HomeMy WebLinkAbout09-1004C. ANN SHEEHAN, Esq.
By: C. Ann Sheehan
Attorney I.D. No 57857
206 S. West Street
Carlisle, PA 17013
(717) 249-7681
THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION
BOARDWALK FRIES, INC.
A Maryland corporation
Ste 101
9220 Rumsey Road
Columbia, MD 21045
Plaintiff
V.
SHRI MADHU, INC. t/a Boardwalk Fries
A Pennsylvania corporation
Boardwalk Fries at Capital City Mall
3441 Capital City Mall Drive
Camp Hill, PA 17011
And
ART SMITH
5114 Maple Leaf Court
Mechanicsburg, PA 17055
Defendants
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NOTICE TO DEFEND
You have been sued in court. If you wish to defend against the claims set
forth in the following pages, you must take action within twenty (20) days after
this complaint and notice are served by entering a written appearance personally,
or by attorney, and filing in writing with the court your defenses or objections to
the claims set forth against you. You are warned that if you fail to do so, the case
may proceed without you and a judgment will be entered against you by the court
without further notice for any money claimed in the complaint or for any other
claim or relief requested by the plaintiff. You may lose money or property or other
rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE.
IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE
OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU
WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT
AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO
PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY
OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED
FEE OR NO FEE.
NAME: CUMBERLAND COUNTY BAR ASSOCIATION
ADDRESS: 2 Liberty Avenue, Carlisle, Pennsylvania
TELEPHONE: 717-249-3166
COMPLAINT
Plaintiff, Boardwalk Fries, Inc., through its undersigned counsel, files this
Complaint against the above captioned Defendants, and in support thereof, avers
the following:
1. Plaintiff, Boardwalk Fries, Inc., is a Maryland corporation and is the
Franchisor of proprietary franchised restaurant businesses, one of
which is known as Boardwalk Fries, Capital City Mall, 3506 Capital
City Mall Drive, Camp Hill, Pennsylvania 17011 (the Franchise).
This Franchise is more particularly described in a December 16, 2005
Franchise Aereement attached hereto, made a part hereof and marked
as Exhibit "A."
2. Based upon information and belief, Plaintiff avers that Defendant,
Shri Madhu, Inc. t/a Boardwalk Fries, is a Pennsylvania corporation
maintaining an office at Boardwalk Fries, Capital City Mall, 3441
Capital City Mall Drive, Camp Hill, Pennsylvania 17011.
3. Based upon information and belief the President of Defendant Shri
Madhu, Inc. t/a Boardwalk Fries is Ajit Smith.
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4. Based upon information and belief, Plaintiff avers that Defendant, Ajit
Smith, is a Pennsylvania resident maintaining a residence at 5114
Maple Leaf Court, Mechanicsburg, Pennsylvania 17055.
5. On December 16, 2005, Shri Madhu, Inc. t/a Boardwalk Fries entered
into a Franchise Agreement ("Exhibit A") with Plaintiff relating to the
franchised Boardwalk Fries business at Capital City Mall and thereby
became a franchisee of the Plaintiff.
6. Also on December 16, 2005, Ajit Smith entered into a Personal
Guaranty of the Franchise Agreement and the franchise obligations of
Defendant, Shri Madhu, Inc. t/a Boardwalk Fries, with respect to the
franchised business. A true and correct copy of this Guaranty is
attached hereto as "Exhibit B". (See also Page 29 of the Franchise
Agreement that is attached hereto as Exhibit "A.")
7. The aforesaid Franchise Agreement (Exhibit "A") permitted
Defendant Shri Madhu, Inc. t/a Boardwalk Fries to operate a
Boardwalk Fries restaurant at Capital City Mall, Camp Hill, PA and to
use the federal trademark "Boardwalk Fries" and to use the
proprietary business format of the Plaintiff to sell food products to the
public.
8. Defendant Shri Madhu, Inc. t/a Boardwalk Fries agreed, among other
things per the terms of the Franchise Agreement, to report its total
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food sales to the Plaintiff on a weekly basis and to pay a royalty of
five percent (5%) of its total food sales to the Plaintiff weekly.
9. Defendant Shir Madhu, Inc. t/a Boardwalk Fries, sometime in
September, 2007, ceased reporting its sales and,ceased paying
royalties to the Plaintiff.
10. Based upon information and belief and sales figures provided by
Defendant Shri Madhu, Inc. t/a Boardwalk Fries to Capital City Mall,
Defendant's Landlord, and which sales information was subsequently
provided by Capital City Mall to Plaintiff, and based on estimates and
calculations predicated upon Defendant's Shir Madhu, Inc. t/a
Boardwalk Fries actual self reported sales to the Plaintiff from
December 16, 2005 to August, 2007, Defendant has deliberately failed
to report sales to Plaintiff in the amount of Three Hundred Twenty-
one Thousand One Hundred Eight Dollars and Ninety-eight Cents
($321,108.98) for the period of September 1, 2007 to February 14,
2009, and has failed to pay royalties to Plaintiff on Two Hundred
Forty-one Thousand One Hundred Eight Dollars and Ninety-eight
Cents ($241,108.98) of those sales for a total royalty (Five Percent
(5%) of sales) due Plaintiff of Twelve Thousand Fifty-four Dollars
and Forty-five Cents ($12,054.45) as set forth in an accounting,
attached hereto as Exhibit "C."
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11. Defendant Shir Madhu, Inc. t/a Boardwalk Fries is and has been in
default under the Franchise Agreement for failure to report its sales to
Plaintiff and to pay Plaintiff the agreed upon royalties on such sales.
12. As of the date of the filing of this Complaint Defendant Shir Madhu,
Inc. t/a Boardwalk Fries has failed to cure its default and pay the
outstanding royalty amount due Plaintiff despite demand by the
Plaintiff to Defendant Shir Madhu, Inc. t/a Boardwalk Fries to do so.
13. As of the date of the filing of this Complaint, Defendant Ajit Smith
has failed to cure the default of Defendant Shir Madhu, Inc. t/a
Boardwalk Fries under his Guaranty of the Franchise Agreement of
Defendant Shir Madhu, Inc. t/a Boardwalk Fries (See Exhibit "B")
despite demand by the Plaintiff to do so.
COUNT 1
BREACH OF CONTRACT
PLAINTIFF v. ALL DEFENDANTS
14. Plantiff hereby incorporates by reference all preceding paragraphs as
if same were specifically set forth at length herein.
15. Defendant Shir Madhu, Inc. t/a Boardwalk Fries is contractually liable
to Plaintiff under the terms of the Franchise Agreement for payment
of all amounts referenced above.
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16. Defendant Ajit Smith is contractually liable to Plaintiff under the
terms of the Guaranty of the Franchise Agreement for payment of all
amounts referenced above.
17. The above-referenced defaults of Defendants constitute material
breaches of the Franchise Agreement and the Guaranty of the
Franchise Agreement.
18. As a result of the Defendants' breaches as aforesaid, Defendants are
liable to Plaintiff in the amount of at least Twelve Thousand Fifty-
four dollars and Forty-nine Cents ($12,054.49).
WHEREFORE, it is respectfully requested that this Honorable Court
enter Judgment against Defendants in an amount yet to be determined
but estimated to be in excess of Twelve Thousand Fifty-four Dollars
and Forty-nine Cents ($12,054.49) and any other just and equitable
relief that this Honorable Court may deem appropriate.
COUNT II
UNJUST ENRICHMENT/
PROMISSORY ESTOPPEL
PLAINTIFF v. ALL DEFENDANTS
19. Plaintiff hereby incorporates by reference all preceding paragraphs as
if same were specifically set forth at length herein.
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20. Count II is set forth alternatively to Count I, and cumulatively to the
extent that damages may be apportioned between different claims.
21. To the extent that any damages or amounts claimed herein are not
recoverable under the Franchise Agreement or Guaranty of the
Franchise Agreement, it is alleged that such damages may be
recovered under the doctrines of unjust enrichment and promissory
estoppel.
22. Defendants requested that Plaintiff grant Shri Madhu, Inc. t/a
Boardwalk Fries a Boardwalk Fries Franchise at Capital City Mall and
requested Plaintiff provide Shri Madhu, Inc. t/a Boardwalk Fries
various services and an exclusive right to use its Plaintiff's trademark
at Capital City Mall.
23. Plaintiff conferred a benefit upon Defendants because Defendants
received these requested services and rights.
24. By failing to pay Plaintiff its agreed upon royalty on the sales of
Defendant Shri Madhu, Inc. t/a Boardwalk Fries, Defendant has
derived a benefit that is unconscionable under the circumstances, and
Defendants' continued retention of the conferred benefit without due
compensation constitutes an unjust enrichment at the expense of
Plaintiff.
25. Plaintiff is entitled to quantum meruit for the value of its services and
grant of rights to Defendants in an amount yet to be determined but
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estimated to be in excess of Twelve Thousand Fifty-four Dollars and
Forty-five Cents ($12,054.49).
WHEREFORE, it is respectfully requested that this Honorable Court
enter Judgment against Defendants in an amount yet to be determined
but estimated to be in excess of Twelve Thousand Fifty-four Dollars
and Forty-five Cents ($12,054.49) and any other just and equitable
relief this Honorable Court deems appropriate.
Respectfully submitted,
C. ANN SHEEHAN, Esq.
BY: -0 , L44, - 4L
C. Ann Sheehan, Esq.
Attorney ID No. 57857
Attorney for Plaintiff
Boardwalk Fries, Inc.
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VERIFICATION
The Undersigned, having read the attached pleading, verifies that the within
pleading is based on information furnished to counsel, which information has been
gathered by counsel in the course of this lawsuit. The language of the pleading is
that of counsel and not of signer. Signer verifies that signer has read the within
pleading and that it is true and correct to the best of signer's knowledge,
information and belief. To the extent that the contents of the pleadings are that of
counsel, signer has relied upon counsel in taking this verification. This
Verification is made subject to the penalties of 18 Pa.C.S.§ 4904 relating to
unsworn falsification of authorities.
