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EXHIBIT 10-91
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ADDENDUM NO. 1 TO
BOSTON CHICKEN, INC.
FRANCHISE AGREEMENT
THIS ADDENDUM No. 1 is to the Boston Chicken, Inc. Franchise
Agreement (the "Agreement"), dated _____________, 1994 by and between Boston
Chicken, Inc. ("Company"), which has its principal office at 1804 Centre Point
Drive, Naperville, IL 60563, and Carl Karcher Enterprises, Inc., which has its
principal office at 1200 North Harbor Boulevard, P.O. Box 4349, Anaheim,
California 92803-4349 (hereinafter referred to as ("FRANCHISE OWNER").
The following shall amend and be incorporated into the
Agreement. In the event of any conflict between the terms of the Agreement and
the terms of this Addendum, then the terms of this addendum shall control. All
capitalized terms not defined in this Addendum shall have the respective
meanings set forth in the Agreement.
1. Section 1.B is hereby amended by deleting the
definition of Catering Area in its entirety and restating it to read as
follows:
"CATERING AREA" - The geographic area in which COMPANY, in its
sole discretion, authorizes FRANCHISE OWNER to provide Catering
Service pursuant to a Catering Rider, which area may be the same as,
smaller than, larger than or different from the Territory (defined
below) of a BOSTON CHICKEN Unit. COMPANY may, at any time and in its
sole discretion, with or without cause and regardless of the
investment made by FRANCHISE OWNER in establishing or conducting
Catering Service: (1) reduce, modify or expand the Catering Area from
time to time (provided, that any reduction or modification which
amounts to a termination or substantially all of FRANCHISE OWNER's
rights to provide such services shall be governed by clause (2),
below) or (2) upon written notice to FRANCHISE OWNER in accordance
with Section 3.D suspend or terminate FRANCHISE OWNER's right to offer
Catering Service.
2. Section 1.B is hereby further amended by inserting at
the end of the definition of "Competitive Business" the following:
COMPANY acknowledges Carl's Jr. restaurants constitute a
Permitted Competitive Business within the meaning of this Agreement
and Exhibit C hereto, provided that such Carl's Jr. restaurants do not
offer
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(1) rotisserie chicken, or (2) any other products prepared in
accordance with COMPANY's recipes or specifications unless such
products are developed by FRANCHISE OWNER and sold in Carl's Jr.
restaurants prior to the development of such products by COMPANY,
provided, further, that no Confidential Information is used in
connection with Carl's Jr. restaurants providing any services or
products.
3. Section 1.B is hereby further amended by deleting the
definition of "Computer System" in its entirety and relating it to read as
follows:
"COMPUTER SYSTEM" - Those brands, types, makes and/or models
of communications and computer systems or hardware specified or
required by COMPANY for use by, between, or among BOSTON CHICKEN Units
and COMPANY, including, but not limited to back office and point of
sale systems, data, audio, video and voice storage, retrieval, and
transmission systems for use at the UNIT, between or among BOSTON
CHICKEN Units, and between UNIT and/or FRANCHISE OWNER and COMPANY,
security systems, printers, and archival and back-up systems.
4. Section 1.B is hereby further amended by deleting the
definition of "Delivery Area" in its entirety and restating it to read as
follows:
"DELIVERY AREA" - The geographic area in which COMPANY, in its
sole discretion, authorizes FRANCHISE OWNER to provide Delivery
Service pursuant to a Delivery Rider, which area may be the same as,
smaller than, larger than or different from the Territory (defined
below) of a BOSTON CHICKEN Unit. COMPANY may at any time and in its
sole discretion with or without cause and regardless of the investment
made by FRANCHISE OWNER in establishing and conducting Delivery
Service or the length of time FRANCHISE OWNER has offered Delivery
Service: (1) reduce, modify or expand the Delivery Area from time to
time (provided, that any reduction or modification which amounts to a
termination of substantially all of FRANCHISE OWNER's rights to
provide such services shall be governed by clause (2), below) or (2)
upon written notice to FRANCHISE OWNER in accordance with Section 3.C,
suspend or terminate FRANCHISE OWNER's (or Authorized Entity's) right
to offer Delivery Service.
