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EXHIBIT 10.5
This Area Development Addendum is made by and between,
JUTLAND FOOD GROUP, INC.
9 LAW DR.
FAIRFIELD, NJ 07006
the Company,
and,
Joe Conti
9961 N. Bighorn Butte Dr.
Tucson, AZ 85737
The Franchisee;
This Addendum describes a business relationship between the parties by which
the Franchisee will become an Area Developer responsible for the expansion of
the Company's bagel chains in a specific area. It is an Amendment to a
Franchise Agreement executed by the parties on ______________ 1995, and is
intended to expand the relationship described in that Agreement. In addition
to the terms and conditions outlined in the franchise agreement, the parties
agree to the following terms and conditions under which Franchisee will operate
as Area Developers and exclusive representative of the Company. Other than as
expressly outlined in this addendum, all terms and conditions of that Agreement
remain in effect.
1. Nature of Representation
Subject to the mutual performance criteria and other terms and conditions
outlined in the franchise agreement and this addendum, Franchisee agrees to
serve as the company's sole and exclusive representative for the development of
the company's bagel chains in the territory denoted in this Addendum. During
the term of this agreement the Company shall be prohibited from any development
within the designated territory, other than through Franchisee.
2. The Territory, Development Schedule, and Fee
Franchisee shall operate as Area Developer for the State of Arizona, and agrees
to develop a minimum number of stores within the territory as outlined in the
development schedule below.
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From the date of the execution of this agreement to:
the end of total stores opened and operating
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6 months 1
18 months 3
24 months 5
36 months 7
48 months 10
60 months 13
thereafter not less than 15
All stores opened and operating in the territory as of the above dates, whether
owned by Franchisee or by a sub Franchisee, shall count in the maintenance of
the development schedule.
Franchisee acknowledges that the continuance of his exclusive rights to
represent the Company is expressly dependent on the maintenance of this
development schedule. Failure to comply with this schedule for any reason,
other than the failure of the Company to maintain a current Uniform Franchise
Offering Circular, shall cause Franchisee to Forfeit his right of Exclusive
representation.
In the event Franchisee forfeits the right of exclusive representation granted
under this Addendum, Franchisee shall continue to have the responsibility of
providing services to all stores in the designated territory which are opened
as of the date of such forfeiture; and as long as such services are provided in
a manner consistent with the Company's reasonable policies and procedures for
such Area Developer services, Franchisee shall continue to receive compensation
for providing such services as described in Paragraph 3 (three) below.
Franchisee agrees to purchase the rights to the above territory by the payment
of an Area developer fee in the amount of $22,500, payable as follows:
Upon the execution of this agreement, a total of $15,000 shall be paid
to the Company, $7,500 as the store franchise fee, and $7,500 as
partial payment of the Area Development Fee; the balance to be paid in
the same manner from the next two store franchise agreements, whether
such agreements are executed by Franchisee, or by a sub franchisee.
3. Rights and Obligations of Area Developer, Compensation
Franchisee, as Area Developer, shall have the exclusive right to develop the
territory for the Company, including the right to assist the Company in
locating other franchisees, who shall become sub franchisees of Area Developer.
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For additional stores developed within the territory after the establishment of
franchise's initial store, and in accordance with procedures established by the
Company, Area Developer shall be responsible for assisting sub franchisees in
the building and opening of stores, the training of store managers and sub
franchisees; and shall further be responsible for the monitoring of sub
franchisee's compliance with all franchise agreements, Company manuals, and
operating procedures; provided, however, that Area Developer's duties with
respect to any sub franchisee shall not exceed those that the Company is
obligated to provide to store franchisees who are not also Area Developers.
The Company further agrees that any additional stores opened by Franchisee or
opened by a sub franchisee of Area Developer shall be subject to substantially
the same terms and conditions as those terms of the initial Franchise Agreement
between the Company and Franchisee which apply to the store franchise
agreement, and not this Area Developer Addendum.
Area Developer's compensation for providing assistance in the sale and
development of franchised stores, and for monitoring the performance of sub
franchises, shall consist of 50% of all franchise fees and franchise royalties
received by the Company from the territory, such compensation to be paid to
Area Developer within 20 days of receipt by the Company. Other than as
provided for in paragraph 2, in accordance with which the Company may withhold
certain amounts due Franchise until franchisee has fulfilled his initial
financial obligation to the Company, such compensation includes franchise fees
and franchise royalties collected by the Company on stores owned and operated
by Area Developer.
Area Developer shall not be entitled to any portion of advertising or
promotional fees collected by the Company, or to any portion of other earnings
of the Company, other than as expressly denoted above.
4. Right of First Refusal
During the term of this Area Development Addendum, the Company will grant to
Franchisee at the right to exercise any right of first refusal, or any purchase
option granted to the Company by virtue of any Agreement with a sub franchisee
in Area Developer's territory.
5. Other Provisions
All other terms and conditions of the store franchise agreement of which this
addendum is part, expressly including, but not limited to, covenants not to
compete, use of trademarks and other proprietary information, and requirements
to follow the Company's operating procedures, and recipes, are also a part of
the Franchisee's agreement to serve as Area Developer under the terms of this
addendum.
Signed this___ day of ____, 1995.
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Andrew Thorburn Witness
Jutland Food Group, Inc.
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Joe Conti, Witness
Franchisee
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