Boardwalk Fries, Inc.
By: %-kw 1 n
Susan Tomlison
Accounting Supervisor
Boardwalk Fries, Inc.
Date: ?- i 7
9
EXHIBIT A
FRANCHISE AGREEMENT
THIS AGREEMENT ("the Agreement") made this December 1.6, :. 2005 byand between
BOARDWALK FRIES, INC., a Maryland corporation ("Franchisor") and Shrimadhu Inc.,
Inc(" Franchisee")
WITNESSETH:
WHEREAS, Franchisor has developed and may continue to develop proprietary
knowledge and trade secrets and uniform systems, procedures, standards, design and marketing
and sales programs for the management and operation of a retail french fry and food products
store (collectively the "System"); and
WHEREAS, Franchisor identifies the System by means of certain marks, logos
and emblems (the "Proprietary Marks"), including but not limited to the mark "BOARDWALK
FRIES" and such other trade names, service marks and trademarks as may be designated now or
hereafter by Franchisor (in the Confidential Operating Manual or otherwise in writing) for use in
connection with the System; and
WHEREAS, Franchisor has established a reputation, demand and goodwill of its
products and System under the Proprietary Marks, which reputation and goodwill signifies to the
public high standards of quality and service and is a unique benefit to Franchisor and it's
franchisees; and
WHEREAS, Franchisor grants to persons meeting certain qualifications
Franchises to own, operate and develop Boardwalk Fries Locations under the Proprietary Marks
and System; and
WHEREAS, Franchisee recognizes the benefits to be obtained from identification
with Franchisor and from the use of the System, and wishes to be franchised to own and operate
a Boardwalk Fries location under the Proprietary Marks and the System at the location
designated herein; and
WHEREAS, Franchisee acknowledges and represents that he or she has read this
Agreement and has had a full and adequate opportunity to consider and evaluate the terms of this
Agreement and the Franchise Disclosure Document provided herewith, and to be advised by
counsel respecting Franchisee's rights and obligations hereunder. Franchisee further represents
that he or she understands the terms and conditions of this Agreement and accepts each and
every term hereof as being reasonably necessary to maintain Franchisor's high standards for
quality, cleanliness, appearance, products, service and the uniform image of all Boardwalk Fries
locations, all of which are essential to preserve and protect the good will associated with the
Proprietary Marks; and
WHEREAS, Franchisor expressly disclaims the making of and Franchisee
Capital City-Shrimadhu, Inc.
acknowledges that he or she has not received or relied upon any representation, warranty or
guaranty, express or implied, as to the revenues, profits or success of the business venture
contemplated by this Agreement other than the information set forth herein or in the Franchise
Disclosure Document; and
WHEREAS, Franchisee acknowledges that he or she has conducted an
independent investigation of the business venture contemplated by this Agreement and
recognizes that the nature of the business conducted by the Franchisor may evolve and change
over time, and further acknowledges that his or her other investment involves business risks not
susceptible to Franchisor's or Franchisee's control, and that his success will be largely dependent
upon his or her own business abilities and efforts.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
contained herein, the parties agree as follows:
I. FRANCHISE
1.1 Grant
(a) Franchisor hereby grants to Franchisee a nontransferable, non-exclusive license (the
"Franchise") to use the System and the Proprietary Marks, as they may be changed, improved, or
modified from time to time, for the purpose of operating one (1) retail french fry store (the
"Boardwalk Fries Location") located within the Exclusive Area (as hereinafter defined)
identified on Exhibit A-1. Any termination or expiration of this Agreement shall constitute a
termination or expiration of the Franchise granted herein. Subject to Sections 1.5 and 1.6 hereof,
Franchisor expressly reserves the right to own and operate and to grant other Franchises for
Boardwalk Fries locations at such locations as Franchisor in its sole discretion may deem
appropriate.
(b) Franchisee hereby accepts the Franchise and undertakes to use its best efforts to promote
the sale of french fry and other products at the Boardwalk Fries Location in accordance with the
System, as the same may be modified, changed or improved from time to time.
1.2 Use of Franchise
The Franchise granted hereunder is expressly limited to the operation of one Boardwalk
Fries Location within the Exclusive Area identified on Exhibit A-1 hereof and to the retail sale of
french fries and related products to consumers in accordance with the System and this
Agreement. Any attempted exercise of the Franchise at any other location or for any other
purpose shall be a material breach of this Agreement.
1.3 Term
This Franchise shall commence on the date of execution hereof by Franchisor (the
"Execution Date") and shall continue until October 15, 2009, unless earlier terminated in
accordance with this Agreement. Notwithstanding any other provision of this Agreement, the
Franchise shall automatically terminate (a) in the event that the Lease for the Boardwalk Fries
Location expires or is terminated for any reason through no fault of Franchisor (subject to
Paragraph 4.5(B) hereof), or (b) in the event the Boardwalk Fries Location is not opened for
business, through no fault of Franchisor, within one (1) year of the execution hereof.
Capital City-Shrimadhu, Inc.
1.4 Grant of Successive Franchise
(a) At the expiration hereof, Franchisor will agree to grant Franchisee a Franchise for the
Boardwalk Fries Location licensed herein for an additional consecutive term of ten (10) years,
provided:
(i) Franchisee is not then in default hereunder or under the Base Lease;
(ii) Franchisee gives Franchisor written notice of its election to purchase the
successive Franchise not less than one hundred twenty (120) days prior to the expiration of this
Agreement;
(iii) Franchisee or Franchisor, as the case may be, is able to extend or renew the Base
Lease for the term of the successive franchise on such terms as it, in its sole discretion, deems to
be economically reasonable;
(iv) Franchisee executes Franchisor's then-current form of Franchise Agreement to
govern the successive franchise which shall be modified to provide for a ten (10) year term with
no further renewal term and such other terms as may be appropriate.
(v) Franchisee pays Franchisor a Franchise Fee for the successive Franchise equal to
Franchisor's then-current initial Franchise Fee; or the sum of $0 to $25,000, whichever is less, as
is applicable, depending upon Franchisee's particular type of business location.
(vi) Franchisee, if Franchisor requests, refurbishes the Boardwalk Fries Location in
accordance with Franchisor's then-current design and decor standards.
(b) Provided all of the above-listed conditions are met, Franchisor shall grant the
successive Franchise. If any applicable and binding law or rule of any jurisdiction requires a
greater notice period or the taking of some other action not required hereunder in connection
with the grant of a successive Franchise, the prior notice and/or action required shall be
substituted for the comparable requirements of this Paragraph.
1.5 Exclusive Area
The Franchise granted herein shall be exclusive to Franchisee within the area outlined
and identified on Exhibit A-1 (the "Exclusive Area") and Franchisor agrees that it shall not own,
operate or grant any other Franchises for Boardwalk Fries locations within such Exclusive Area
without the prior written consent of the Franchisee. If the Franchise is located in a regional mall,
the Franchisee agrees not to purchase, construct, or operate another retail food service or
restaurant business within that mall without Franchisor's express written consent, which consent
may be withheld at Franchisor's sole discretion and option.
1.6 Right of First Refusal
Outlined on Exhibit A-2 attached hereto is that certain area defined as the "First Refusal
Area." In the event Franchisor elects to open or Franchise a Boardwalk Fries location within the
First Refusal Area, Franchisor shall first offer said site to Franchisee by written notice, provided
Franchisee is not then in default hereunder, and further provided that there is no other Franchise
agreement in effect dated prior to the date hereof which grants an exclusive right or a right of
first refusal for said proposed site. Franchisee shall have thirty (30) days after receipt of
Franchisor's then-current form of Franchise agreement therefor and paying Franchisor for the
Capital City-Shrimadhu, Inc.
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new Boardwalk Fries location in accordance with the terms of the applicable Franchise
Agreement including any Franchise Fees. If, for any reason, Franchisee fails to pay said fee and
sign the franchise agreement, within thirty (30) days of Franchisor's written notice, Franchisee's
right of first refusal with respect to the new Boardwalk Fries location shall be deemed waived.
II. FRANCHISEE'S REPRESENTATIONS AND COVENANTS
2.1 Parties to Agreement: Ownership
Franchisee agrees that each individual who now has, or hereafter acquires any equity,
financial participation or other interest in the Franchise or in the Franchisee (if Franchisee is a
corporation or partnership) shall be named on Exhibit B hereto and shall be deemed to be a party
to this Agreement. Franchisee represents and warrants that details of all equity, financial
participation or other interest in the Franchise or in the Franchisee (if Franchisee is a corporation
or partnership) is fully disclosed on Exhibit B. Franchisee shall promptly notify Franchisor in
writing in the event that the information disclosed therein ceases to be accurate and complete.
2.2 Designation of Operator
If Franchisee consists of more than one individual or is a corporation, Franchisee will
designate, subject to Franchisor's written approval, a person who shall have primary
responsibility for operating the Boardwalk Fries Location during the term hereof (the
"Operator"). If Franchisee is an individual, he will be deemed to be the Operator hereunder.
Franchisee shall obtain Franchisor's written approval prior to the appointment of any new
Operator.
2.3 Participation in Franchised Business
During the term of this Agreement, the Operator shall reside in the locality of the
Boardwalk Fries Location and shall devote his full time and best efforts to the day-to-day
operation of the Boardwalk Fries Location and shall have no managerial responsibility for any
other business without Franchisor's prior written approval.
III. STANDARDS AND UNIFORMITY OF OPERATIONS
3.1 The System
(a) The System includes a comprehensive retail french fry format (including
recommendations for decor, layout, design, color schemes, equipment and signage) and an
operating system (including management techniques, business methods, product and service
quality standards and merchandising and marketing programs), all of which promote the sale of
high quality french fries and related products to consumers at Boardwalk Fries Locations.
Franchisee hereby expressly acknowledges that each and every operating procedure, product, or
equipment requirement, quality standard and marketing program comprising the System is
continually subject to review by Franchisor and may be modified, deleted or expanded from time
to time at Franchisor's sole discretion.