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5. Section 1.B is hereby further amended by deleting the
definition of "Licensed Program" in its entirety and restating it to read as
follows:
"LICENSED PROGRAM" - The computer software programs developed
by or for COMPANY and designated by COMPANY from time to time as
specified or required in connection with utilization of the Computer
Systems, which may include, without limitation, COMPANY's required
point-of-sale, bookkeeping, inventory, training, marketing, employee
selection, operations and financial information, collection and
retrieval systems (including COMPANY's required general ledger system
utilizing the standard chart of accounts prescribed by COMPANY from
time to time) for use in connection with the operation of BOSTON
CHICKEN Units or franchise owners' and developers' business, including
any updates, supplements, modifications or enhancements thereto made
from time to time, all related documentation, the tangible media upon
which such program is recorded, and database file structure thereof,
but excluding any data or databases owned or compiled by COMPANY or
its Affiliates for use with the Licensed Program or otherwise or any
data generated by the use of the Licensed program.
6. Section 1.B is hereby further amended by deleting the
definition of "Market Area" in its entirety and restating it to read as
follows:
"MARKET AREA" - The Sub-Area (as defined in the Development
Agreement) in which the UNIT is located.
7. Section 1.B is hereby further amended by adding the
following immediately before the definition of "Territory":
"SPECIFIED SOFTWARE" - Such software, programming, and
services other than the Licensed Program, which COMPANY from time to
time specifies or requires in connection with utilization of the
Computer System
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8. Section 2.A is hereby further amended by adding the
following at the end thereof:
Notwithstanding the foregoing, FRANCHISE OWNER shall not be
required to cause the execution and delivery of the Guaranties
referred to in this Section 2.A, unless FRANCHISE OWNER is an
"Authorized Entity" as defined in the Development Agreement.
9. Section 2.E is hereby amended by deleting the phrase
"one (1) year" in the last paragraph and replacing it with the phrase "two (2)
years."
10. Section 3.A is deleted in its entirety and restated
to read as follows:
FRANCHISE OWNER acknowledges and agrees that: (1)
FRANCHISE OWNER is not granted any rights within or outside
the Territory to offer, perform, or participate in the
development or operation of Special Distribution Arrangements
("SDA"), other than as expressly provided in this Paragraph A,
and (2) COMPANY reserves all such rights to offer, perform, or
participate in the development or operation of SDA, within the
Territory. Notwithstanding anything to the contrary contained
in this Paragraph A, if COMPANY, during the Agreement Term,
determines to itself develop and operate, or grant to others
the right to develop and operate an SDA in the Territory, then
COMPANY shall notify FRANCHISE OWNER of such intention by
providing to FRANCHISE OWNER COMPANY's proposed plan for such
SDA and the form of an initial Special Distribution Agreement
which COMPANY proposes to FRANCHISE OWNER to execute and
deliver with regard to such SDA ("COMPANY's SDA Plan Notice").
