELEVEN to substantially the same condition it would have held
but for FRANCHISEE's breach.
Notwithstanding the three Business Days notice provision
above, FRANCHISEE shall have the right to an extended 30-day notice of
termination, commencing on the date the termination notice is served upon
FRANCHISEE, for any Material Breach if, prior thereto, FRANCHISEE has
obtained Security Certification from 7-ELEVEN.
If FRANCHISEE has failed to obtain Security Certification prior to
notice of termination, FRANCHISEE may nevertheless obtain Security
Certification by increasing Net Worth to 85% of FRANCHISEE's Security
Asset Level, prior to the expiration of the notice period, at which time
the termination date shall be extended to 30 days from the date of the
original notice; provided however, that all other provisions of the
notice of termination shall remain binding and effective.
If FRANCHISEE fails to maintain all necessary requirements for
Security Certification, 7-ELEVEN shall have the right to revoke
same. If the revocation occurs while an extended 30-day notice of
termination is in effect, FRANCHISEE shall be served written notice
specifying the new date for termination, which date shall be not less
than three Business Days from the date of such notice. FRANCHISEE shall
thereafter have one opportunity prior to termination to regain Security
Certification and have the termination date resetto the date which was in
effect immediately prior to the time that theSecurity Certification was
revoked, by increasing Net Worth through paid-in capital to an amount
equal to at least 85% of FRANCHISEE's Security Asset Level as calculated
immediately prior to the date that the notice of termination was
received.
This Agreement also may be terminated by: (i) agreement between
the parties, (ii) by FRANCHISEE upon at least 72 hours (or shorter, if
accepted by 7-ELEVEN) notice, or (iii) as provided in Paragraph 27.
This Agreement may also be terminated by 7-ELEVEN upon at least
30 calendar days notice (or longer if required by law) in the event a
FRANCHISEE dies or becomes incapacitated (except, if there is more than
one FRANCHISEE and only one dies or becomes incapacitated, 7-Eleven
may continue this Agreement with the survivor or person not so
incapacitated, or upon written
17
request by 7-ELEVEN, 7-ELEVEN may execute with same a new "Store
Franchise Agreement" for the
Store in the then current form, but not differing in any financial
terms from this Agreement, for the remainder of the existing term of this
Agreement).
This Agreement will terminate prior to the Expiration Date (i)
30 days prior to the loss of 7-ELEVEN's Leasehold Rights, (ii)
upon a condemnation or transfer in lieu of condemnation which results in
7-ELEVEN's determination not to continue the Store as a 7-Eleven Store,
(iii) upon casualty damage to the Store building or Equipment which cannot
reasonably be repaired or replaced within 30 calendar days, or (iv)
upon closing of the Store required by law (if such closing was not the
result of a violation by 7ELEVEN). In the event that this Agreement is so
terminated, FRANCHISEE may, for a period of 180 days following such
termination, elect either to transfer to another 7-Eleven Store available
for franchise (a "Transfer") or to receive a refund of a portion of the
Franchise Fee paid by FRANCHISEE (a "Refund"), on the terms and
conditions set forth below. If at the end of such 180 day period
FRANCHISEE has not expressly elected otherwise, FRANCHISEE shall be
deemed to have elected the Refund provision.
In order to elect the Transfer, FRANCHISEE shall either sign a
Store Franchise Agreement or the Transfer Election Form. Once the election
is made, the transfer shall be completed, after reasonable prior
notice, within a reasonable time. The following shall be conditions
precedent to FRANCHISEE's ability, if eligible, to elect a Transfer: (i)
FRANCHISEE may not be selling or assigning FRANCHISEE's interest in the
Store for a premium, or transferring such interest to a third party
pursuant to any available transfer mechanisms; (ii) the FRANCHISEE must
not be in Material Breach of this Agreement at the time of such
election; (iii) the FRANCHISEE must have had a Net Worth in an amount
equal to that required by this Agreement, for the one (l) year
immediately prior to the time of such election; (iv) the FRANCHISEE
must execute and deliver to 7-ELEVEN the then current class of Agreement
available for 7-Eleven franchises in the area in which the store to
which FRANCHISEE wishes to transfer is located, but with no franchise
fee, and a mutual termination and release of this Agreement; (v) the
FRANCHISEE must not have been served with three or more notices of
Material Breach of this Agreement within the two (2) years prior to the
time of such election; and (vi) the FRANCHISEE must complete any
additional training requested by 7-ELEVEN, provided that 7-ELEVEN shall
bear those same types of costs for such training as are set forth in
Exhibit D. Provided that these conditions have been satisfied, if
FRANCHISEE elects a Transfer, said Transfer may be to any 7Eleven Store
which is available for franchise, and for which FRANCHISEE is qualified.
7-ELEVEN shall not be responsible for any moving or relocation expenses
of FRANCHISEE or for the payment of any premium amount, broker's fee, or
any other payment to a third party arising in connection with such
Transfer. No damages shall be payable by 7-ELEVEN to FRANCHISEE if one of
the events giving FRANCHISEE the right to elect a Transfer or Refund occurs
prior to the expiration of ten (10) years following the Effective Date
of this Agreement, and the Transfer, or the Refund described in the
immediately succeeding paragraph in lieu of the Transfer, shall be
FRANCHISEE's sole remedy in such event. In the event 7-ELEVEN's Leasehold
Rights expire or are
18
terminated (and are not renewed or otherwise extended) as a result of the
acts or omissions of FRANCHISEE or FRANCHISEE's employees, the Term shall
expire at the expiration or termination of 7-ELEVEN's Leasehold Rights,
and FRANCHISEE shall have no right to a Transfer or Refund.
If FRANCHISEE is eligible for and elects a Refund, the amount of
said refund shall be computed by deducting from the Franchise Fee
paid by FRANCHISEE upon the execution of this Agreement a Base Fee of
$20,000. The remainder after such deduction shall be divided by 120. The
resulting amount multiplied by the number of calendar months from the
first day of the month next following the time FRANCHISEE elects to
receive the refund through the month of the scheduled Expiration Date
shall be refunded to FRANCHISEE.
The following shall be conditions precedent toFRANCHISEE's ability,
if eligible, to elect a Refund: (i) FRANCHISEE may not be selling or
assigning FRANCHISEE's interest in the Store for a premium, or
transferring such interest to a third party pursuant to any available
transfer mechanisms; (ii) the FRANCHISEE must not be in Material Breach of
this Agreement at the time of such election; (iii) the FRANCHISEE must
have had a Net Worth in an amount equal to that required by the
Agreement, for the one (l) year immediately prior to the time of such
election; (iv) the FRANCHISEE must execute a mutual termination and
release of this Agreement; and (v) the FRANCHISEE must not have been
served with three or more notices of Material Breach of this
Agreement within the two (2) years prior to the time of such election.
No Transfer or Refund shall be available in the event that the
Agreement is terminated by 7-ELEVEN for cause, or in the event
FRANCHISEE voluntarily terminates the Agreement. If eligible, the
FRANCHISEE may select either a Refund or a Transfer, and in no event
shall FRANCHISEE have the right to both a Refund and a Transfer.
29. REFUND OF FRANCHISE FEE. If FRANCHISEE's interest under
this Agreement is not being transferred to a third party, then upon l0 days
notice given to 7-ELEVEN, within l70 days from the Effective Date,
FRANCHISEE may terminate this Agreement and, upon FRANCHISEE's
execution of a mutual termination and release (acceptable to 7-ELEVEN)
and compliance with all other terms of this Agreement, 7-ELEVEN shall
refund without interest an amount equal to the Franchise Fee less the
training expenses set forth in Exhibit D which have been reimbursed or
paid by 7-ELEVEN and less the costs set forth in Paragraph 30 upon a
termination; provided, however, that if FRANCHISEE is a Previous
Franchisee or a Renewing Franchisee, an amount equal to l0% of the
Franchise Fee shall be deducted from such refund. This right to a refund
is in no way related to the Refund right described in Paragraph 28.