(b) Franchisee hereby expressly acknowledges that adherence to each and every provision
of the System is reasonable, necessary and essential to maintain the uniform image and favorable
reputation of each Boardwalk Fries location and the success of the Boardwalk Fries franchise
program. Accordingly, Franchisee expressly agrees to comply with each and every requirement
Capital City-Shrimadhu, Inc.
of the System during the term hereof, as the same may be modified or changed from time to time
by Franchisor in its sole discretion.
3.2 Confidential Operating Manual
(a) During the term hereof, Franchisor will lend Franchisee one copy of the Boardwalk
Fries confidential operating manual (the "Manual") which shall remain the exclusive property of
the Franchisor at all times. The manual contains specifications, standards and operating
procedures, including minimum hours of operation, prescribed from time to time by Franchisor.
Each and every provision of the Manual, as amended from time to time, is incorporated herein by
this reference and shall bind Franchisee as if fully set forth herein.
(b) Franchisor shall have the right to add to and otherwise modify the Manual from time
to time to reflect changes in the business, authorized products, and/or specifications, equipment
requirements, quality standards and operating procedures of a Boardwalk Fries Location,
provided that no such addition or modification shall alter Franchisee's fundamental status and
rights under this Agreement. Franchisee shall keep his copy of the Manual current and in the
event of a dispute relative to the contents of the Manual, the master copy maintained by
Franchisor at its principal office shall be controlling.
(c) Franchisee expressly acknowledges that the Manual contains confidential information
and trade secrets proprietary to Franchisor and agrees to observe with respect to said Manual the
confidentiality obligations set forth in Section ten (10) hereof.
3.3 Building and Premises
Franchisee's premises shall be designated and improved in accordance with Franchisor's
standards. Franchisee, at its cost and expense, shall cause to be prepared plans and specifications
for the premises, subject to Franchisor's written approval. Franchisor shall provide advice and
consultation with respect to the preparation, of such plans and specifications. Such premises and
improvements shall not be altered, modified or changed without Franchisor's prior written
approval. During the term of this Agreement, Franchisee agrees to promptly make, at its
expense, any and all repairs and alterations as may be determined by the Franchisor to be
reasonably necessary to conform to Franchisor's standards of quality and appearance, as the same
may be modified from time to time.
3.4 Signs
Franchisee shall maintain and display at the Boardwalk Fries Location, Franchisor's
approved signage and shall not place additional signs or posters in or at the Boardwalk Fries
Location without the prior written consent of Franchisor. At Franchisor's request, Franchisee
shall promptly discontinue the use of any signs, advertising or promotional materials, whether or
not such materials were previously approved by Franchisor. Franchisee shall not use or display
the Proprietary Marks except in a manner previously approved in writing by Franchisor.
3.5 Equi ment
(a) Franchisee shall purchase, from Franchisor and/or other approved sources, the
machinery, equipment, furnishings, signs and other personal property (the "Equipment") as set
forth on the Equipment Exhibit attached hereto, (if applicable). Upon Franchisee's request,
Franchisor shall assist Franchisee in arranging for the purchase of the Equipment and shall
Capital City-Shrimadhu, Inc.
6
provide Franchisee with the names of approved suppliers, which may include Franchisor,
through which Franchisee may obtain the Equipment.
(b) Franchisee agrees to maintain such equipment in excellent working condition. As
items of equipment become obsolete or mechanically impaired to the extent that they require
replacement as may be determined by Franchisor or Franchisee, Franchisee agrees to promptly
replace such items with the same or substantially the same types and kinds of approved
equipment as are being installed in new Boardwalk Fries locations at the time of replacement.
Franchisor may from time to time determine that additional or substitute equipment is necessary
due to change or modification of menu items or methods of operation, preparation, and service
and Franchisee agrees to purchase and install such equipment upon written notice from
Franchisor. All equipment used in Franchisee's Boardwalk Fries Location, whether purchased
from Franchisor or other approved suppliers pursuant to Section 3.8 hereof, shall meet
Franchisor's standards and specifications.
3.6 Vending Machines etc
Telephone booths, newspaper racks, juke boxes, gum machines, rides, games or any coin
operated machines shall not be installed in or at the Boardwalk Fries Location without the prior
written approval of the Franchisor.
3.7 Menu and Service
(a) Franchisee agrees to serve only the menu items specified by the Franchisor, to follow
all specifications and formulas of the Franchisor as to contents and weight of unit products
served and to sell no other food or drink item or any other merchandise of any kind without the
prior written approval of the Franchisor. Franchisee agrees that all food and drink items will be
served in containers bearing acceptable reproductions of the Proprietary Marks or such other
containers as may be approved by Franchisor in writing. Such imprinted items shall be
purchased by Franchisee through the Franchisor or through a supplier or manufacturer approved
in writing by the Franchisor.
(b) Franchisee agrees that he will operate his Boardwalk Fries Location in accordance
with the standards, specifications and procedures set forth in the Manual. Franchisee further
agrees that changes or modifications in such standards, specifications and procedures may
become necessary from time to time and agrees to accept as reasonable such changes,
modifications, revisions, deletions and additions to the Manual which the Franchisor believes to
be necessary. Franchisee agrees not to deviate from the standards of appearance, quality,
cleanliness and sanitation as established and maintained by the Franchisor in Franchisee's
operation of the Boardwalk Fries Location. It is understood and agreed that curb service is not
approved by the Franchisor.
(c) Franchisee shall remain open for business from 9:00 a.m. to 10:00 p.m. each day
unless Franchisor consents to alternative days or hours at the request of Franchisee. Franchisor
consents to alternative days or hours at the request of Franchisee. Franchisor recognizes that
considerations unique to the location of Franchisee's Boardwalk Fries Location may make it
desirable to alter the aforesaid hours of operation and the Franchisor will not unreasonably
withhold its consent to modify the aforesaid hours of operation.
3.8 Alternate Approved Sup tiers
Notwithstanding any other provision hereof, Franchisee may obtain Franchisor's approval
Capital City-Shrimadhu, Inc.
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of any source of supply not previously approved by Franchisor in writing. Franchisee may
obtain such approval by notifying Franchisor in writing of the name and address of each such
source of supply and the nature of its products or services and submitting to Franchisor samples
of such products or services, including any laboratory work. Franchisor shall notify Franchisee
in writing, within a reasonable time after receipt of Franchisee's request and samples, whether
such products or services satisfy Franchisor's then-current appearance, quality, size or portion
(and where applicable, taste) and uniformity standards and specifications and are consistent with
the image and business of the Boardwalk Fries locations, and, if not, the reasons for rejection.
Franchisor may require that samples from such alternate suppliers be tested by the Franchisor or
an independent testing laboratory before approval and use. A charge not to exceed the actual
cost of the test may be made by the Franchisor or such independent testing laboratory designated
by the Franchisor and shall be promptly paid the Franchisee. Franchisor may from time to time
prescribe additional or modified procedures for the submission of requests for the approval of
products and suppliers. Franchisor shall further have the right to impose reasonable limitations
on the number of approved brands of products and on the number of approved suppliers of each
such product.
3.9 Right of Entry and Inspection
Franchisor or its authorized agents or representatives shall have the right from time to
time to enter and inspect the Boardwalk Fries Location premises and examine and test food
products, equipment and supplies for the purpose of ascertaining that Franchisee is operating the
Boardwalk Fries Location in accordance with the terms of this Agreement and the Manual. Such
inspections shall be conducted during normal business hours. Franchisor shall notify Franchisee
of any deficiencies detected during inspection and Franchisee shall promptly and diligently
correct any such deficiencies. Upon notification by the Franchisor that any equipment, food,
supplies or imprinted containers do not meet the specifications; standards and requirements of
the Franchisor, Franchisee shall immediately desist and refrain from the further use thereof.
3.10 Sales Staff
Franchisee shall at all times maintain, at its sole expense, sufficient, trained staff to
provide prompt, courteous and adequate levels of service at the Boardwalk Fries Location.
3.11 Conduct of Business: Compliance with Laws
In all dealings with Franchisor, and with Franchisee's customers, suppliers and the public,
Franchisee shall adhere to the highest standards of honesty, integrity, fair dealing and ethical
conduct. Franchisee shall be solely responsible for securing and maintaining all required
licenses, permits and certificates applicable to Franchisee's authorized activities in the Boardwalk
Fries Location and shall comply with any and all federal, state and local laws, regulations and
ordinances. Franchisee shall promptly notify Franchisor in writing of any action, suit or
proceeding or the issuance of any award, decree or order which may adversely affect the
operation of the Franchised business.
IV. THE BOARDWALK FRIES LOCATION
4.1 Premises and Lease
Capital City-Shrimadhu, Inc.
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The Exclusive Area within which Franchisee shall operate its Boardwalk Fries Location
is fully described in Exhibit A-1 attached hereto. The exact location of the premises in which the
Boardwalk Fries Location will operate shall be determined as follows:
(a) In the event Franchisor has, prior to the execution hereof, determined an exact
location for the Boardwalk Fries Location licensed herein, a description of such premises is
attached hereto as Exhibit A-1. Franchisee shall promptly execute, as tenant, sub-tenant or
assignee, as the case may be, the Lease, Sublease or Assignment of Lease, as the case may be,
attached hereto as part of Exhibit B-1.
(b) In the event Franchisor has not, prior to the execution hereof, determined an exact
location for the Boardwalk Fries Location licensed herein, Franchisee shall, within ninety (90)
days following the execution of this Agreement, acquire a site, within the Exclusive Area,
approved by Franchisor for the location of the Boardwalk Fries Location. Upon the request of
Franchisee, Franchisor shall assist Franchisee in the selection of a site and/or the negotiation of
the lease. Prior to the acquisition by lease or purchase of any site for the location of the
Boardwalk Fries Location, Franchisee shall submit, for Franchisor's approval, a complete
description of the proposed site together with a letter of intent or other evidence satisfactory to
Franchisor which confirms Franchisee's favorable prospects for obtaining the proposed site.