Company shall notify FRANCHISE OWNER in writing as to
whether COMPANY, in its sole discretion, elects to have
FRANCHISE OWNER (i) perform the development or operation of
the SDA, or (ii) participate in the COMPANY cash flow, if any,
solely from the development and performance of such SDA ("Net
Cash Flow") in the event a Cannibalization Impact is
established, as defined below. Notwithstanding anything to
the contrary, including any such election by COMPANY,
FRANCHISE OWNER
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acknowledges that COMPANY need not permit FRANCHISE OWNER to
perform the development or operation of such SDA and COMPANY
shall have no obligation to enter into any Special
Distribution Agreement with FRANCHISE OWNER with respect to
such SDA unless FRANCHISE OWNER demonstrates, to COMPANY's
reasonable satisfaction, that it has or will acquire the
appropriate resources (financial and otherwise) to take full
advantage of the SDA and to discharge all of its obligations
under the Special Distribution Agreement. If COMPANY elects
for FRANCHISE OWNER to develop and operate such SDA pursuant
to (i), above, then, COMPANY and FRANCHISE OWNER will promptly
commence negotiations in good faith toward the execution of a
revised Special Distribution Agreement in accordance with
COMPANY's SDA Plan Notice. If COMPANY and FRANCHISE OWNER are
unable to agree, in good faith, on the terms of and execute
the revised Special Distribution Agreement within sixty (60)
days after COMPANY's delivery to the FRANCHISE OWNER of the
COMPANY's SDA Plan notice and FRANCHISE OWNER does not execute
and deliver the initial Special Distribution Agreement, or in
the event COMPANY determines FRANCHISE OWNER does not have and
cannot acquire appropriate resources to take full advantage of
the SDA and to discharge all of its obligations under the
Special Distribution Agreement, then COMPANY will have no
further obligation to negotiate with the FRANCHISE OWNER
pursuant hereto for such SDA other than to permit FRANCHISE
OWNER to participate in Net Cash Flow, if any, pursuant to
(ii), above, and COMPANY may develop or operate, or pursue
negotiations with and offer to third parties the right to
develop and operate, such SDA.
If COMPANY elects (ii), above, the COMPANY shall have
the right to develop and operate or grant the right to others
to develop and operate such SDA within the Territory and, if
such SDA is so developed or operated within the Territory
during the Agreement Term, FRANCHISE OWNER may, by written
notice to COMPANY at any time within one year after
commencement of such SDA, require COMPANY to engage a
reputable, unaffiliated third-party market survey company at
COMPANY's expense which shall, within sixty (60) days of
engagement render a report to the
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COMPANY as to whether such SDA has caused more than a 5%
permanent cannibalization ("Cannibalization Impact") of the
gross sales of the UNIT. If such Cannibalization Impact is so
reported, then the market survey company shall determine if
the projected annualized after tax cash flow of such UNIT for
the next four (4) years will yield to FRANCHISE OWNER an
annualized average cash return on the book value of such UNIT
(which book value shall never be deemed to exceed invested
capital to date in such UNIT) equal to or exceeding 25%. If
such return equals or exceeds 25%, then no portion of the Net
Cash Flow shall be paid to FRANCHISE OWNER. If such return is
less than 25%, then, COMPANY shall pay to FRANCHISE OWNER a
reasonable portion of the Net Cash Flow, if any, as earned
from time to time (less any net cash losses for prior periods)
as determined by the COMPANY from time to time in good faith,
taking into account all relevant factors, including, but not
limited to, the scope of DEVELOPER's activities, the amount of
the reported Cannibalization Impact of the SDA on DEVELOPER,
whether such impact is mitigated by positive factors.
If FRANCHISE OWNER fails to comply with any of its
material obligations under this Agreement, COMPANY shall have
no obligation to negotiate with FRANCHISE OWNER pursuant
hereto for such SDA rights pursuant to (i), above and COMPANY
may develop and operate or pursue negotiations with and offer
to third parties the right to develop and operate such SDA
within such Sub-Area without any obligation of payment which
would have otherwise been owed to FRANCHISE OWNER in the event
of a proper election pursuant to (ii), above. Notwithstanding
anything else to the contrary herein, FRANCHISE OWNER's rights
to enter into a Special Distribution Agreement pursuant to (i)
or receive payments pursuant to (ii) for the Territory shall
terminate without further action or notice by COMPANY if:
(a) FRANCHISE OWNER fails to meet its development
obligations hereunder with regard to the UNIT Sub-Area,
including without limitation, the timely opening of any UNIT
pursuant to Schedule C attached to the Development Agreement;
or
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(b) This Agreement is terminated prior to its
applicable expiration date.