30. CLOSE OUT PROCEDURE. Upon any expiration or termination
of this Agreement, FRANCHISEE shall: (i) peaceably surrender the
Store and Equipment (without additional notice, except as required by
law and not waivable, all other notices to quit or vacate being
expressly waived by FRANCHISEE) in as good condition as when received by
FRANCHISEE, normal wear and tear excepted;
19
(ii) transfer the final Inventory (for the Cost Value of the final
Inventory), of a type, quantity, quality, and variety consistent with
the 7-Eleven Image, to 7-ELEVEN, or, at 7-ELEVEN's option, to the
transferee (but only if any amount due 7-ELEVEN is paid in full
and arrangements satisfactory to 7-ELEVEN are made for the payment of any
amount which may become due 7-ELEVEN upon delivery of final Financial
Summaries); (iii) transfer to 7-ELEVEN the Receipts, cash register
fund, pre-paid Operating Expenses, money order blanks, bank drafts, and
Store supplies; (iv) cease using the Service Xxxx, the Related Trademarks,
and the 7-Eleven System, including the Trade Secrets; (v) return
FRANCHISEE's copy of the Franchise Systems Manual and of the Foodservice
Operations Manual; and (vi) return all Trade Secrets and other 7-Eleven
System material.
Within l0 days after such surrender and transfer, 7-ELEVEN shall:
(i) credit FRANCHISEE for such Receipts, cash register fund, prepaid
Operating Expenses, usual and reasonable amounts of Store supplies, the
amount received by or due from 7-ELEVEN for transfer of the final
Inventory, and $100 if FRANCHISEE's copy of the Franchise Systems
Manual and of the Foodservice Operations Manual is returned; (ii) charge
FRANCHISEE a $200 closing fee; and (iii) remit to FRANCHISEE any amount by
which 7-ELEVEN estimates the Net Worth (excluding any amount due
FRANCHISEE under Paragraph 29) will exceed the greater of $l0,000 or
twenty-five percent (25%) of FRANCHISEE's Total Assets. Within 75 days
after the last day of the month in which such surrender and transfer
occurs, 7-ELEVEN shall deliver to FRANCHISEE final Financial
Summaries together with any credit balance in the Open Account. Upon
delivery of the final Financial Summaries, any unpaid balance in the Open
Account shall be due and payable in full and FRANCHISEE shall immediately
pay same to 7-ELEVEN. Any property belonging to FRANCHISEE and left in
the Store after such surrender and transfer shall belong to 7-ELEVEN.
3l. ARBITRATION. The parties may, by mutual agreement,
provide that any controversy relating to this Agreement shall be settled by
individual arbitration. Unless the parties expressly agree otherwise,
such arbitration shall be conducted in accordance with the rules of the
American Arbitration Association; provided that, if such rules are
contrary to this Agreement, this Agreement shall control. The parties
shall bear their own expenses and shall share equally all expenses of the
arbitrator(s) and the American Arbitration Association. If the parties do
not mutually agree to arbitration, each party may pursue any rights and
remedies available at law or in equity.
32. GOVERNING LAWS AND SEVERABILITY. This Agreement shall
be governed by and construed according to the laws of the state where the
Store is located. If, however, any provision, or portion hereof in
any way contravenes the laws of any state or jurisdiction where this
Agreement is to be performed, such provision, or portion thereof,
shall be deemed to be modified to the extent necessary to conform
to such laws, and still be consistent with the parties' intent as
evidenced herein, or if such modification is impossible, to be
deleted here from. If any part of this Agreement for any reason shall
be declared invalid such decision shall not affect the validity of any
remaining portion, which shall remain in full force
20
and effect. In the event that any material provision of this Agreement
shall be stricken or declared invalid, 7-ELEVEN reserves the right to
terminate this Agreement.
33. PERSONAL QUALIFICATION. This Agreement is being entered into by
7ELEVEN with the person(s) named on the signature page, upon the
personal qualifications of, and upon the representation and
agreement that the following person(s) will be the FRANCHISEE(S) of
and will actively and substantially participate in the operation of the
Store and will have full managerial authority and responsibility for
the operation of the Store. No changes in the ownership and/or control
of the franchise shall be made without the prior written approval of 7-
ELEVEN.
34. COMPLETE AGREEMENT. THIS AGREEMENT, ANY OTHER
AGREEMENTS SPECIFIED IN EXHIBIT D, AND THE EXHIBITS, AMENDMENTS, AND
ADDENDA (WHICH ARE INCORPORATED HEREIN BY THIS REFERENCE AND MADE A
PART OF THIS AGREEMENT) CONTAIN ALL AGREEMENTS BETWEEN FRANCHISEE AND 7-
ELEVEN AND COVER THEIR ENTIRE RELATIONSHIP CONCERNING THE STORE, ALL
PRIOR OR CONTEMPORANEOUS PROMISES, REPRESENTATIONS, AGREEMENTS, OR
UNDERSTANDINGS BEING EXPRESSLY MERGED AND SUPERSEDED. NO AGENT OR
EMPLOYEE OF 7-ELEVEN IS AUTHORIZED TO MAKE ANY MODIFICATION, ADDITION,
OR AMENDMENT TO OR WAIVER OF THIS AGREEMENT UNLESS IN WRITING AND
EXECUTED BY AN ASSISTANT SECRETARY OF 7-ELEVEN. FRANCHISEE REPRESENTS
AND WARRANTS THAT ALL INFORMATION PROPERLY REQUESTED HAS BEEN SUPPLIED
AND THAT NO REPRESENTATIONS HAVE BEEN MADE BY 7-ELEVEN (OR ANY AGENT OR
EMPLOYEE) OR RELIED UPON BY FRANCHISEE AS TO THE FUTURE OR PAST INCOME,
EXPENSES, SALES VOLUME OR POTENTIAL PROFITABILITY, EARNINGS OR INCOME OF
THE STORE OR ANY OTHER LOCATION, OTHER THAN THE INFORMATION PROVIDED IN
ITEM XIX OF 7-ELEVEN'S UNIFORM FRANCHISE OFFERING CIRCULAR AND
SITE SPECIFIC INFORMATION PROVIDED IN 7-ELEVEN'S "HERE
ARE THE FACTS" SUPPLEMENTAL DISCLOSURE.
35. SAVINGS CLAUSE. All obligations imposed by Paragraphs 16,
18,30, and 31 hereof which are not discharged prior to termination or
expiration of this Agreement shall remain binding and effective until
fully discharged, to the sole satisfaction of 7-ELEVEN.
21
IN WITNESS WHEREOF, FRANCHISEE and 7-ELEVEN have executed this
Agreement this ________________ day of ___________________________________,
19________.
7-ELEVEN: THE SOUTHLAND CORPORATION
_______________________________
____________________________________
Signature Signature
_______________________________
____________________________________
Market Manager Assistant Secretary
Full Name (Typed) Full Name (Typed)
7-Eleven Office/Store
No.__________________________________________________
________________________________________________________________________
___ Address of Office Street
________________________________________________________________________
___ City State Zip
FRANCHISEE(S)
______________________________
____________________________________
Signature Signature
______________________________
____________________________________
Full Name (Typed) Full Name (Typed)
Witness:_______________________ Witness:
___________________________
Witness of Above Signature Witness of Above Signature
________________________________________________________________________
___ Address of Franchisee's Residence Street
________________________________________________________________________
___ City State Zip
22
EXHIBIT 10.(ii)B(1) - A
EXHIBIT A
STORE
FRANCHISEE ACCEPTS THE STORE AS IS IN ITS CONDITION
ON THE DATE HEREOF, EXCEPT AS SPECIFICALLY NOTED HEREON.