Within ten (10) days after receiving Franchisee's written proposal, Franchisor shall provide
Franchisee with written notice of approval or disapproval of the proposed site.
Within thirty (30) days after receiving Franchisor's written approval of the Boardwalk
Fries Location site, as provided for above, Franchisee shall execute a lease (if the premises are to
be leased) or a binding agreement to purchase the site, the terms and form of which shall have
been previously approved in writing by Franchisor. Franchisor's approval of the lease may be
conditioned upon the inclusion in the lease of such provisions as Franchisor may reasonably
require, including, but not limited to:
(1) a provision reserving to Franchisor the right, at Franchisor's election, to receive an
assignment of the leasehold interest upon the termination or expiration of the franchise; and
(2) a provision which expressly permits the Lessor of the premises to provide
Franchisor upon Franchisor's request with all sales and other information in the Lessor's
possession relating to the operation of the Boardwalk Fries Location; and
(3) a provision which requires the Lessor to provide Franchisor concurrently with a
copy of any written notice of deficiency or default under the lease sent to Franchisee and which
grants to Franchisor, in its sole discretion, the right, but not the obligation, to cure any deficiency
or default under the lease within fifteen (15) days after the expiration of any period in which
Franchisee may cure such deficiency or default
(c) Franchisor shall grant a reasonable extension of any of the time requirements
contained in subparagraph (b) for any delays which are caused by force majeure, acts of God or
by Franchisor. If the Franchisee fails to perform within the times required in subparagraph (b),
or within such time extensions, if any, granted by Franchisor, such failure to perform shall be
deemed a material breach of this Agreement.
The Lease, Sublease or Assignment of Lease described in subparagraph (a) above or the
lease described in subparagraph (b) above, as the case may be, as executed by Franchisee
pursuant to the terms hereof shall be hereinafter referred to as the "Base Lease."
Franchisee shall fully and faithfully carry out all of the obligations imposed upon
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,percentage
rent and additional rent. Franchisee agrees to indemnify and hold Franchisor harmless from and
against any and all liability, claims, suits or actions and any and all costs incident thereto, arising
from or caused by Franchisee's failure to perform or carry out any of the obligations imposed
upon Franchisee by the terms, provisions and covenants of the Base Lease.
4.2 Use of Premises
Franchisee agrees that the premises shall be used exclusively for the purpose of operating
a franchised retail Boardwalk Fries Location in accordance with this Agreement and in
compliance with all applicable laws, regulations and ordinances and for no other purpose.
4.3 Leasehold Improvements
Franchisee shall pay the cost of all leasehold improvements, additions or alterations,
whether made by Franchisee or Franchisor.
4.4 Assignment of Subletting
Franchisee shall not assign the Base Lease or sublet the premises without the prior
written consent of the Franchisor, such consent to be at Franchisor's sole discretion and any such
assignment or subletting made without the prior written consent of Franchisor shall constitute a
material breach of this Agreement.
4.5 Damal:e or Destruction of Premises
In the event that the Base Lease is terminated or canceled, through no fault or action of
Franchisee, as a result of the damage or destruction of the premises resulting from fire or other
casualty or by condemnation or the exercise of eminent domain, Franchisor shall permit
Franchisee to open and operate a new Boardwalk Fries Location for the balance of the term
hereof at a site to be mutually approved in writing by Franchisor and Franchisee. All costs of
relocating the franchised business and the cost of any leasehold improvements, fixtures,
furnishings and equipment necessary to open and operate the new Boardwalk Fries Location
shall be borne by Franchisee.
4.6 Termination of Base Lease or Default of Franchisee
Except as provided in Paragraph 4.5, in the event the Base Lease is terminated or
canceled through no fault of Franchisor, or in the event that Franchisee is in default under the
Base Lease and has not cured such default within any applicable grace periods, such termination,
cancellation or default shall constitute a material breach of this Agreement. Franchisee shall be
charged $50.00 by Franchisor if the landlord of his Boardwalk Fries unit issues a default notice
because of a default under the lease which is Franchisee's fault. If Franchisor must take action to
evict Franchisee because of breach of his Franchise Agreement, Franchisee will be charged
$1,000.00 in addition to outside legal costs.
V. SERVICES AVAILABLE TO FRANCHISEE
During the term hereof, Franchisor shall provide, at no expense to Franchisee, the
following assistance and services:
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5.1 Site Specifications
Site selection guidelines, initial standard specifications for improvements, equipment,
furnishings, decor, layout and signs for Boardwalk Fries locations, together with advice and
consultation concerning them;
5.2 Training
A pre-opening training program for Franchisee, Franchisee's Operator or employees,
consisting of approximately six (6) full business days of instruction in the operation of a
Boardwalk Fries Location, and the use of the System, including training in relevant business,
merchandising and marketing techniques, which program shall be conducted at Franchisor's
headquarters or at such other location as Franchisor shall specify (provided, however, that
Franchisee shall be solely responsible for all travel and living expenses incurred by Franchisee or
Franchisee's Operator and any wages of Franchisee's employees while attending such program).
The Franchisor, at its discretion, may require additional training for Franchisee or Franchisee's
Operator;
5.3 Consultation During First Month
The consultation and advice of a Franchisor representative for a minimum of two (2) full
business days at the Boardwalk Fries Location of Franchisee during the first month of
operations;
5.4 Manual
The loan of one copy of the Manual explaining the System and other procedures and
methods for operating a Boardwalk Fries Location;
5.5 Periodic Advice and Materials
Periodic advice and consultation in connection with the operation of the Boardwalk Fries
Location, which advice may be provided at Franchisor's election in the Manual and supplements
thereto, in bulletins or other written materials, or by telephonic or personal consultations at the
offices of Franchisor or at the Boardwalk Fries Location of Franchisee;
5.6 Merchandising
Periodic recommendations regarding merchandising, promotion, display and advertising
techniques;
5.7 Advertisin Program
Administration of the advertising program of Franchisor pursuant to Paragraph VII
hereof;
5.8 New Programs
Communication of new product and service developments and techniques relevant to the
operation of the Boardwalk Fries Location; and
5.9 Grand Opening
Recommendations for a Grand Opening Program of the Boardwalk Fries Location,
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including suggested advertising. In the event that the Franchisee requests special services or
items, Franchisor may impose a fee for such items based upon time, resources and amounts
expended by Franchisor, its agents and employees expended in performing or providing such
additions, which fee shall be paid by Franchisee upon the opening of the Boardwalk Fries
Location.
VI. FEES AND ROYALTIES
6.1 Initial Franchise Fee
Franchisee shall pay to Franchisor as an initial Franchise Fee the sum of $0, as is
applicable, depending upon Franchisee's particular type of business location. Said Franchise Fee
shall be payable as follows:
(a) One half (1/2) shall be paid by Franchisee upon the delivery by Franchisor of a fully
executed copy of this Agreement to Franchisee.
(b) The balance shall be paid by Franchisee a day before the Grand Opening of
Franchisee's Boardwalk Fries Location.
The Franchise Fee is fully earned by Franchisor upon the execution of this Agreement
and, once received, no portion thereof shall be refunded to Franchisee, provided, however, that in
the event Franchisee is unable to locate a site within the time periods provided for in Paragraph
4.1 hereof, and Franchisor terminates this Franchise Agreement due to such cause, Franchisor
shall refund one-half (1/2) of the initial Franchise Fee paid by Franchisee upon the execution of
this Agreement.
6.2 Franchise Rovaltv
During the term hereof, Franchisee shall pay Franchisor a weekly royalty equal to Five
Percentage (5 %) of Franchisee's weekly Gross Revenues (as hereinafter defined) from the sale
of products at each Boardwalk Fries Location he operates throughout the term of this Agreement
as set forth on Exhibit C attached hereto. Royalties shall be paid weekly on or before Monday
following the close of the business week which is Saturday. Franchisee is required to execute
and deliver to the Franchisor appropriate preauthorized draft forms (see Exhibit I) for his
Boardwalk Fries unit's checking account prior to the opening of the unit to permit drafts against
his bank account for the full amount of the weekly accrual of royalties so that the Franchisor will
be able to deposit monies on a timely basis to collect royalty. Franchisee shall report his gross
sales by telephone within two (2) days after the end of the business week (currently Saturday)
and submit written weekly summaries showing results of his operations by the following
Wednesday. If the Franchisee fails to report his gross sales on a timely basis, the Franchisor may
estimate his sales. The Franchisor will then deposit, into its account the Franchisee's
preauthorized drafts for the amounts then due based upon reported or estimated sales. Deposits
based upon estimated gross sales will be subject to adjustments upon determination of actual
sales. If Franchisee fails to pay his royalty or advertising fees when due, Franchisor may charge
interest up to the maximum legal rate in the jurisdiction where his Boardwalk Fries unit is
located. If Franchisee changes his bank account without giving notice to Franchisor in advance,
and this results in Franchisees default in payment of royalties, advertising or other amounts
drawn by preauthorized transfer, a Fifty Dollar ($50.00) fee will be charged. The fee shall be
Twenty Dollars ($20.00) for returned checks or preauthorized funds transfers. These fees may
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be changed or eliminated by Franchisor in the future. In the event Franchisee's annual statement
of Gross Revenues required pursuant to Paragraph 8.2 hereof discloses a deficiency in royalty
payments paid for such year, Franchisee shall pay Franchisor the amount of such deficiency at
the time the annual statement is delivered.
6.3 Definition of Gross Revenues
The term "Gross Revenues" as used in this Agreement shall include all sums charged
(whether or not received in full at time of sale) for french fries and related products and other
products or items sold or provided at or from the Boardwalk Fries Location licensed herein. The
term Gross Revenues excludes, federal, state, county and city sales taxes or other similar taxes
levied upon customers based upon sales transactions, and returns made by customers.
6.4 Broker's Fee
In the event Franchisor or Franchisee has retained a broker for the sale or purchase of this
Franchise location, the Franchisee, upon the execution hereof or at such other times as may be
set forth on Exhibit F, shall pay such broker's fee in the amount(s) and upon the conditions set
forth on Exhibit F attached hereto and made a part hereof.