If FRANCHISE OWNER has executed a Special
Distribution Agreement, COMPANY reserves the right, at any
time and in its sole discretion with or without cause and
regardless of the investment made by FRANCHISE OWNER in
establishing or operating the Special Distribution Arrangement
or the length of time the Special Distribution Arrangement has
been in effect, to suspend or terminate FRANCHISE OWNER's
right to operate the Special Distribution Arrangement upon one
hundred eighty (180) days prior written notice to FRANCHISE
OWNER; provided, however, that notwithstanding such
termination, FRANCHISE OWNER shall be entitled during such one
hundred eighty (180) day period to fulfill any contractual
obligations it had incurred prior to receipt of such notice,
but may not incur or undertake any new obligations or
commitments.
Provided, however, such one hundred eighty (180) day
period may be extended by an additional period not to exceed
the lesser of (a) the period required to amortize (in
accordance with generally accepted accounting principles) the
balance of FRANCHISE OWNER's investment in the SDA or (b)
eighteen months. Notwithstanding the foregoing one hundred
eighty (180) day notice period, COMPANY may terminate
FRANCHISE OWNER's right to operate the SDA upon such shorter
notice (pursuant to procedures promulgated by COMPANY and
applied to a majority of the BOSTON CHICKEN Units then in
operation) as COMPANY determines in its sole discretion if the
reasonfor such termination is FRANCHISE OWNER's failure to
meet COMPANY's operational standards with respect to such
special Distribution Arrangement.
Notwithstanding any other provision of this Section
4.A, COMPANY shall not have the right to propose a Special
Distribution Arrangement to FRANCHISE OWNER pursuant hereto
during the first three years of the Agreement Term of the
Development Agreement, unless such Special Distribution
Arrangement is being conducted, or COMPANY has committed to
conduct it, in Areas of Dominant Influence whose population is
equal to 25% or more of the
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aggregate population of all the Areas of Dominant Influence in
which Boston Chicken Units are open or under development.
Further, during the term of the Agreement, COMPANY shall
consult with FRANCHISE OWNER prior to finalizing any material
(with regard to any particular Unit) SDA within the Territory.
Such consultation shall be for advice only and COMPANY shall
not be bound by any advice or recommendations of FRANCHISE
OWNER.
11. Section 3.B is hereby deleted.
12. Section 3.C is hereby amended by deleting the phrase
"; or (ii)" from the end of the last sentence thereof and inserting the phrase
"(provided, that any reduction or modification which amounts to a termination
of substantially all of FRANCHISE OWNER's rights to provide such services shall
be governed by clause (2), below); or (2) upon one hundred eighty (180) days
prior written notice from COMPANY to FRANCHISE OWNER," and by inserting the
following at the end thereof:
Provided, however, such one hundred eighty (180) day period
may be extended by an additional period not to exceed the lesser of
(a) the period required to amortize (in accordance with generally
accepted accounting principles) the balance of DEVELOPER's investment
in delivery vehicles and facilities or (b) eighteen (18) months.
Notwithstanding the foregoing one hundred eighty (180) day notice
period, COMPANY may terminate or suspend FRANCHISE OWNER's right to
operate the Delivery Service upon such shorter notice (pursuant to
procedures promulgated by COMPANY and applied to a majority of the
BOSTON CHICKEN Units then in operation) as COMPANY determines in its
sole discretion if the reason for such termination or suspension is
FRANCHISE OWNER's failure to meet COMPANY's operational standards with
respect to such Delivery Service.
13. Section 3.D is hereby amended by deleting the phrase
"; or (ii)" from the end of the last sentence thereof and inserting the phrase
"(provided, that any reduction or modification which amounts to a termination
of substantially all of FRANCHISE OWNER's rights to provide such services shall
be governed by clause (2), below); or (2) upon one hundred eight (180) days
prior written notice from COMPANY to FRANCHISE OWNER," and by inserting the
following at the end thereof:
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Provided, however, such one hundred eighty (180) day period
may be extended by an additional period not to exceed the lesser of
(a) the period required to amortize (in accordance with generally
accepted accounting principles) the balance of FRANCHISE OWNER's
investment in its catering facilities or (b) eighteen (18) months.