This Exhibit is based on information available or furnished to 7
ELEVEN on the date hereof. It is accurate to the best of 7-ELEVEN's
knowledge and belief. A complete copy of any master lease is
available on request. If there are any questions concerning this
Exhibit or if a more complete explanation of any item is desired,
please contact the Market Manager. If now owned by 7-ELEVEN, the
Store may be sold and leased back. If leased by 7-ELEVEN, the Lease
to FRANCHISEE is (or then will be) a sublease and the pertinent
provisions of the master lease are included on Exhibit A (or will be
on a revision). 7-ELEVEN reserves the right to designate the area in
which amusement type machines will be located. 7-ELEVEN reserves from
the Lease and/or Common Area such portions as it designates for:
installation of banking or other similar equipment, attended or self
service gasoline, a photo kiosk, or signs or xxxx boards, and such
additional areas as 7-ELEVEN deems necessary for the installation,
maintenance, repair, and operation of appurtenant equipment and 7
ELEVEN shall have unobstructed non-exclusive ingress and egress in
connection therewith. FRANCHISEE agrees that 7-ELEVEN may at any time
remodel the Store in accordance with one of 7-ELEVEN's remodel
programs.
7-Eleven Store No.____________ Street________________________________
______________________________________________________________________
City State Zip
[ ] Plot Plan Attached
[ ] Owned by 7-ELEVEN:
Legal description of the property (attach copy from deed).
Special Provisions;
Use/Merchandise Restrictions:
Other:
[ ] All or any portion leased by 7-ELEVEN:
Legal description of property (attach copy from master
lease).
The present term of the master lease expires on the ______ day of
_______________________, ________. 7-ELEVEN has no obligation to
renew or exercise any option to extend the master lease. If the
1
master lease is not renewed, the term of this Agreement shall expire
30 days prior to the expiration of the master lease.
Special Charges:
Maintenance:
Co-operative Advertising:
Common Area (including landscaped areas):
Other:
Special Provisions:
Hours:
Signs:
Parking:
Use/Merchandise Restrictions:
Exclusives:
Condemnation:
Rules and Regulations:
Other:
[ ] State and Local Ordinances
Zoning:
Signs:
Hours:
Parking:
Alcoholic Beverages:
Gasoline:
Other:
2
FRANCHISEE: _______________________ (Signature)
FRANCHISEE: _______________________ (Signature)
7-ELEVEN: __________________________ (Signature)
DATE: _______________________________
3
EXHIBIT 10.(ii)B(1)-B
EXHIBIT B
EQUIPMENT
FRANCHISEE ACCEPTS THE EQUIPMENT AS IS IN ITS CONDITION
ON THE DATE HEREOF, EXCEPT AS SPECIFICALLY NOTED HEREON.
This Exhibit is based on information available or furnished to 7-
ELEVEN on the date hereof. It is accurate to the best of 7-ELEVEN's
knowledge and belief. A complete copy of any master lease is available
on request. If there are any questions concerning this Exhibit or if a
more complete explanation of any item is desired, please contact the
Market Manager. If now owned by 7-ELEVEN, the Equipment may be sold
and leased back. If leased by 7-ELEVEN, the Lease to FRANCHISEE is
(or then will be) a sublease and the pertinent provisions of the
master lease are (or will be) applicable. 7-ELEVEN may, at its
discretion, replace any of the Equipment, including, but not limited
to, cash registers and point of sale computers. Any of the
Equipment may be removed, or new Equipment (of a type or category
other than currently exists) added, by 7-ELEVEN. New or additional 7-
ELEVEN Equipment shall be added to this list.
7-Eleven Store No.___________________________
7-ELEVEN
--------
Description Make Model Serial No. 7-E ID Owned
Leased
----------- ---- ----- ---------- ------ ----- ----
--
1
7-ELEVEN
--------
Description Make Model Serial No. 7-E ID Owned
Leased
----------- ---- ----- ---------- ------ ----- ----
--
The following Gasoline and other specified equipment, and any and
all replacements or additions thereto, are excluded from the
Lease of Equipment under this Agreement.
7-ELEVEN
--------
Description Make Model Serial No. 7-E ID Owned
Leased
----------- ---- ----- ---------- ------ ----- ----
--
FRANCHISEE: ______________________
Signature)
FRANCHISEE: ______________________
(Signature)
7-ELEVEN: ______________________
Signature)
DATE: ______________________
2
EXHIBIT 10.(ii)B(1) - C
EXHIBIT C
7-ELEVEN'S INDEMNIFICATION
THIS IS NOT AN INSURANCE BINDER, CERTIFICATE,OR POLICY 7-
ELEVEN CONTRACTUAL INDEMNIFICATION
7-Eleven Store No.______________________
LIABILITY. Subject to the limitations, exclusions and conditions
set forth herein, the Franchisee shall be provided with
contractual indemnification for losses up to a maximum of $500,000
per occurrence, which arise out of or as a result of bodily injury,
personal injury or property damage incurred by any third party,
excluding an employee acting within the course and scope of his
employment or any other agent of the Franchisee, in connection with
the Franchisee's lawful operation of the Store.
For purposes of this Exhibit C, an occurrence shall be defined as
that term is ordinarily used in a standard Commercial General Liability
policy. Bodily injury, personal injury and property damage shall be
defined as those terms are ordinarily used in a standard Commercial
General Liability policy.
The contractual indemnification provided to the Franchisee pursuant
to this Exhibit C is that which would normally be provided under
those portions of a standard Commercial General Liability policy
relating to coverages regarding bodily injury and property damage
liability and personal injury liability, specially endorsed to
include coverage for liquor liability, but otherwise subject to the
exclusions set forth in a standard Commercial General Liability
policy, except to the extent otherwise limited or excluded by this
Exhibit C.
The contractual indemnification provided to the Franchisee under
this Exhibit C shall not be construed to constitute an insurance
binder, certificate or policy nor shall the Franchisee be considered
to be an insured of 7-Eleven nor have the protections or rights
normally associated with an insured vis-a-vis an insurer. Accordingly,
this Exhibit C is to be construed as a contractual indemnity.
FIRE AND OTHER PERILS: Up to full replacement cost of the Inventory
and Store supplies for direct losses as a result of fire,
lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicle, smoke, vandalism, and
malicious mischief.
ROBBERY:
(i) For a single loss of Receipts and cash register fund as the
result of a Robbery, an amount equal to $50 for each cash
register in operation at the time of the Robbery, and one-half
of the full replacement cost for a single loss of Inventory and
Store supplies, as
1
a result of a Robbery, with a maximum aggregate coverage for any single
loss of $200.
(ii) Up to the full replacement amount of the Current Deposit for
a single loss of Receipts as a result of a Robbery, less $l00;
provided Receipts were being properly prepared for deposit or
transported to the Bank or between more than one 7-Eleven Store
franchised by FRANCHISEE while en route to the Bank, and where,
in 7-ELEVEN's opinion, all receipts are properly accounted for in
accordance with this Agreement and appropriate security measures were
taken.
(iii) Up to the full replacement amount equal to the sum of the
Current Deposit, and the Receipts from the current Collection
Period, for a single loss of Receipts as a result of a Safe
Robbery, less $l00; provided that all Receipts are properly
accounted for in accordance with this Agreement and where, in 7-
ELEVEN's opinion, appropriate security measures were taken.
(iv) Up to the lesser of $2,500 or the amount shown in account l0
(or such appropriate account) on the Financial Summaries for a single
loss of the cash register fund (1) as the result of a Safe Robbery
or (2) while the cash register fund is being prepared for
deposit or
transported to or from the Bank or (3) while the cash register fund
is being transported between more than one 7-Eleven Store
franchised by FRANCHISEE while en route to or from the Bank; and
provided the amount taken to the Bank is noted in the Cash Report
and a receipt is obtained from the Bank showing the correct amount of
money obtained.
BURGLARY:
(i) Up to full replacement cost for a single loss of Inventory (other
than tobacco products) as a result of a Burglary, less $l00.