6.5 Assistance and Supervision
During the term hereof, the Franchisor supplies supervision and assistance to franchisees
at the times and in the manner otherwise set forth herein and as determined by Franchisor. In the
event that Franchisee requests or the Franchisor determines that supervision or assistance in
addition to that given generally to all Franchisees is required by the Franchisee, Franchisor may
impose a fee for such supervision or assistance based upon time, resources and amounts
expended by Franchisor's employees, agents or representatives in providing such supervision and
assistance not to exceed $250.00 per day. Such fee shall be paid by Franchisee within ten (10)
days following the completion of such supervision or assistance.
VII. ADVERTISING
7.1 Contribution
Franchisee shall pay Franchisor as an advertising contribution an amount equal to a Zero
Percentage (0 %) of Franchisee's weekly Gross Revenues (as hereinabove defined) from the sale
of products at each Boardwalk Fries Location he operates throughout the term of this Agreement
As set forth on Exhibit E attached hereto. Such contributions shall be paid weekly in the same
manner as set forth in Section 6.2 for Royalties of this Agreement and all applicable penalties,
interest and late charges shall apply as outlined in Section 6.2. The Franchisee acknowledges
that the advertising contributions may not benefit franchisees proportionately to the sums paid in
any particular geographic area.
7.2 Placement
Franchisor shall purchase and place, from time to time, national, regional and/or local
advertising promoting the Boardwalk Fries chain and the products generally sold therein. All
decisions regarding the type and placement of coverage (whether national, regional or local),
selection of media, determination of advertising content, and use of agencies and consultants
shall be within the sole discretion of Franchisor. Franchisor may spend in any fiscal year an
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amount greater or less than the aggregate contributions of franchisees in that year and Franchisor
may make loans to the advertising fund bearing reasonable interest to cover any deficits or invest
any surplus advertising contributions, pending future application to the costs of the advertising
program.
7.3 Application of Contributions
Franchisor agrees to use the advertising contributions only for the advertising program,
including, but not limited to, the costs and expenses set forth below, and for no other purpose.
Franchisee agrees that the advertising contributions collected by Franchisor may be used to meet
any and all costs of maintaining, administering, directing and implementing all advertising and
promotional activities of Franchisor relating to the Boardwalk Fries chain, including, without
limitation, the costs of preparing and conducting television, radio, magazine, billboard, sign,
newspaper and other media programs and activities, employing advertising agencies to assist
therewith, providing promotional brochures, conducting market research studies and defraying
such reasonable salaries, administrative costs and overhead as Franchisor may incur in
connection with such activities. Not less frequently than annually, Franchisor shall prepare a
written accounting summarizing the expenditures and operations of the Boardwalk Fries
advertising program, which accounting shall be made available to Franchisee fifteen (15) days
after his written request.
7.4 Franchisee's Advertising
Franchisee shall, at its sole expense, have the right to engage in advertising and
promotion of his Boardwalk Fries Location and the products and services offered therein,
provided that all such materials are submitted to Franchisor for its prior written approval.
Notwithstanding Franchisor's approval, Franchisee shall be solely responsible for complying
with all federal, state and local laws and regulations relating to such advertising.
VIII.FINANCIAL REPORTING
8.1 Books and Records
Franchisee shall keep complete records of the franchised business and the sale of all
goods and services therein at the Boardwalk Fries Location. Franchisee shall retain at the
Boardwalk Fries Location for a period of at least twenty-four (24) months, all sales records,
books of account, business and payroll records, books of account, business and payroll records
and other financial information relating to the franchised business, or relating to any corporation
or partnership owning the Franchise.
8.2 Financial Reports
On a weekly basis during the term hereof, Franchisee shall supply Franchisor with a
telephonic report in the form required by Franchisor of all sales made at the Boardwalk Fries
Location during the preceding calendar week and, if available, information respecting the
comparable period during the preceding year. On or before the tenth (10th) day of each month,
Franchisee shall furnish Franchisor with a written sales report and statement of Gross Revenues
in the format prescribed by Franchisor for all sales made and services provided during the
preceding month. On or before February 15 of each calendar year, Franchisee shall submit to
Franchisor a profit and loss statement, a balance sheet and a statement of Gross Revenues
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reflecting Gross Revenues and the results of operations for the preceding calendar year. All
profit and loss statements and balance sheets shall comply with any format prescribed by
Franchisor, shall be prepared in accordance with generally accepted accounting principles
consistently applied and shall be signed and verified as true and correct by Franchisee or, if
Franchisee is a corporation, by its duly authorized chief financial officer. In addition, Franchisee
shall submit to Franchisor true copies of all state sales tax returns relating to sales made at the
Boardwalk Fries Location at the same time the returns are filed with state authorities, and such
other records as Franchisor may reasonably request from time to time, including without
limitation, state and federal income tax returns of Franchisee.
8.3 Audits
(a) Franchisor or its representatives, at Franchisor's expense, shall at all reasonable times
have the right to inspect or audit the books, accounts, records and returns of the Boardwalk Fries
Location or of any corporation or partnership which owns the Franchise. Franchisee shall fully
cooperate with Franchisor and its representatives or agents conducting such inspections or audits.
(b) In the event a discrepancy is found between reported Gross Revenues for any
reporting period and actual Gross Revenues for that period, Franchisee shall promptly pay the
amount determined to be owing and, if the discrepancy exceeds two percent (2%) of reported
Gross Revenues, Franchisee shall reimburse Franchisor for all costs of the audit, plus interest,
including travel, lodging and wages of personnel of Franchisor or third parties required to
conduct such audit. In the event of a deficiency of two percent (2%) or more in reported Gross
Revenues for any two (2) consecutive reporting periods is discovered more than twice during the
term hereof, Franchisor shall have the right to terminate this Agreement immediately.
Franchisee shall also promptly reimburse Franchisor for the cost of any audit (including salaries,
travel and living expenses) necessitated by Franchisee's failure to file any financial report due
hereunder and any deficiency in royalties or advertising contributions disclosed by such audit.
8.4 Disclosure of Financial Information
Franchisee hereby authorizes all banks and/or other financial institutions with which he
does business to disclose to Franchisor any requested financial information in their possession
relating to the Boardwalk Fries Location licensed herein, and hereby authorizes Franchisor to
release to its lenders or prospective lenders, financial and operational information relating to the
Boardwalk Fries Location licensed herein. Franchisee further authorizes Franchisor to disclose
such information to prospective Franchisees and state regulatory agencies, provided that such
information is not identified as relating to Franchisee's Boardwalk. Fries Location unless required
by law or regulation and then only if Franchisor requests that such identification be held in
confidence.
IX. TRADEMARKS TRADE NAMES SERVICE MARKS AND TRADE SECRETS
9.1 Ownership by Franchisor
Franchisee acknowledges that ownership of all right, title and interest in the System, the
Proprietary Marks, and other trademarks, tradenames or service marks authorized by Franchisor
for use by Franchisee, and in the design, decor and image of all Boardwalk Fries locations is and
shall remain vested solely in Franchisor or its affiliate. Franchisee hereby expressly disclaims
any right, title or interest therein or in any goodwill derived therefrom. Franchisee hereby agrees
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that all materials lent or otherwise made available to him by Franchisor and all disclosures made
to him hereunder including, without limitation, the Manual and other confidential commercial
information identified as such by Franchisor are trade secrets of Franchisor and shall be kept
confidential and used by Franchisee only in the operation of the Boardwalk Fries Location.
Franchisee will not himself, nor permit anyone else to, reproduce, copy or exhibit any portion of
the Manual or any other confidential or proprietary information received from Franchisor.
Franchisee shall not divulge any such trade secrets to any person other than his employees and
then only to the extent necessary for the operation of the Boardwalk Fries Location. Franchisee
shall require all of his employees having access to Franchisor's confidential information to enter
into confidentiality agreements in favor of Franchisee and Franchisor restricting the use of such
information in accordance with this Agreement.
9.2 Infrin ements
Franchisee shall not, directly or indirectly, at any time during the term of the Agreement
or thereafter, do, cause or suffer to be done any act or thing disputing, attacking or in any way
impairing or tending to impair the right, title or interest of Franchisor in the Proprietary Marks or
the System or in any other trademark, tradename or service mark which Franchisor authorizes
Franchisee to use. Franchisee shall immediately notify Franchisor in writing of all infringements
or imitations of the Proprietary Marks, and Franchisor shall exercise absolute discretion in
deciding what action, if any, should be taken. Franchisee shall fully cooperate with Franchisor in
the prosecution of any action to prevent infringement, imitation or illegal use of the Proprietary
Marks and agrees to be named as a party in any such action at Franchisor's request.
9.3 Protection of Franchisee
(a) Franchisor shall bear any and all legal expenses incident to Franchisee's participation
at Franchisor's request in any action to prevent the infringement or illegal use of the Proprietary
Marks, except for the cost of any legal counsel retained by Franchisee.
(b) Provided Franchisee has timely notified Franchisor of any claim or proceeding
relating to Franchisee's use of the Proprietary Marks and has otherwise complied with this
Agreement, Franchisor shall indemnify and hold Franchisee harmless against any liability arising
from Franchisee's use of the Proprietary Marks and the System as authorized herein, including
the reasonable costs of defending any such claim or proceedings. Franchisor reserves the right to
defend any action brought against Franchisee at its sole expense for the benefit of Franchisee.
(c) Except as expressed in this Paragraph, Franchisor shall not be liable to Franchisee for
any damages, costs, expenses loss of profits or business opportunities, or incidental or
consequential damages of any kind or nature whatsoever relating to any action involving the
Proprietary Marks.
9.4 Limitations on use of the Proprietary Marks
(a) Franchisee shall use the Proprietary Marks as the sole identification of the Boardwalk
Fries Location; provided, however, that in all public records and in his relationship with other
persons, on stationery, business forms, checks or as otherwise required by Franchisor, Franchisee
shall indicate his independent ownership of the Boardwalk Fries Location. In no event shall
Franchisee use the Proprietary Marks in connection with the sale of any product not authorized
for sale at the Boardwalk Fries Location.