After receipt of notice terminating FRANCHISE OWNER's Catering Service
or reducing FRANCHISE OWNER's Catering Area. FRANCHISE OWNER will not
accept any new orders for catering or, as applicable, will not accept
any new orders for catering from the portion of the Catering Area
which has been terminated; provided, however, FRANCHISE OWNER shall
have the right to compete any catering orders during such one hundred
eighty (180) day period, but which were received prior to receipt of
such notice of termination of Catering Service or reduction of
Catering Area.
Notwithstanding the foregoing one hundred eighty (180) day
notice period, COMPANY may terminate or suspend FRANCHISE OWNER right
to operate the Catering Service upon such shorter notice (pursuant to
procedures promulgated by COMPANY and applied to a majority of the
BOSTON CHICKEN Units then in operation) as COMPANY determines in its
sole discretion if the reason for such termination or suspension is
FRANCHISE OWNER's failure to meet COMPANY's operational standards with
respect to such Catering Service.
14. Section 4.A is hereby amended to delete the
requirement that FRANCHISE OWNER use its best efforts to use the Form Unit
Lease. The parties acknowledge that FRANCHISE OWNER may use DEVELOPER's
standard form lease, provided that FRANCHISE OWNER shall incorporate the
Standard Required Site Agreement Terms for CKE units (including collateral
assignment of site agreement to Company or its designee) in the lease for the
UNIT. Provided, however, FRANCHISE OWNER shall only be obligated to use its
best efforts to have the Standard Required Site Agreement Terms included in a
Site Agreement for Approved Sites that are operating as a Carl's Jr. and which
are leased from independent third party landlords.
15. Section 4.C is hereby amended by: (a) deleting the
phrase "one hundred eighty (180) days" in the first sentence and replacing it
with the phrase "one (1) year" and (b) deleting the phrase "one hundred twenty
(120) days" in the last sentence.
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16. Section 4.E is hereby amended by adding the following
at the end thereof:
FRANCHISE OWNER shall pay to COMPANY a one-time
License Fee for the Licensed Program when it becomes available
for use by FRANCHISE OWNER. The License Fee shall be the
lesser of (a) $15,000, or (b) the amount charged as a License
Fee to other franchise owners that are similarly situated to
DEVELOPER. FRANCHISE OWNER shall pay a Subscription Fee to
COMPANY (payable with the Royalty Fee) for support and
maintenance of the Licensed Program. The Subscription Fee
shall be $400 per four week period. Notwithstanding the
foregoing, COMPANY may increase the Subscription Fee from time
to time, provided that it may not be increased by more than
ten percent (10%) (or such lesser percentage as may be applied
to FRANCHISE OWNERS similarly situated to DEVELOPER) in any
calendar year.
17. Section 4.E is hereby amended by deleting the first
paragraph thereof in its entirety and restating it to read as follows:
4.E COMMUNICATION AND INFORMATION SYSTEMS.
FRANCHISE OWNER agrees to use in the development and
operation of the UNIT only those brands, types, makes, and/or
models of communications and computer systems or hardware
which COMPANY has from time to time specified or required for
the Computer System. FRANCHISE OWNER also agrees to use in
the development and operation of the UNIT only the Specified
Software and the Licensed Program, as comprised from time to
time in accordance with the specifications and requirements of
COMPANY. FRANCHISE OWNER acknowledges that COMPANY and its
Affiliates and designees are in the process of completing the
development of the Licensed Program and COMPANY is in the
process of completing the development of specifications for
certain components of the Licensed Program and Computer System
and may modify such specifications and the components of the
Licensed Program and the Computer System from time to time.
During the term hereof, COMPANY may require FRANCHISE OWNER to
obtain specified computer hardware and/or software, including,
without limitation, the Computer System, the
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Specified Software, and a license to use the Licensed Program
from COMPANY or its designee under a separate agreement after
COMPANY notifies FRANCHISE OWNER to commence use thereof.