(ii) Up to the lesser of the actual cost of tobacco products taken
or the equivalent of the total reasonable purchases, at cost, of
tobacco products for the Store for the prior 12 weeks, divided by 6
(with a limit of an amount equal to twice the average weekly
purchases, at cost, minus $100 until the Store has been open 12
weeks), for a single loss of tobacco products in the Inventory as a
result of a Burglary, less $l00.
(iii) An amount equal to the sum of the Receipts from the
immediately previous Collection Period plus the cash register fund
for a single loss of Receipts as a result of a Safe Burglary, less
$l00, provided all receipts are properly accounted for in
accordance with this Agreement.
(iv) The maximum aggregate exclusion for a single loss as the result of
a Burglary and/or Safe Burglary shall be $l00.
2
CONDITIONS AND EXCLUSIONS. Notwithstanding anything to the
contrary stated herein, the Franchisee's contractual right to be
indemnified for losses under this Exhibit C shall be expressly subject
to the limitations, exclusions and conditions set forth in this
Paragraph. Neither employees nor agents of the Franchisee shall be
considered indemnities or thirdparty beneficiaries of this Exhibit C.
Further, this Exhibit C does not provide indemnification to the
Franchisee for losses arising from the assumption of liability by
the Franchisee pursuant to any contract or agreement.
The Franchisee's contractual right to be indemnified and 7-
Eleven's contractual obligation to indemnify the Franchisee for losses
under this Exhibit C shall be expressly contingent upon and
subject to the
Franchisee's cooperation, to 7-Eleven's satisfaction, in
any
investigation, prosecution or defense of any claim or lawsuit conducted
by 7-Eleven, 7-Eleven's insurance company or any representative or law
firm designated by 7-Eleven. The failure of the Franchisee to cooperate
in any such investigation, claim or suit, to 7-Eleven's
satisfaction, shall immediately release 7-Eleven of its contractual
obligation to indemnify the Franchisee in connection with such loss.
The Franchisee shall not be entitled to be indemnified for any
loss associated with a robbery or burglary, unless the Franchisee,
within twenty-four (24) hours of such loss, files a report with the
appropriate law agency and furnishes a representative of 7-Eleven with
a notice and proof of loss report (acceptable to 7-Eleven), a copy of
the report filed with the law agency and any report required to be filed
with the insurance company. In addition, the Franchisee shall be
indemnified for Receipts only if the Receipts have been properly
handled in accordance with the terms of the Agreement and the
Franchisee has properly completed a Cash Report for the Receipts and
timely submitted same to a representative of 7Eleven.
Notwithstanding the above, 7-Eleven's contractual obligation to
indemnify the Franchisee shall not extend to any loss suffered by the
Franchisee which is otherwise deemed under the Agreement to be the
responsibility of the Franchisee, nor shall the Franchisee be
indemnified for the loss of any Inventory and/or Store supplies
located outside of the Store building at the time of such loss. In
addition, the Franchisee shall have the duty to use its best efforts to
promptly mitigate any loss for which it may be entitled to be
indemnified. The Franchisee's failure to mitigate such loss shall
relieve 7-Eleven of its contractual obligation to indemnify the
Franchisee for same. The Franchisee will not be indemnified for any
cash register fund loss if the Franchisee has refused to allow an audit
of that fund by 7-Eleven within twelve (12) months prior to such loss.
The Franchisee shall not be entitled to be indemnified for punitive
or exemplary damages or fines. The Franchisee shall not be entitled to
be indemnified for and 7-Eleven shall be released of its
contractual obligation to indemnify the Franchisee for any loss suffered
if (i) the Franchisee is in breach of the Agreement and such breach
causes, creates or contributes to the occurrence of such loss; or (ii)
such loss is caused by, results from or occurs in connection with an
intentional act committed
3
by the Franchisee or by an agent or employee of the Franchisee.
FRANCHISEE: ______________________
(Signature)
FRANCHISEE: ______________________
(Signature)
7-ELEVEN: ______________________
(Signature)
DATE: ______________________
4
EXHIBIT 10.(ii)(B)(1) - D
EXHIBIT D
Complete All Blanks.
(a)FRANCHISEE's operation of the Store shall be designated only
as"________________________________________________________, doing
business as 7-Eleven Store No. _______________________________" and, so
long as permitted by law, the Store shall be open for business (except, at
FRANCHISEE's option, Christmas day) _____________ hours per week. (For a 24-
Hour Operation, use 168 hours per week; if the store is to be operated less
than 24 hours per day, use the actual number of hours per week the store is to
be operated.)
(b) The Franchise Fee was $_______________. The Down Payment on the initial
unpaid balance in the Open Account was $_______________. The
Down Payment also includes a $_______________ contribution toward the
estimated Cost Value of the initial Inventory, a $_______________ payment
toward the estimated initial governmental fees for necessary licenses,
permits, and bonds (an Operating Expense), and a $_______________
payment for the initial cash register fund.
(c) The initial annual interest rate charged by 7-ELEVEN to the
FRANCHISEE on the unpaid balance in the Open Account shall be _______%. The
annual interest rate charged by 7-ELEVEN to FRANCHISEE on the unpaid balance in
the Open Account shall be adjusted, effective each March 1, and continuing in
effect through the last day of February of the succeeding year, to equal
the rate which is two percent in excess of the prime rate charged by
NationsBank (or any successor) as of the first working day of each calendar
year during which such adjustment becomes effective. In the event that the
interest charged hereunder exceeds the maximum amount permitted by applicable
law, the excess amount so charged shall be deemed automatically credited to the
principal balance of the loan, it being the intent of 7-ELEVEN not to
charge an amount of interest that would be in violation of any applicable
law.
(d) The annual interest rate paid by 7-ELEVEN to FRANCHISEE on a credit balance
in the Open Account pursuant to Paragraph 11 shall be equal to the prime rate
at NationsBank (or any successor), as of the first working day of each
calendar year minus two percentage points, effective each subsequent March 1.
(e) Each FRANCHISEE must attend both store and classroom training. If
FRANCHISEE is only one individual, FRANCHISEE designates
________________________________________ to receive training. Each
participant must successfully complete each phase of training in order to
continue the training process.
(f) The training expenses to be reimbursed or paid by 7-ELEVEN are: for
transportation, and accommodations if applicable as arranged by 7ELEVEN,
(up to) $____________ for store training and $_____________ for classroom
training (airline tickets will be provided by 7-ELEVEN); for
1
food, $_____________ daily for each participant; for lodging, where and as
deemed necessary by 7-ELEVEN, at 7-ELEVEN's cost. All other expenses deemed
necessary by trainee will be borne by FRANCHISEE.
(g) The percentage used to adjust retail to cost for determining Cost Value
and Inventory Variation shall be computed by dividing the prior twelve (12)
months' Purchases at cost (including delivery charges, cost equalization, and
adjustment for discounts and allowances received) by the prior twelve (12)
months' Purchases at retail. Purchases of Vending Supplies, container
deposits, consigned merchandise and product markdowns are excluded from
Purchases at cost as well as Purchases at retail. Until the Store has been in
operation three months, the average percentage for all 7-Eleven Stores in the
market based on the prior twelve (12) months will be used; thereafter, the
percentage will be computed for the Store based on the prior twelve (12)
months (or lesser available period) operation of the Store.
(h) Checks from 7-ELEVEN to FRANCHISEE shall be payable to
_____________________________.
(i) FRANCHISEE's draw to be remitted weekly shall be $_______________, unless
changed by mutual agreement of FRANCHISEE and 7-ELEVEN.
(j) 7-Eleven Charge:
(i) For a 24-Hour Operation:
The 7-Eleven Charge for the Store is 52% of the Gross Profit, except
as may be increased pursuant to subsections (ii) or (iii) of this Paragraph
(j).