(b) In adopting any corporate, proprietorship or partnership name, Franchisee shall not
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use the Proprietary Marks or any variation or abbreviation, or any words confusingly similar
thereto.
(c) If it becomes advisable at any time in Franchisor's sole discretion for Franchisor
and/or Franchisee to modify or discontinue use of the Proprietary Marks, and/or use one or more
additional or substitute trade or service marks, Franchisee agrees to comply therewith within a
reasonable time after written notice thereof by Franchisor, and the sole obligation of out-of-
pocket costs of complying with this obligation. Franchisee agrees to stop using the trademarks
and other marks and materials associated with a Boardwalk Fries franchise. If Franchisee
violates these provisions he must pay Franchisor $250.00 per day for each day he is in default.
X. UNFAIR COMPETITION
10.1 Restrictions
Franchisee acknowledges the uniqueness of the System and that Franchisor is making its
knowledge, know-how and expertise available to him only for the purpose of operating the
Boardwalk Fries Location licensed herein. Franchisee acknowledges that it would be an unfair
method of competition to use or duplicate any of the knowledge, know-how and expertise
received from Franchisor for any other use and Franchisee expressly agrees that, during the term
of the Agreement, he will not own, operate or otherwise participate in, whether directly, or
indirectly or beneficially, any retail french fry business or any profits derived therefrom other
than the Boardwalk Fries Location licensed herein or any other locations separately licensed by
Franchisor or one of its affiliates.
10.2 Covenant not to Compete
Upon termination or expiration of the Agreement, Franchisee shall not, for a period of
one (1) year thereafter, own, operate or otherwise participate, directly or indirectly, in any retail
french fry business within a five (5) mile radius of any Boardwalk Fries location.
10.3 Remedies
Franchisee expressly agrees that a breach by Franchisee of the obligations and restrictions
of Paragraphs 10.1 and 10.2 hereof would irreparably injure and damage Franchisor in a manner
which could not reasonably or adequately be compensated by monetary damages in any action at
law. Franchisor shall be entitled to the remedy of injunctive relief and other equitable remedies
in enforcing its rights under these Paragraphs in accordance with the provisions of Paragraph 17
hereof and the customary rules of equity respecting application therefor and defenses thereto.
XI. INSURANCE: INDEMNIFICATION
11.1 Liability Insurance
During the term of this Agreement, Franchisee shall carry at his sole expense,
comprehensive general liability insurance (including products liability, completed operations and
blanket contractual liability covering the liabilities assumed herein), in an amount not less than
Two Million Dollars ($2,000,000.00) combined single limit, or in such other amounts as
Franchisor may from time to time reasonably request or as may be required by Base Lease. Such
insurance shall cover property damage and personal injury arising in, at or about the Boardwalk
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Fries Location or resulting from the use or occupation of the Boardwalk Fries Location by
Franchisee or its activities therein.
11.2 Property and Casualty Insurance
During the term of this Agreement, Franchisee shall be solely responsible for insuring at
its sole expense all of the leasehold improvements, personal property, inventory, fixtures and
equipment in the Boardwalk Fries Location and any real property in accordance with the terms
of the Base Lease. Such insurance shall be in amounts not less than the replacement cost of said
property.
11.3 Workmen's Compensation and Unemployment
Franchisee shall secure and pay premiums on a Worker's Compensation insurance policy
in accordance with statutory requirements, and shall pay all unemployment contributions
imposed by law in connection with the operation of the Boardwalk Fries Location.
11.4 General Provisions
(a) Franchisor shall have the right to approve any insurance carrier providing the
foregoing coverages. Each policy required hereunder shall name Franchisor and its subsidiaries
and affiliates as additional insureds (excepting only any workman's compensation insurance
policy) and shall provide that the policy cannot be canceled or modified without thirty (30) days
prior written notice to Franchisor. At Franchisor's request, Franchisee shall furnish Franchisor
from time to time with certificates of insurance reflecting that the foregoing coverages are in
effect. All policies shall be renewed prior to the expiration dates of the policies.
(b) Franchisor may increase the minimum protection or coverage requirements of any
policy required hereunder, as of its renewal date, and may require different or additional kinds of
insurance at any time to reflect inflation, identification of special risks, changes in law or
standards of liability, higher damage award or other relevant changes in circumstances.
(c) If Franchisee at any time fails or refuses to maintain in effect any insurance coverage
required by Franchisor, or to furnish satisfactory evidence thereof, at its option and in addition to
its other rights and remedies hereunder, Franchisor shall have the right to, but need not, obtain
such insurance coverage on behalf of Franchisee, and Franchisee shall promptly execute any
applications or other forms or instruments required to obtain any such insurance, and pay to
Franchisor on demand, any costs and premiums incurred by Franchisor therefor.
(d) Franchisor and Franchisee each hereby releases the other from any and all liability or
responsibility to the other or anyone claiming through or under them by way of subrogation or
otherwise for any property damage, bodily injury or personal injury arising from Franchisee's use
or occupancy of the Boardwalk Fries Location or its activities therein. Franchisor and
Franchisee each agrees that it will obtain from its insurance carriers a clause or endorsement to
its policies evidencing such waiver if such waivers are granted by such carriers.
(e) Franchisee shall notify Franchisor in writing within five (5) days of receipt of notice
or knowledge of any claim, dispute, loss or damage, real or alleged, arising from Franchisee's
activities in, at or around the Boardwalk Fries Location licensed herein, whether or not such
claim names Franchisor or any of its affiliates.
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imposed by law in connection with the operation of the Boardwalk Fries Location.
11.4 General Provisions
(a) Franchisor shall have the right to approve any insurance carrier providing the
foregoing coverages. Each policy required hereunder shall name Franchisor and its subsidiaries
and affiliates as additional insureds (excepting only any workman's compensation insurance
policy) and shall provide that the policy cannot be canceled or modified without thirty (30) days
prior written notice to Franchisor. At Franchisor's request, Franchisee shall furnish Franchisor
from time to time with certificates of insurance reflecting that the foregoing coverages are in
effect. All policies shall be renewed prior to the expiration dates of the policies.
(b) Franchisor may increase the minimum protection or coverage requirements of any
policy required hereunder, as of its renewal date, and may require different or additional kinds of
insurance at any time to reflect inflation, identification of special risks, changes in law or
standards of liability, higher damage award or other relevant changes in circumstances.
(c) If Franchisee at any time fails or refuses to maintain in effect any insurance coverage
required by Franchisor, or to furnish satisfactory evidence thereof, at its option and in addition to
its other rights and remedies hereunder, Franchisor shall have the right to, but need not, obtain
such insurance coverage on behalf of Franchisee, and Franchisee shall promptly execute any
applications or other forms or instruments required to obtain any such insurance, and pay to
Franchisor on demand, any costs and premiums incurred by Franchisor therefor.
(d) Franchisor and Franchisee each hereby releases the other from any and all liability or
responsibility to the other or anyone claiming through or under them by way of subrogation or
otherwise for any property damage, bodily injury or personal injury arising from Franchisee's use
or occupancy of the Boardwalk Fries Location or its activities therein. Franchisor and Franchisee
each agrees that it will obtain from its insurance carriers a clause or endorsement to its policies
evidencing such waiver if such waivers are granted by such carriers.
(e) Franchisee shall notify Franchisor in writing within five (5) days of receipt of notice
or knowledge of any claim, dispute, loss or damage, real or alleged, arising from Franchisee's
activities in, at or around the Boardwalk Fries Location licensed herein, whether or not such
claim names Franchisor or any of its affiliates.
11.5 Indemnification
Franchisee shall be responsible for all losses, damages or contractual liabilities to third
persons arising out of, or in connection with, the possession, ownership or operation of the
Boardwalk Fries Location and for all claims or demands for damages to property or for injury,
illness or death to persons directly or indirectly resulting therefrom. Franchisee shall defend,
indemnify and save Franchisor and its subsidiaries and affiliates harmless from any such claims,
demands, losses, obligations, judgments, costs, liabilities, debts, damages, costs of settlement or
expenses (including reasonable attorney's fees) unless resulting solely from the negligence of
Franchisor. Franchisor expressly reserves the right to defend itself against any such claims,
demand, suit or action and recover from Franchisee any costs so incurred under this indemnity.
Franchisor's right to indemnify under this Agreement shall arise notwithstanding that joint or
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Conditions to Franchisor's consent to any assignment or transfer to a third party otherwise
prohibited herein may include, without limitation, that:
(a) Franchisee shall have satisfied all of its obligations to Franchisor, whether arising
under this Agreement or otherwise, at the time of the transfer;
(b) Franchisee shall have executed and delivered to Franchisor, if not prohibited by law,
a general release in form and substance satisfactory to Franchisor, which release shall cover any
liability arising out of this agreement, or any other agreements, or understanding relating to the
Franchise prior to the date of transfer; such a release by Franchisee shall not apply to any
liability under the applicable Franchise Registration and Disclosure law;
(c) The prospective purchaser must complete Franchisor's Franchise application and be
approved through Franchisor's standard selection process (including satisfactorily demonstrating
to Franchisor that he meets the financial, character, managerial, equity ownership, and other
criteria used by Franchisor in considering applications for new franchises);
(d) The prospective purchaser must execute the then-current form of Franchise
Agreement for a term equal to the remaining term of this Agreement (provided that said
agreement shall also be modified to provide for royalty payments and other amounts due
Franchisor equal to the amounts due under this Agreement;
(e) Franchisor must approve the terms and conditions of the contract of sale. Franchisor
may disapprove a sale contract if, in its sole discretion, it believes that sale would not be in the
best interest of the Boardwalk Fries Location Franchise program;
(f) The prospective purchaser shall pay Franchisor a Fee equal to Fifteen Thousand
Dollars ($15,000.00) for the costs and expenses Franchisor will incur in training the purchaser
and/or its operator in the operation of the franchised business and in assisting the purchaser in the
orderly transfer of the Franchised business.