COMPANY's development and/or modification of such
specifications for the components of the Computer System, the
Specified Software, and the Licensed Program may require
FRANCHISE OWNER to incur costs to purchase, lease and/or
license new or modified computer hardware and/or software and
to obtain service and support for the Computer System, the
Specified Software, and the Licensed Program during the term
of this Agreement. FRANCHISE OWNER acknowledges that COMPANY
cannot estimate the costs of future additions, enhancements
and modifications to the Computer System, the Specified
Software, and the Licensed Program and that the cost to
FRANCHISE OWNER of obtaining the additions, enhancements and
modifications to the Computer System (the Specified Software,
and the Licensed Program) may not be fully amortizable over
the remaining term of this Agreement. Nonetheless, FRANCHISE
OWNER agrees to incur such costs in connection with obtaining
the Computer System, the Specified Software, and the Licensed
Program and any additions, enhancements or modifications
thereto, provided that the Computer System, the Specified
Software, and the Licensed Program that COMPANY specifies for
same Computer system, the Specified Software, and the Licensed
Program that COMPANY specifies for use by FRANCHISE OWNER is
substantially the same computer system, the specified
software, and the license program which COMPANY is then
currently specifying for use in COMPANY-owned BOSTON CHICKEN
Units. Within one hundred twenty (120) days after FRANCHISE
OWNER receives notice from COMPANY, FRANCHISE OWNER shall
obtain the components of the Computer System, the Specified
Software, and the Licensed Program which COMPANY designates
and requires. Such portion of the Computer System Specified
Software, and Licensed Program as is purchased from COMPANY or
its agents or affiliate may involve one-time and periodic fees
or payments to COMPANY. FRANCHISE OWNER further acknowledges
and agrees that COMPANY has the right to require FRANCHISE
OWNER to pay to COMPANY or its designee a reasonable periodic
systems fee for modifications and enhancements made to the
Licensed Program and reasonable periodic fees for other
maintenance
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and support services provided to FRANCHISE OWNER related to
the Specified Software and the Computer System.
18. Section 4.F is hereby amended by deleting the phrase
"one hundred and eighty (180)" and replacing it with the phrase "one (1) year."
19. Section 4.G is amended hereby by deleting the second
and third sentences thereof.
20. Section 4.H is amended as follows:
The words "Company and" are deleted in the fourth
line and the following is added after the end of the first
sentence:
Notwithstanding the foregoing, FRANCHISE OWNER may
not relocate the UNIT for a reason other than damage,
condemnation or other event rendering it unusable unless (a)
FRANCHISE OWNER is then in full compliance with this Agreement
and (b) the proposed new site for the UNIT has been approved
by the COMPANY pursuant to COMPANY's standard site criteria
and site approval procedures.
21. Section 4.H is further amended to provide that, in
the event that the UNIT is relocated pursuant to Section 4.H as amended hereby
because the UNIT has been rendered unusable due to damage, condemnation or
other cause, FRANCHISE OWNER shall have up to two hundred and seventy (270)
days to re-open the UNIT at the new location.
22. Section 4.I is hereby amended by deleting it in its
entirety.
23. Section 5.A is hereby amended by deleting the term
"three (3)" wherever it appears and replacing it with the term "ten (10)."
24. Clauses (5) and (6) of Section 5.B are hereby amended
by adding the following before the semicolon at the end of each of them:
if the UNIT is one of the first three (3) BOSTON
CHICKEN Units developed under the Development Agreement; and
24A. Notwithstanding the first line of Section 5.B,
COMPANY shall be obligated to provide the guidance referred to
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in clauses (5) and (6) of Section 5.B., as those clauses are amended hereby.
25. The first sentence of Section 5.C is hereby amended
by inserting the following immediately before the parenthetical definition of
the "Manuals":
, whether by way of supplements, replacement pages, Franchise
Bulletin or Partner Bulletin disclosures, or other officials
pronouncements or means.