(ii) Reduced Hours of Operation:
In the event that the hours of operation of the Store are
restricted to less than a 24-Hour Operation as the result of
governmental regulation not caused, directly or indirectly, by
FRANCHISEE's acts or failure to act, or if 7-ELEVEN agrees to
operation of the Store on less than a 24-Hour basis, the 7-Eleven Charge
shall be increased on a pro-rata basis, rounded to the nearest 0.1%
(rounded up at .05% and above) of the Gross Profit, by adding to 52% the
product resulting from multiplying the Hourly Factor times the
difference between 168 and the Weekly Hours of Operation; provided that,
in no event shall the hours of operation of the Store be less than from
7:00 a.m. to 11:00 p.m. daily, 7 days per week (except, at FRANCHISEE's
option, Christmas Day). In
the event the hours of operation of the Store are reduced other than as
provided in this Paragraph (j)(ii), the 7-Eleven Charge for the Store may
be calculated pursuant to Paragraph (j)(iii) below.
2
(iii) Increase of 7-Eleven Charge:
If during any Accounting Period the Store is not open for business the
number of hours per week specified in this Exhibit D, 7-Eleven may, at
its sole discretion, increase the FRANCHISEE's 7-Eleven Charge for any
such Accounting Period by adding to 52% an amount equal to (i) 4% of
the Store's Gross Profit if the Store is operated as a Limited-Hour
Operation or (ii) 6% of the Store's Gross Profit if the Store is
operated as a Minimum-Hour Operation. This increase in the 7-Eleven
Charge is not 7-ELEVEN's sole remedy, but is in addition to any other
remedies available to 7ELEVEN in the event of a reduction in the hours
of operation of the Store by the FRANCHISEE.
(k) The Gross Income for an Accounting Period (where the Store is open for
business throughout the full period) shall be at least equal to:
(i) for a 24-Hour Operation, $60,000 per calendar year, prorated
to $164.39 per day multiplied by the number of days in such
Accounting Period;
(ii) for a Limited-Hour Operation, $40,000 per calendar year
prorated to $109.59 per day multiplied by the number of days in such
Accounting Period; or
(iii) for a Minimum-Hour Operation, $30,000 per calendar year
prorated to $82.20 per day multiplied by the number of days in such
Accounting Period;
provided however, that all of the FRANCHISEE's separate income out of the
Store, including, but not limited to, Gross Profit from alcoholic beverage
sales and gasoline commissions or income, shall be included to determine Gross
Income.
(l) Other special provisions (specify):
FRANCHISEE: ______________________ (Signature)
FRANCHISEE: ______________________ (Signature)
7-ELEVEN: ______________________ (Signature)
DATE: ______________________
3
EXHIBIT 10.(ii)(B)(1) - E
EXHIBIT E
DEFINITIONS
7-ELEVEN STORE No.____________________
"Accounting Period" means a calendar month of FRANCHISEE's operation of
the Store, except that if the Effective Date, expiration, or
termination or surrender of the Store and Equipment occurs during any
calendar month, that portion of said month which follows the Effective
Date or precedes such other events shall be an Accounting Period.
"Audit" means a physical count of the Inventory (priced at retail
value determined as provided in the Agreement), Receipts, cash
register fund, cash, money order blanks, and bank drafts, pursuant to
7-ELEVEN's normal procedures.
"Bank" means the bank or similar institution designated by 7-ELEVEN for
the Store and, specifically, the account established therein for the
Store.
"Bona Fide Suppliers" means persons or entities regularly conducting
the business of supplying merchandise, supplies or services to
retail businesses and performing all of the functions normally
associated with such activities.
"Bond" means a financial guarantee payment bond in favor of 7-ELEVEN, in
a form and from a reputable company satisfactory to 7-ELEVEN and
in a principal amount at least equal to the greater of FRANCHISEE's
Total Assets (at cost) as reflected on the then current
Bookkeeping Records, or $50,000.00.
"Bookkeeping Records" means financial summaries in the form of
income statements, balance sheets, reports reflecting credits and
charges to FRANCHISEE's Open Account, inventory records and such other
records and reports relating to FRANCHISEE's income, expenses,
profits and losses, assets and liabilities as 7-ELEVEN elects to
prepare. 7-ELEVEN may, in its discretion, change the format, manner or
timing of the records it prepares and the procedures for collecting or
compiling data for such reports. The inventory records and reports
derived from such records shall be maintained by 7-ELEVEN by using the
retail inventory method (see definition of "Retail Book Inventory"),
and the retail value will be adjusted to cost as described in
Exhibit D. The Bookkeeping Records shall be based upon information
supplied to 7-ELEVEN by FRANCHISEE, information obtained by 7ELEVEN from
Audits, Store inspections and vendors, and, where necessary or
appropriate, information based upon estimates or factors concerning
Store transactions.
"Burglary" means the stealing of Inventory from within the Store when
the Store is closed, all doors are duly closed and locked, and entry
is by actual force evidenced by visible marks made by tools,
explosives, electricity, or chemicals.
1
"Cash Report" means that form or other method of reporting
FRANCHISEE's Receipts as designated by 7-ELEVEN from time to time.
FRANCHISEE must complete a Cash Report for each Collection Period.
Each Cash Report must indicate the time and date at which the Collection
Period ended.
"Cash Variation" means the difference between (i) Receipts reflected on
the applicable cash register tapes, less Receipts expended by
FRANCHISEE for Purchases or Operating Expenses (and reported to and
verified by 7-ELEVEN), coupons, over-rings, and refunds to customers and
(ii) Receipts deposited or delivered to 7-ELEVEN pursuant to the
Agreement.
"Collection Period" means each period of time for which FRANCHISEE
reports Receipts. FRANCHISEE's initial Collection Period shall commence
at the time FRANCHISEE begins the operation of the Store, and may end,
at FRANCHISEE's discretion, at any time within FRANCHISEE's first 24
hours of operation. Each subsequent Collection Period shall begin
immediately upon the ending of the immediately preceding Collection
Period, and must be 24 hours (unless otherwise agreed by 7-ELEVEN).
"Cost of Goods Sold" means the Cost Value of Inventory at the beginning
of the Accounting Period (not including the value of consigned gasoline),
plus the cost of Purchases during the Accounting Period (including
delivery charges, cost equalization, and adjustment for discounts and
allowances received), and minus the Cost Value of the Inventory at the
end of the Accounting Period. Adjustment will be made so that any
Inventory Variation and bad merchandise (due to FRANCHISEE causes) will
not be included in Cost of Goods Sold. Retailer discounts and
allowances (including promotional and display allowances) paid to 7-
ELEVEN and allocated or reasonably traceable to Purchases shall be
credited to Cost of Goods Sold, except that 7-ELEVEN shall retain
reimbursements for its expenditures pursuant to vendors' co-operative
advertising or other similar programs where 7-ELEVEN is partially or
wholly reimbursed (or where costs are shared) for advertising
expenditure programs. Those not allocated or reasonably traceable
to Purchases shall be credited to Cost of Goods Sold on the basis of
sales of the Store compared with sales of all stores affected.
Discounts, allowances, and the value of premiums received by
FRANCHISEE shall be credited to Cost of Goods Sold. 7-ELEVEN shall not
be obligated to credit to Cost of Goods Sold any discounts or allowances
not collected. For purposes of determining the 7-Eleven Charge
allocable to a given Collection Period, Cost of Goods Sold for that
Collection Period shall be determined on a pro rata basis by the number
of Collection Periods in the Accounting Period in which that Collection
Period falls.
"Cost Value" means the cost value of the Inventory at any time
determined by: deducting from the Retail Book Inventory the included
retail value of all consigned merchandise, deposit bottles, and Vending
Supplies; adjusting from retail value to cost as specified in Exhibit
D; and adding the wholesale cost of all deposit bottles and Vending
Supplies.
2
"Current Deposit" means all Receipts obtained during the
immediately preceding Collection Period and accounted for by the proper
completion of the most recent 7-ELEVEN Cash Report relating to those
Receipts.
"Current Standards" _ See Paragraph 26 of the Agreement.