13.3 Assignment to a Controlled Corporation
With the prior written consent of Franchisor, an individual or partnership Franchisee may
assign this Agreement to a corporation in which said individual or partners shall own 100% of
the issued shares. Franchisor may impose reasonable conditions on such assignment, including
without limitations:
(a) Continued personal liability of the individual Franchisee(s) to Franchisor for
performance of all obligations of Franchisee under this Agreement;
(b) A prohibition against any subsequent issuances or transfers of shares of the
corporation without Franchisor's prior written approval and limitation on the total number of
shareholders to five (5) persons;
(c) A prohibition against the corporation engaging in any business activity other than that
which is directly related to the operation of the Boardwalk Fries Location;
(d) A requirement that the Franchisee remain the owner of not less than 30% of the
outstanding shares of the corporation after any issuance or transfer of shares;
(e) A provision in the Articles of Incorporation and By-Laws of the corporation
reflecting the limitation on the number of shareholders and that the issuance and transfer of
shares are restricted and may be transferred only in accordance with the terms and conditions of
this Agreement; and
(f) A legend on all stock certificates stating as follows: "The transfer of this stock is
subject to the terms and conditions of a Franchise Agreement with Boardwalk Fries, Inc.
Reference is made to such Franchise Agreement and the restrictive provisions of the Articles of
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Incorporation and By-Laws of this corporation.
13.4 Assignments Upon Death or Incapacity of Franchisee
(a) If a partner or shareholder of a Franchisee other than the Operator dies or becomes
permanently incapacitated, Franchisor shall consent to the transfer of said Franchisee's interest in
the Franchise to his heir or heirs on conservator or to the other partners or shareholders of
Franchisee if (i) said transferee(s) assume in writing all of the deceased or incapacitated
Franchisee's obligations and liabilities hereunder, and (ii) the Operator, one of the transferees or
such other partner or shareholder who, in Franchisor's reasonable judgment, is capable of
operating the Boardwalk Fries Location, consents in writing to serve as the Operator from and
after the transfer.
(b) In the event of the death or permanent incapacity of an individual Franchisee or an
Operator (hereinafter the "Affected Managerial Franchisee"), Franchisor shall consent to a
transfer of the Affected Managerial Franchisee's interest to his heir or heirs or conservator or to
the other partners or shareholders of Franchisee if (i) the transferee(s) of the Affected Managerial
Franchisee assume in writing all of the obligations and liabilities of the Affected Managerial
Franchisee under this Agreement and one of the transferees or such other partner or shareholder
is deemed by Franchisor, in its reasonable judgment, to be capable of operating the Boardwalk
Fries Location and agrees in writing to serve as the Operator from and after the transfer.
(c) If Franchisor determines that the heir or heirs or conservator of the Affected
Managerial Franchisee is not capable of operating the Boardwalk Fries Location and there is no
other partner or shareholder who meets with Franchisor's approval, then the Affected Managerial
Franchisee's representative and the other principals of the Franchisee, if applicable, shall use
their best efforts to sell the Boardwalk Fries Location to a party acceptable to Franchisor.
During such interim period, the Affected Managerial Franchisee's representative or other
principals of the Franchisee may continue to operate the Boardwalk Fries Location. At
Franchisor's option and without obligation to do so, Franchisor may elect to manage the
Boardwalk Fries Location during such interim period until the Franchise or interest therein is
sold or otherwise transferred to a party acceptable to Franchisor. In such event, Franchisor shall
account in full for the proceeds of such operation less all costs of operations and shall charge a
monthly management fee of Ten Percent (10%) of Gross Revenues.
(d) If Franchisor determines that the provisions of subparagraph (c) hereof require the
sale of the franchise to a third party, then Franchisor shall have a right of first refusal to purchase
the Franchise in accordance with the provisions of Paragraph 14 hereof.
XIV. RIGHT OF FIRST REFUSAL
14.1 Grant
(a) In the event Franchisee receives at any time during the term hereof an acceptable
bona fide offer from a fully disclosed third party to purchase the Franchise, the assets used at the
Boardwalk Fries Location or any interest in Franchisee (if Franchisee is a partnership or
corporation), Franchisee shall promptly give Franchisor written notice thereof, setting forth the
name and address of the prospective purchaser and the price and terms of the offer, together with
an application for a franchise completed by the prospective purchaser, a copy of the sale contract
and such other information as Franchisor may request in order to evaluate the offer. Franchisor
shall then have the prior option to purchase Franchisee's interest covered by such offer at the
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price and upon the terms of such offer. If the consideration is not money, the purchase price
payable by Franchisor shall be cash equal to the fair market value of the proposed consideration.
Franchisor shall have thirty (30) days after receipt of Franchisee's notice of offer and the
furnishing of all requested information within which to notify Franchisee of its election to
purchase the assets proposed by the transferred. Silence on the part of Franchisor shall constitute
rejection. This right of first refusal shall apply to any transfer, conveyance, assignment,
consolidation, merger or any other transaction in which legal or beneficial ownership of the
Franchise, in the assets used at the Boardwalk Fries Location or in Franchisee, is transferred.
(b) In the event the proposed sale includes more Franchises than the Franchise granted
herein, or assets of Franchisee not related to the operation of the Boardwalk Fries Location,
Franchisor shall have the right to purchase all of the Boardwalk Fries Franchises and additional
assets included in the proposed sale. In no event, however, may Franchisor elect to exercise its
right of first refusal with respect to a portion of the Boardwalk Fries Franchises or assets
included in the proposed sale.
14.2 Subsequent Offers
The election by Franchisor not to exercise its right of first refusal as to any offer shall not
affect its right of first refusal as to any subsequent offer.
14.3 Sales Without Consent
Any sale effected without first giving Franchisor the right of first refusal described above
shall be void and of no force and effect and shall constitute a material breach of this Agreement.
14.4 Sales After Rejection
Franchisor's waiver of, or failure to exercise its right of first refusal shall not relieve
Franchisee of its obligation to obtain Franchisor's approval of the proposed sale or transfer in
accordance with Paragraphs XIII hereof.
XV. DEFAULT AND EFFECTS OF TERMINATION
15.1 Events of Default by Franchisor
If Franchisee is in substantial compliance with this Agreement, any material breach by
Franchisor of its obligations hereunder which is not cured within thirty (30) days of Franchisee's
written notice describing such breach shall constitute an event of Default by Franchisor.
15.2 Remedies of Franchise
(a) Upon the occurrence of an Event of Default by Franchisor which is not timely cured,
Franchisee may, upon ten (10) days written notice to Franchisor terminate this Agreement. In no
event shall any termination of this Agreement by Franchisee for cause relieve Franchisee of its
obligation to pay any moneys to perform any other obligation accruing prior to the date of
termination of this Agreement.
(b) A termination of this Agreement by Franchisee for any reason other than breach of
this Agreement by Franchisor and Franchisor's failure to timely cure such breach shall be
deemed a termination of this Agreement by Franchisee without cause.
15.3 Events of Default by Franchisee
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(a) The following events shall constitute Events of Default by Franchisee, which defaults
shall be cured within thirty (30) days after receipt of written notice from Franchisor, describing
the default, or Franchisor may thereafter terminate the franchise or exercise any or all of its
rights and remedies hereunder:
(i) Failure of Franchisee (a) to maintain and operate the Boardwalk Fries Location in
accordance with the specifications and standards of the System or set forth in the Manual, or (b)
to cease displaying or selling any unapproved product or service or any approved product or
service, the source of which has not previously been approved by Franchisor;
(ii)(a) Failure of the Franchisee to pay when due any Note Payment or invoice, if
applicable, under any Note due Franchisor by Franchisee, or for any invoice for services,
materials, or goods provided by Franchisor to Franchisee at Franchisee's request or,
(ii)(b) Failure of the Franchisee to pay when due any Fee, Royalty or Advertising
contribution required to be paid by Franchisee under the Franchise Agreement.
(iii) Voluntary abandonment of the franchise relationship or closing of the Boardwalk
Fries Location for more than four (4) consecutive days or for more than ten (10) business days or
Saturdays during any calendar year (excluding holidays) without the prior written consent of
Franchisor;
(iv) Failure of Franchisee to submit any financial statement when required;
(v) Failure by Franchisee to maintain a responsible credit rating by not making prompt
payment of undisputed bills, invoices and statements from suppliers of goods and services to the
Boardwalk Fries Location;
(vi) Entry of a final judgment against Franchisee which remains unsatisfied of record
for thirty (30) days (unless a supersede as or other appeal bond has been filed), or any levy of
execution upon the Franchise or upon property used in the Boardwalk Fries Location which is
not discharged within five (5) days;
(vii) Filing by or against Franchisee of a petition or application seeking any type of
relief under the Bankruptcy Code or any state insolvency or similar law, or seeking to have
Franchisee adjudicated a bankrupt, or the appointment of a receiver for any part of Franchisee's
property, which petition, application or appointment is not dismissed within forty-five (45) days;
or
(viii) Failure by Franchisee to comply with any other provision of this Agreement.