26. Notwithstanding Section 9.A hereof: (a) FRANCHISE
OWNER shall not be required to obtain COMPANY's prior written consent with
respect to information described in clauses (i) and (ii) thereof; and (b) the
restrictions on FRANCHISE OWNER's disclosure and use of the Confidential
Information shall not apply to knowledge of the food service business which
FRANCHISE OWNER already possesses and which has not been obtained in
contravention of any obligation of confidentiality owed to COMPANY.
27. The first paragraph of Section 9.B is hereby amended
by inserting the following immediately before the "." at the end of subclause
(2) thereof:
; or (3) divert or attempt to divert any business or any
customers of any BOSTON CHICKEN Unit to any other food service
business.
28. Notwithstanding Section 11.A (5) (a), FRANCHISE OWNER
shall not be required to make the changes referred to therein unless COMPANY
has required such changes with respect to at least 25% of all BOSTON CHICKEN
Units then open and in operation and provided further that FRANCHISE OWNER
shall be required to make such changes on the same timetable that COMPANY has
established for effecting such changes at BOSTON CHICKEN Units owned by
COMPANY.
29. Section 11.B is hereby amended to provide that,
notwithsatnding the first sentence of the second paragraph thereof, DEVELOPER
may designate the evaluation service to conduct the "mystery shopper" program.
30. Section 11.C is amended by adding the following after
the end thereof:
The parties acknowledge that Carl Karcher Enterprises, Inc.
operates a food distribution division ("CKE Distribution") and
that FRANCHISE OWNER may from time to time seek COMPANY's
approval of CKE Distribution as an
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approved supplier pursuant hereto. In the event that
FRANCHISE OWNER applies for such approval, COMPANY shall
diligently pursue the supplier approval procedures of this
Section 11.C.
31. Section 11.C is further amended to change the term
"one hundred and twenty (120) days" wherever it appears to "ninety (90) days."
32. Section 11.F is hereby amended to delete the last
sentence of the first paragraph thereof and to replace it with the following:
FRANCHISE OWNER shall provide the Unit Manager with a
compensation program reasonably acceptable to COMPANY designed
to provide an incentive to the Unit Manager to use diligent
efforts to cause the UNIT to be operated profitably.
33. FRANCHISE OWNER acknowledges that there are two
hundred (200) BOSTON CHICKEN Units open and operating and, therefore, FRANCHISE
OWNER's required contribution to the Marketing Fund is two percent (2%) of the
UNIT's Royalty Base revenue.
34. Notwithstanding anything in Section 12.B hereof, the
Local Ad Fund may propose to COMPANY annual advertising and marketing plans for
this Sub-Area in which the UNIT is located ("Advertising Plans"). If the Local
Advertising Fund proposes and Advertising Plan for such Sub-Area, it shall be
submitted to COMPANY for its approval, which shall not be unreasonably
withheld; provided that an Advertising Plan shall not be used without COMPANY's
approval and provided that the Local Ad Fund will support at the local level
substantially all of COMPANY's national marketing campaigns. The foregoing
provisions concerning Advertising Plans shall not apply if the UNIT is located
in the Sub-Area (as defined in the Development Agreement) which includes the
City of Sacramento, California. Further, so long as DEVELOPER owns and
operates all Boston Chicken UNITS contributing to the Local Ad Fund, the
contributions to such Local Ad Fund shall be made to and held in a segregated
account established and maintained by DEVELOPER and all expenditures pursuant
to this Section 12.B shall be made from such account. An accounting with
regard to such Local Ad Fund shall be rendered by DEVELOPER to COMPANY from
time to time at COMPANY's request.
35. The second paragraph of Section 12.B is hereby
amended by adding the following after the end of the first sentence thereof:
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Notwithstanding the foregoing, FRANCHISE OWNER acknowledges
and agrees that it may be required from time to time to
contribute to the Local Ad Fund an amount greater than that
provided for herein to enable FRANCHISE OWNER to commence and
continue Required Television Advertising (as defined in the
Development Agreement) as required pursuant to the Development
Agreement.
36. Section 12.C is hereby amended by deleting the term
"Accounting Period" whenever it appears in the first sentence thereof and
replacing it with the term "quarter."