"Down Payment" means the initial amount actually paid by FRANCHISEE to
7ELEVEN on the unpaid balance in the Open Account, if any, as set out
in Paragraph (b) of Exhibit D.
"Effective Date" means the date FRANCHISEE first opens the Store
for business under the Agreement.
"Excess Investment Draw" means an amount equal to the amount by
which FRANCHISEE's Net Worth exceeds FRANCHISEE's total assets (as
reflected on the Bookkeeping Records-- Balance Sheet prepared for each
Accounting Period by 7-ELEVEN for the Store).
"Expiration Date" means the date this Agreement expires and terminates
by its own terms, other than termination because of a breach of this
Agreement by FRANCHISEE.
"Financial Summaries"_ See Paragraph 10 of the Agreement.
"Foodservice" means the unique, comprehensive system for retailing
a limited menu of uniform, quality, freshly prepared food products
and related items for take-out purposes, developed by 7-ELEVEN, with
those changes approved and adopted by 7-ELEVEN from time to time.
"Foodservice Facility" means that area or those areas of the Store
and concomitant Equipment from time to time used for the Foodservice
operation.
"FRANCHISEE" means the individual(s) (jointly and severally if more
than one) signing the Agreement as FRANCHISEE.
"Gross Income" means Gross Profit less the 7-Eleven Charge.
"Gross Profit" means Net Sales less Cost of Goods Sold.
"Hourly Factor" means .l07.
"HVAC Equipment" means the heating, ventilation and air conditioning
unit and related equipment, duct work, filters and refrigerant gas for
the air conditioning unit, but does not include water heaters,
equipment and refrigerant gases for refrigerated vaults and cases, and
other equipment used in connection with the sale of Inventory from the
Store.
3
"Inventory" means all merchandise for sale from the Store,
including deposit bottles, Vending Supplies, and consigned merchandise
(other than consigned gasoline).
"Inventory Overage" means any difference at retail value remaining
after (i) the Retail Book Inventory is deducted from (ii) the retail
value of the Inventory as reflected by a binding Audit.
"Inventory Shortage" means any difference at retail value remaining
after (i) the retail value of the Inventory as reflected by a binding
Audit is deducted from (ii) the Retail Book Inventory.
"Inventory Variation" means any Inventory Overage or Inventory
Shortage, adjusted from retail value to cost as specified in Exhibit
D. Inventory Variation is charged or credited, as applicable, to
Operating Expenses.
"Lease" _ See Paragraph 6 of the Agreement. Except as otherwise
provided herein, in the event that an allocation of the 7-Eleven Charge
to the lease of Equipment is required by law or ordinance, or for
taxation purposes, the amount of the 7-Eleven Charge allocable to the
lease of the Equipment shall be equal to the monthly straight line
depreciation of the Equipment.
"Leasehold Rights" means 7-ELEVEN's rights to possession of the Store
under any pre-existing or subsequent lease of the Store, whether
pursuant to the current term of a lease, an option thereto which is
exercised by 7-ELEVEN, or a renegotiation of the lease by 7-ELEVEN. 7-
ELEVEN has no obligation to exercise any options or other contractual
rights, or otherwise enter into any agreement for the purpose of
retaining Leasehold Rights.
"Limited-Hour Operation" means FRANCHISEE's operation of the Store for
less than a 24-Hour Operation, but not less than 136 hours a week,
including from 7 a.m. to 11 p.m. daily, 7 days a week (except, at
FRANCHISEE's option, Christmas day).
"Loan Repayment Schedule" _ See Paragraph 13 of the Agreement.
"Material Breach" _ See Paragraph 28 of the Agreement.
"Minimum-Hour Operation" means FRANCHISEE's operation of the Store
less than a Limited-Hour Operation but not less than from 7 a.m. to
11 p.m. daily, 7 days a week (except, at FRANCHISEE's option, Christmas
day).
"Monthly Draw" means an amount equal to 70% of the total increase in
Net Worth over the three Accounting Periods immediately prior to the date
upon which Monthly Draw is calculated, divided by three, less any
amounts reflected on FRANCHISEE's most recent Bookkeeping Records as
distributions to FRANCHISEE of additional draw, unauthorized draw, or
Excess Investment Draw; but, in no event, greater than an amount which
would reduce Net Worth to the minimum determined pursuant to Paragraph l3
of the Agreement.
4
"Net Income" means Gross Income less Operating Expenses.
"Net Sales" means (i) Receipts reflected on the applicable cash
register tapes (plus any additional receipts of the Store) less (ii)
over-rings, refunds to customers, taxes collected incidental to sales,
and the face value of money orders (not including the value or
sales of consigned gasoline).
"Net Worth" means the cash register fund, the Cost Value of the
Inventory, Store supplies, receivables, prepaids, refundable deposits,
and any portion of the initial cost of an alcoholic beverage
license employed in FRANCHISEE's operation of the Store which is
charged to the Open Account and carried on the Bookkeeping Records
(except nominal governmental fees which are an Operating Expense);
less FRANCHISEE's payables and accruals from FRANCHISEE's operation of
the Store, as reflected on the Financial Summaries.
"Normal Operating Hours" means the hours the Store is continually
obligated to remain open, as set out in Exhibit D or the hours the Store
is actually staying open, if more.
"Open Account" _ See Paragraph 11 of the Agreement.
"Operating Expenses" means the expenses (or credits) incurred by
FRANCHISEE in the operation of the Store for: (i) payroll; (ii)
payroll taxes (including unemployment, worker's compensation, payroll
insurance, and social security contributions); (iii) Inventory
Variation; (iv) Cash Variation; (v) maintenance, repairs,
replacements, laundry expense, and janitorial services; (vi)
telephone; (vii) Store supplies, including grocery bags and other
Store-use items; (viii) nominal governmental fees of licenses, permits,
and bonds; (ix) interest; (x) returned checks; (xi) inventory and
business taxes; (xii) bad merchandise due to FRANCHISEE neglect;
(xiii) advertising and other miscellaneous expenditures which 7ELEVEN
(in its discretion and regardless of the classification by
FRANCHISEE or the Internal Revenue Service) determines to be
Operating Expenses.
"Previous Franchisee" means a FRANCHISEE, other than a Renewing
Franchisee or a Transferring Franchisee, who has, at any previous
time, been a FRANCHISEE of 7-ELEVEN. For purposes of Paragraph 13 of
the Agreement, a Previous Franchisee shall include, but not be limited
to, a FRANCHISEE taking by way of a contractual right of
survivorship from a Previous Franchisee, a FRANCHISEE taking by way
of a son/daughter transfer from a Previous Franchisee, or a FRANCHISEE
corporation in which a FRANCHISEE or Previous Franchisee has or had an
interest.
"Proprietary Products" means certain products developed by 7-ELEVEN
which are unique to 7-ELEVEN by virtue of either their ingredients,
formulas, manufacturing or distribution processes, or the manner in
which they are
5
presented to consumers and which 7-Eleven supports through the use
of trademarks, copyrights, quality control, advertising,
promotions, trademarked packaging, and other activities as listed on
Exhibit G to the Agreement.
"Purchases" means all of FRANCHISEE's purchases of merchandise for
sale from the Store.
"Receipts" means all sales proceeds (whether cash, check, vendor
draft, credit instrument, or other evidence of receipt), money order
revenues, discounts or allowances received by FRANCHISEE, and
miscellaneous income (including rentals, royalties, fees, commissions
and amounts received by FRANCHISEE from on-site currency operated
machines) and the value of premiums received from FRANCHISEE's
operation of the Store. (Receipts from on-site currency operated
machines are deemed received at the time the proceeds are collected
from the machine).
"Related Trademarks" means the trademarks, service marks, trade
names, trade dress and other trade indicia, excluding the Service Xxxx,
which 7ELEVEN may authorize the FRANCHISEE to use from time to time as
part of the 7-Eleven System and all other combinations of the word or
numeral "7" and the word or numeral "Eleven," in any language, other
than those comprising the Service Xxxx. By way of example, Related
Trademarks include the trademarks BIG GULP and BIG BITE, as well as the
distinctive trade dress of 7-Eleven Stores.
"Renewing Franchisee" means a FRANCHISEE who is executing this Agreement
as a renewal of a previous Agreement, for the same store as was
franchised under that previous Agreement.
"Retail Book Inventory" means that book inventory maintained as part of
the Bookkeeping Records which reflects the retail value of the Inventory.
The
Retail Book Inventory initially shall be determined by an Audit by 7-
ELEVEN of the initial Inventory. The Retail Book Inventory thereafter
shall be adjusted by: adding the retail value (based on FRANCHISEE's
then current retail selling prices) of subsequent Purchases (other
than gasoline); subtracting Net Sales of items reflected in the
Retail Book Inventory; adding or subtracting the retail value of
all retail selling price increases or decreases of items reflected in
the Retail Book Inventory, as reported by FRANCHISEE to or determined
from surveys of the Inventory by 7ELEVEN; subtracting the included
retail value of any merchandise used as Store supplies and out-of-date
date-coded merchandise or merchandise which is damaged or deteriorated
as reported by FRANCHISEE to and verified by 7ELEVEN; and adding any
Inventory Overage or subtracting any Inventory Shortage. The Retail
Book Inventory at expiration or termination shall be determined by an
Audit by 7-ELEVEN. The Retail Book Inventory shall be appropriately
adjusted to reflect the results of each binding Audit. The
retail value of the Inventory for purposes of an Audit shall be
determined: for the initial Audit and the Audit on expiration or
termination, at 7ELEVEN's then current suggested retail selling
prices; and for any other Audit, at FRANCHISEE's then current retail
selling prices.
6
"Robbery" means the stealing of Receipts (other than a Safe
Robbery), Inventory, or Store supplies from FRANCHISEE or FRANCHISEE's
agents or employees by acts or threat of violence in the Store or while
Receipts are being transported directly from the Store to the Bank
designated by 7ELEVEN or between more than one 7-ELEVEN Store
franchised by FRANCHISEE while en route to the Bank, or while the
cash register fund is being transported directly from the Bank to the
Store or between more than one 7Eleven Store franchised by FRANCHISEE
while en route from the Bank, and in the presence of FRANCHISEE or
FRANCHISEE's agents or employees, if not committed by FRANCHISEE or
FRANCHISEE's agents or employees.
"Safe Burglary" means the stealing of Receipts or cash register fund from
a vault, safe, or security drop box in the Store and approved by 7-
ELEVEN when the Store is closed and all doors of the Store and of
such vault, safe, or security drop box are closed and locked and entry
thereto is by actual force evidenced by visible marks made by
tools, explosives, electricity, or chemicals.
"Safe Robbery" means the stealing of Receipts from a vault, safe,
security drop box, or vending tubes in a safe in the Store and approved
by 7-ELEVEN by acts or threat of violence committed in the presence of
FRANCHISEE or FRANCHISEE's agents or employees, if not committed
by FRANCHISEE or FRANCHISEE's agents or employees.
"Security Asset Level" means FRANCHISEE's total assets (as reflected on
the Bookkeeping Records-- Balance Sheet prepared for each Accounting
Period by 7-ELEVEN for the Store) for the immediately preceding
twelve (12) full Accounting Periods (or the number of full Accounting
Periods following the Effective Date of the Agreement, if less), divided
by twelve (or the number of full Accounting Periods following the
Effective Date of the Agreement, if less).
"Security Certification" means 7-ELEVEN's written acknowledgement
that FRANCHISEE has complied with the Security Certification
requirements by providing 7-ELEVEN with security equal to at least
85% of FRANCHISEE's Security Asset Level, in the form of any one or
a combination of the following: (i) Net Worth; (ii) a bond in a
form and with a company satisfactory to 7-ELEVEN; or (iii) any other
security approved in writing by 7-ELEVEN in its sole discretion.
"Security Interest" means FRANCHISEE's right and interest in the
Inventory, Receipts and premium and going concern value, if any, all of
which have been assigned to 7-ELEVEN as security for the repayment
of any unpaid balance in the Open Account.
"Service Xxxx" means the service xxxx logo and design registered in
the United States Patent and Trademark Office (Registration No.
920,897) and the 7-Eleven service xxxx registered in the United
States Patent and Trademark Office (Registration No. 798,036).
"7-ELEVEN" means The Southland Corporation, a Texas corporation.
7
"7-Eleven Charge" means an amount equal to the percent of Gross
Profit specified in Exhibit D, reduced if necessary (where the Store is
open for business) so that Gross Income for each Accounting Period shall
be at least equal to the amount specified in Exhibit D.
"7-Eleven Image" means the public acceptance, favorable reputation,
and extensive goodwill achieved by 7-ELEVEN and its Franchisees in the
U.S. and elsewhere for the Service Xxxx, the Related Trademarks and
for 7-Eleven Stores operated pursuant to the 7-Eleven System.
"7-Eleven System" means the system for the fixturization,
layout, merchandising, promotion (sometimes through products or services
consisting of or identified by trademarks, service marks, trade names,
trade dress symbols, other trade indicia, copyrights, or advertising
owned or licensed by 7-ELEVEN), and operation of extended-hour retail
stores operated by 7ELEVEN or its Franchisees in the U.S. and elsewhere
and identified by the Service Xxxx, which system provides
groceries, take-out foods and
beverages, dairy products, non-food merchandise, specialty items,
and various services, emphasizes convenience to the customer, and has
been developed and is being continually refined, modified and updated
by 7ELEVEN based on experience and new marketing developments to meet
and serve the changing preferences of the customer.
"Total Assets" means the total assets, (as reflected on the
Bookkeeping Records _ Balance Sheet prepared for each Accounting Period
by 7-ELEVEN for the Store) for the 12 Accounting Periods prior to the
first day of each Year of Operation, divided by
12.
"Trade Secrets" means the "Franchise Systems Manual," the
"Foodservice Operations Manual," and all other manuals, forms, and
materials included in the 7-Eleven System. The Trade Secrets are
restricted proprietary information belonging to and exclusively for the
benefit of 7-ELEVEN and its FRANCHISEES.
"Transferring Franchisee" means a FRANCHISEE who is executing
this Agreement as a result of electing a Transfer (as defined in
Paragraph 28 hereof) pursuant to the provisions of a 7-Eleven Store
Franchise Agreement or an amendment thereto.
"24-Hour Operation" means FRANCHISEE's operation of the Store 24 hours
a day, 7 days a week (except, at FRANCHISEE's option, Christmas day).
"Vending Supplies" means those containers, ingredients, condiments,
and other items used or furnished in connection with the preparation or
sale of a specific product and so designated by 7-ELEVEN.
"Weekly Hours of Operation" means the number of hours of operation per
week established by agreement of FRANCHISEE and 7-ELEVEN and/or as
required by governmental regulation, provided the restriction does
not reduce the operation past a Minimum Hour Operation.
8
"Year of Operation" means the period from the Effective Date, or,
as appropriate, the first day of an Accounting Period on or after
the anniversary date of the Effective Date, until the first day
of the Accounting Period on or following the next anniversary
date of the Effective Date.
FRANCHISEE: ______________________
(Signature)
FRANCHISEE: ______________________
(Signature)
7-ELEVEN: ________________________
(Signature)
DATE: ____________________________
9
EXHIBIT 10(ii)B(i) - F
EXHIBIT F
SURVIVORSHIP
7-ELEVEN STORE NO.__________________
Notwithstanding anything in this Agreement or the Exhibits hereto to the
contrary:
l. In the event of the death of a FRANCHISEE, 7-ELEVEN will
operate the Store for the benefit of FRANCHISEE's estate from the period
beginning on the death of FRANCHISEE and ending on the earliest of
the following events: (l) sale of the franchise by the estate and
mutual termination of the Agreement, all in accordance with the
terms hereinbelow and in the Agreement; (2) the Effective Date of a
new 7-Eleven Store Franchise Agreement with a designated individual
as provided herein; or (3) the expiration of 30 days, or such longer
notice period provided in the Agreement. "Death of the Franchisee"
shall be defined as the death of the individual or simultaneous death
of the individuals who executed the Agreement.