37. Notwithstanding the first sentence of the second
paragraph of Section 13 hereof, FRANCHISE OWNER shall not be required to adopt
a fiscal year which coincides with COMPANY's fiscal year. FRANCHISE OWNER
shall not be required to submit the reports contemplated by clause (1) of
Section 13 for periods for which COMPANY collects from the UNIT via the
Computer System the date which would otherwise be included in such reports.
38. Notwithstanding the last paragraph of Section 13,
FRANCHISE OWNER needs only furnish tax returns to COMPANY that relate solely to
FRANCHISE OWNER's Boston Chicken business.
38A. Section 15.A is amended by adding the following at
the end thereof:
; provided that COMPANY shall remain liable for its
obligations hereunder for the balance of the term of this
Agreement after the date of any transfer or assignment of this
Agreement.
39. Section 15.B is amended by adding the following after
the end thereof:
Notwithstanding the foregoing, the restrictions in
this Section 15.B shall not apply to transfers of ownership
interests in Carl Karcher Enterprises, Inc. or to changes in
the members of its Board of Directors.
40. Section 15.C is hereby amended by inserting the
following after "(c)" in subparagraph (13) thereof:
divert or attempt to divert any business or any customers of
any BOSTON CHICKEN Unit to any other food service business;
or (d)
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41. Section 15.F is hereby amended by deleting in its
entirety and replacing it with the following:
FRANCHISE OWNER may make public or private offerings
of securities, provided that FRANCHISE OWNER shall not, unless
otherwise required by law and any relevant governmental
agency, include in any published financial statements, in any
prospectus or other offering document, or in any publicly
filed or disseminated report (including any Form 10-K, 10-Q,
or 8-K or any Proxy Statement or Annual Report to
Stockholders) or in any Management Discussion Analysis or in
any footnotes accompanying any of the foregoing, any category,
line-item, breakdown, or type of information concerning its
operation of Boston Chicken Units that COMPANY does not
utilize in its published financial statements, prospectuses or
offering documents, or publicly filed or disseminated reports.
Additionally, DEVELOPER and CKE shall not disclose information
regarding its Boston Chicken business during 1994 by segment
although, DEVELOPER and CKE shall have the right, during
1994, to discuss, using general statements in the Management
Discussion and Analysis section of any of the documents
referred to in this paragraph, its Boston Chicken business,
provided, however neither DEVELOPER nor CKE shall make a
disclosure of same store sales comparisons or average store
revenue for its Boston Chicken Units unless otherwise required
by applicable law and any relevant governmental agency.
42. Section 16.A. is amended hereby to provide that: (a)
FRANCHISE OWNER shall have the right, on the conditions set forth in Section
16.A. to obtain a second Successor Franchise, and (b) that the fee for each
Successor Franchise shall be one-third of the initial franchise fee set forth
in the Franchise Agreement.
43. Section 18.F is hereby amended by deleting the last
sentence of the first paragraph thereof.
44. Clause 19.A. is amended by deleting the first
paragraph thereof in its entirety and by deleting the word "other" from the
first sentence of the second paragraph.
CKEADD.FIN 16
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45. Section 19.B. is hereby amended by deleting the
phrase "of ten (10) days' prior written notice" at the end of the second
paragraph and by replacing it with the following:
of forty-five (45) days' prior written notice, unless COMPANY
determines, in its reasonable discretion, that a shorter
notice period is necessary.
46. Section 19.E is hereby amended by deleting it in its
entirety.
47. Section 19.H is amended by deleting it in its
entirety.
In witness whereof, the parties hereto, intending to be
legally bound hereby, have duly executed this Addendum in duplicate as of the
date written below.
DATE:__________________, 1994 DATE:__________________, 1994
COMPANY: FRANCHISE OWNER:
BOSTON CHICKEN, INC. CARL KARCHER ENTERPRISES, INC.
By:___________________________ By:__________________________
Its: Vice President Its:______________________
CKEADD.FIN 17