The period beginning with the death of the FRANCHISEE and ending upon
the occurrence of one of the above referenced events is referred to
hereinafter as the "Notice Period". Upon occurrence of any of the
events specified above, the Agreement shall terminate as provided
herein. "Simultaneous death," as used herein, is defined as meaning
the death of all of the FRANCHISEES within a 72 consecutive hour
period, whether or not the deaths arise from the same casualty or
occurrence.
For any Accounting Period during the Notice Period the Open
Account will not be charged an amount for Inventory Variation or for
payroll and payroll taxes (including FRANCHISEE's draw amount) in
excess of the average experience of the Store for the three calendar
months prior to the death of FRANCHISEE, or such shorter period as the
Agreement was in effect, and 7-ELEVEN will indemnify FRANCHISEE's
estate from any claims which arise during such operation. Any balance
due FRANCHISEE from 7-ELEVEN will be paid to the estate in accordance
with the Agreement.
2. FRANCHISEE may designate in writing, and notify 7-ELEVEN
pursuant to the notice provision in the Agreement, up to three (3)
individuals, listed alternatively and in order of preference, who
FRANCHISEE believes are qualified and each of whom
individually wishes to have the opportunity to franchise the Store
after the death of FRANCHISEE. FRANCHISEE acknowledges and agrees that
the opportunity to franchise the Store will be offered to one
individual (and his or her spouse) only, and will be offered to one
individual at a time in accordance with the order in which the
individuals are designated on the notice provided to 7-ELEVEN. To be
effective, the notice of designation must be either personally
delivered or postmarked not later than one (l) day prior to FRANCHISEE's
death. Such designation may be changed by FRANCHISEE in writing to 7-
ELEVEN, effective upon
1
receipt. If there are designated individuals, 7-ELEVEN, after the death
of FRANCHISEE, will promptly attempt to locate and arrange an interview
with the designated individual and will advise the estate whether or not
that designated individual has been located and is qualified in accordance
with 7-ELEVEN's then current qualification procedures. If more than one
individual is designated and the first designated individual cannot
be
reasonably located, is not qualified under 7-ELEVEN's then current
qualification procedures, or is not interested in obtaining a
franchise for the Store, 7-ELEVEN will attempt to locate and determine the
qualifications and interest of the second designated individual, and
likewise for the third individual, if necessary, and the estate will
be advised accordingly.
If, before the expiration of the Notice Period, one of the designated
individuals qualifies and desires to franchise the Store, and the estate
mutually terminates the Agreement, waives, in form satisfactory to 7-ELEVEN,
any claim it may have to sell the franchise, and pays or makes arrangements
satisfactory to 7ELEVEN for payment of any amount due 7-ELEVEN under
the
Agreement, and in the case of an Incorporated Franchisee, if the designated
individual acquires ownership or control of all of the authorized, issued, and
outstanding shares of the Incorporated Franchisee, 7-ELEVEN will sign a new
7-Eleven Store Franchise Agreement for the Store in the then current
form with said designated individual (if qualified). In addition, in the
case of an Incorporated Franchisee, after the designated individual has
acquired ownership or control of all of the authorized, issued, and
outstanding shares of the Incorporated Franchisee and signed a new 7-Eleven
Store Franchise Agreement for the Store in the then current form, 7-ELEVEN
will effectuate the assignment of the new 7-Eleven Store Franchise
Agreement to the former Incorporated Franchisee or other corporation,
provided that all then current conditions required by 7-Eleven in its
sole discretion for assignment have been satisfied. No franchise fee will be
charged, there will be no change in the financial terms from those in the
Agreement until such time as the term of the Agreement would have expired if
not earlier terminated, at which time the financial terms set forth in the
new 7-Eleven Store Franchise Agreement executed by said designated individual
shall become effective for the remainder of the term thereof.
3. If during the Notice Period neither of the first two events
specified in Paragraph 1 above occurs, and the estate delivers to 7-ELEVEN a
written request indicating that it desires to arrange a sale of the
franchise and has and will continue to make good faith efforts to find a
qualified purchaser, and the estate pays or makes arrangements satisfactory to
7-ELEVEN for the payment of any amount due 7-ELEVEN under the Agreement, 7-
ELEVEN will extend to the estate the opportunity to arrange a sale of the
franchise for a total of 120 days from the death of FRANCHISEE (including the
Notice Period) and will not refranchise the Store during that time unless the
estate waives in writing any claim it may have to sell the franchise (even
though the Agreement previously has terminated); however, from the 31st
through the 120th day, the Store shall be operated by and for the benefit of
7-ELEVEN.
2
4. An officer of 7-ELEVEN shall review any arrangement between 7-
ELEVEN and the estate, including application of the terms hereof,
before implementation of that arrangement.
5. For and in consideration of 7-ELEVEN allowing FRANCHISEE to
designate a successor to FRANCHISEE's interest, and as a
condition precedent to 7-ELEVEN being bound by the terms hereof,
FRANCHISEE does hereby agree and covenant with 7-ELEVEN:
a. That notwithstanding any probate or estate
administration proceedings involving
FRANCHISEE or FRANCHISEE's estate, or disputes by, among, or
between the FRANCHISEE's designees, heirs, legatees,
beneficiaries, successors in interest or the like, the time limits
established by the terms hereof shall control and govern any
obligations of 7-ELEVEN or rights of any party arising from the terms
hereof; and
b. That in the event a dispute arises concerning the
disposition of the franchise pursuant to the Agreement, and such
dispute involves 7-ELEVEN or its rights or obligations, any
expenses reasonably incurred by 7-ELEVEN in that dispute, to
include attorneys' fees and court costs, shall be borne either by the
Open Account or FRANCHISEE's estate, or both, as determined by 7-
ELEVEN.
The terms used herein shall have the meanings defined in the
Agreement.
FRANCHISEE: ______________________
(Signature)
FRANCHISEE: ______________________
(Signature)
7-ELEVEN: ________________________
(Signature)
DATE:____________________________
3
EXHIBIT 10(ii)B(i) - G
EXHIBIT G
REQUIRED PROPRIETARY PRODUCTS
Following is a list of the Proprietary Products that FRANCHISEE is
required to carry in the Store at all times. Any of these items may
be deleted, or new items may be added, by 7-ELEVEN at any time but no
more than twice each calendar year.
PRODUCT DESCRIPTION AND PRESENTATION
Slurpee-R- Frozen carbonated beverage,
prepared with a variety of high-
quality syrups, properly brixed, and
served in standardized,trademarked
Slurpee-R- cups.
Big Gulp-R- Post-mix fountain beverage,
prepared with a variety of high-
quality syrups, properly brixed, and
served in standardized, trademarked
32 ounce Big Gulp-R- cups.
Super Big Gulp-R- Post-mix fountain beverage,
prepared with a variety of high-
quality syrups, properly
brixed, and served in standardized, trademarked 44 ounce Super Big Gulp-
R- cups.
7-Eleven-R- Coffee Fresh brewed coffee, prepared
with the regionally approved 7-Eleven-
R- coffee blend, and
served in standardized, trademarked 7-Eleven-R- coffee cups.
Big Bites-R- High quality, all-beef hot dog,
prepared using the 7-Eleven-R-
approved spice mix, offered in both
8:1 lb. and 1/4 lb. sizes, and served
in standardized, trademarked Big
Bites-R- hot dog containers.
1
FRANCHISEE:_____________________________
(Signature)
FRANCHISEE:_____________________________
(Signature)
7-ELEVEN:_______________________________
(Signature)
DATE:____________________________________
2
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