(b) The following events shall constitute Events of Default by Franchise hereunder and,
upon the occurrence of any of them, Franchisor may terminate this Agreement immediately by
written notice to Franchisee or exercise any or all of its rights and remedies hereunder:
(i) Submission of more than two consecutive financial statements which under-report
Gross Revenues for any reporting period by two percent (2%) or more (regardless of any
subsequent cure);
(ii) Refusal of Franchisee to permit Franchisor to exercise its inspection, inventory or
audit rights hereunder;
(iii) Conviction of, or a plea of no contest by, Franchisee or any of its partners,
shareholders, officers or directors, if Franchisee is a partnership or a corporation to any felony
charge or to any crime or offense that is likely to have an adverse effect on the reputation of the
Boardwalk Fries or the goodwill associated with the Proprietary Marks;
(iv) Utilization or duplication of the System or disclosure of any portion of the Manual
in violation of this Agreement;
(v) Admission by Franchisee in writing of his inability to pay his debts as they mature
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or any assignment for the benefit of Franchisee's creditors;
(vi) The assignment or transfer of any interest in the Franchise or in the Franchisee (if
the Franchisee is a corporation or partnership), or the sale or transfer of a substantial portion of
the assets of the franchised business in violation of the provisions of Paragraph XIII of this
Agreement;
(vii) Expiration or termination of the Base Lease attached as Exhibit D for any reason
through no fault of Franchisor;
(viii) Submission by Franchisee of a franchise application which contains any false or
misleading statement or omits any material fact necessary in order to make the statements made
not misleading;
(ix) Two or more breaches of the provisions of this Agreement in any twelve-month
period, regardless of cure; or
(x) The acquisition by Franchisee of any interest in a retail french fry business in
violation of Paragraph 10.1 hereof; or
(xi) Failure of Franchisee to obtain a site within the time periods provided in Paragraph
4.1 hereof.
(xii) The receipt by Franchisor of notice in writing from the Landlord of the Franchisee
stating that the Franchisee is in default of its lease or has failed or refused to pay to the Landlord
any amount due or owed to the Landlord under said Lease (and subsequent Assignment to
Franchisee of the Lease), subject however, to the cure or grace provisions contained in the Lease.
15.4 Remedies of Franchisor
If an Event of Default by Franchisee (as defined herein) occurs and Franchisee fails to
cure the default within any applicable cure period specified, Franchisor may, at its option and
without prejudice to any other rights or remedies provided for hereunder or by law or equity,
terminate this Agreement and the Franchise. If any applicable and binding law or rule of any
jurisdiction requires a greater prior notice of the termination of this Agreement than is required
hereunder, or the taking of some other action not required hereunder, the prior notice and/or
other action required by such law or rule shall be substituted for the comparable provisions
hereof. Such modifications to this Agreement shall be effective only in such jurisdiction, unless
Franchisor elects to give them greater applicability, and this Agreement shall be enforced as
originally made and entered into in all other jurisdictions.
15.5 Effect of Expiration or Termination
(a) Upon termination or expiration of this Agreement for any reason whatsoever,
Franchisee shall immediately pay Franchisor any and all royalties, advertising contributions,
rental payments or other amounts due to Franchisor or its affiliates on the date of such
termination or expiration.
(b) Upon any expiration or termination of the Agreement, Franchisee's right to use the
Proprietary Marks and the System shall immediately terminate. Franchisee shall not thereafter
identify himself as a Boardwalk Fries franchisee or use any of Franchisor's trade secrets,
operating procedures, promotional materials, the Proprietary Marks or any mark confusingly
similar thereto. Franchisee shall also immediately return to Franchisor the Manual, all other
material containing trade secrets, operational instructions or business practices of Franchisor and
any other materials previously supplied by Franchisor.
(c) Upon termination or expiration of this Agreement for any reason whatsoever,
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Franchisee shall, if requested by Franchisor and if permissible under the terms of th24
e Base Lease
promptly and peaceably surrender the Boardwalk Fries Location to Franchisor in the same
condition as on the date hereof, reasonable wear and tear excepted; provided that Franchisee may
promptly remove his trade fixtures, movable equipment and moveable personal property, subject
to the rights of the lessor under the Base Lease or of any holder of any security interest.
(d) Upon any termination by Franchisor for cause, Franchisee shall not, for a period of
one (1) year thereafter, own, operate or otherwise participate, directly or indirectly, in any retail
french fry business within a five (5) miles radius of any Boardwalk Fries Location.
(e) Upon any termination of this Agreement by Franchisor for cause, Franchisor shall
have the option immediately to enter and take possession of the Boardwalk Fries Location in
order to maintain continuous operation of the business and to protect Franchisor's interests. If
Franchisee shall dispute the validity of any termination of the Franchise, Franchisor shall operate
the business pending arbitration of the dispute for the benefit of the prevailing party in
accordance with Paragraph XVI hereof. In the event of a determination by the arbitrator that the
termination was not valid, Franchisor shall make a full and complete accounting for the period
during which it operated the business.
(f) Upon any termination of this Agreement by Franchisor for cause, Franchisor shall
have the right, at its option, to purchase at Franchisee's cost, all usable materials owned by
Franchisee bearing the Proprietary Marks.
(g) Upon any termination of this Agreement by Franchisor for cause, any damages
suffered by Franchisor shall be a lien in favor of Franchisor against the personal property,
inventory, fixtures and equipment owned by Franchisee at the Boardwalk Fries Location at the
time of such default.
XVI. ARBITRATION
16.1 Procedure
Except for (a) disputes regarding the payment or nonpayment of any amount due
hereunder to Franchisor or any of its affiliates and (b) disputes regarding the requirement that
Franchisee offer only Franchisor's approved products, all disputes and claims relating to any
provision hereof, any specification, standard operating procedure or obligation or the breach of
any of them (including, without limitation, any claim that any provision of this Agreement, any
specification, standard or operating procedure or any other obligation of Franchisee or
Franchisor is illegal or otherwise unenforceable or voidable under any law, ordinance, or ruling)
shall be settled by arbitration in Baltimore City, Maryland, in accordance with the United States
Arbitration Act (9 U.S.C. Section 1 et seq.) and the Rules of the American Arbitration
Association relating to the arbitration of disputes arising under franchise agreements, if any;
otherwise, the general rules of commercial arbitration. All awards of the arbitration shall be
binding and non-appealable except as otherwise provided in the United States Arbitration Act.
Judgment upon the award of the arbitrator may be entered in any court having jurisdiction
thereof. During the pendency of arbitration proceeding hereunder, Franchisee and Franchisor
shall fully perform their obligations under this Agreement. Franchisee must pay half of the fees
and costs of the arbitrator in any arbitration. Information concerning arbitration may be obtained
from the local office of the American Arbitration Association. Franchisee will be responsible for
its own costs related to the proceeding, including the costs or his own attorney or other advisors
and any related travel expenses. Franchisee may also be liable to Franchisor for its collection
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costs, including attorney's fees. 25
16.2 Demand: Statute of Limitations
If the aggrieved party fails to give written notice to the other requesting arbitration within
sixty (60) days after the action or event giving rise to the dispute, any claim of said party relating
to the dispute shall be deemed barred unless prohibited by law and no further relief, whether by
way of arbitration or action or defense in any court, shall be permitted.
XVII.SPECIFIC ENFORCEMENT AND INJUNCTIVE RELIEF
Nothing herein contained, including without limitation the provisions of Paragraph XVI
hereof, shall bar Franchisor or Franchisee's right to obtain specific performance of the provisions
of this Agreement and injunctive relief against threatened conduct that will cause it loss or
damage under customary equity rules, including applicable rules for obtaining restraining orders
and preliminary injunctions.
XVIII. MISCELLANEOUS PROVISIONS
18.1 Validity and Interpretation
This Agreement shall not be valid until executed by a duly authorized officer of
Franchisor. The recitals and exhibits hereto shall be considered a part of this Agreement.
Nothing in this Agreement is intended, nor shall be deemed to confer any rights or remedies
upon any person or legal entity not a party hereto. Paragraph captions are used only for
convenience and are in no way to be construed as part of this Agreement or as a limitation of the
scope of the particular paragraphs to which they refer. Words of any gender used in this
Agreement shall include the plural, where the context requires. All provisions of this Agreement
applicable to the Proprietary Marks shall apply to any additional proprietary trade and service
marks and commercial symbols hereafter authorized for use by, and licensed to Franchisee
pursuant to the Franchise.
18.2 Governing Law
Except to the extent governed by the United States Trademark Act of 1946 and the United
States Arbitration Act, this Agreement and the Franchise shall be governed by the laws of the
state in which the Boardwalk Fries Location licensed herein is located.
18.3 Severability
Except as expressly provided to the contrary herein, each provision of this Agreement
shall be considered severable and if, for any reason, any such provision is held to be invalid,
contrary to, or in conflict with any applicable present or future law or regulation in a final,
unappealable ruling issued by any court, agency or tribunal with competent jurisdiction in a
proceeding to which Franchisor is a party, that ruling shall not impair the operation of, or have
any other effect upon, such other portions of this Agreement as may remain otherwise
intelligible, which shall continue to be given full force and effect and bind the parties hereof.
Any provision held to be invalid shall be deemed not to be part of this Agreement from the date
the time for appeal expires if Franchisee is a party thereto, otherwise upon Franchisee's receipt of
a notice of non-enforcement thereof from Franchisor.
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18.4 No Waivers
The failure of Franchisor to exercise any right given to it under this Agreement, to insist
upon strict compliance by Franchisee with the terms of this Agreement, to enforce any obligation
of any other Franchisee of Franchisor, or Franchisor's observance of any custom or practice at
variance with the terms hereof shall not constitute a waiver of any breach by Franchisee
hereunder, nor a waiver by Franchisor of its right at any time thereafter to require strict
compliance with the terms of this Agreement. The rights or remedies of Franchisor and
Franchisee which are set forth in this Agreement are in addition to any other rights or remedies
which may be granted at law or in equity, and are cumulative. No exercise of any rights
hereunder by either party shall preclude the exercise of any other right or remedy.
18.5 Notices
All notices required or permitted hereunder shall be in writing and shall be hand
delivered or sent by registered or certified mail, postage prepaid. Notices to Franchisor shall be
sent to 8980 Route 108, Suite J, Columbia, Maryland 21045 or to such other address as the
Franchisor may designate. Notices to Franchisee shall be sent to the Boardwalk Fries Location
licensed herein. Notices shall be deemed delivered on the earlier of actual receipt or the third
(3rd) day after being deposited in the U.S. mail.
18.6 Payments
All payments to Franchisor hereunder shall be made payable to Boardwalk Fries, Inc. and
shall be tendered to Franchisor. All payments received by Franchisor from Franchisee shall be
applied to the oldest obligation, regardless of any contrary designation by Franchisee. Any
payment not made when due shall constitute a default hereunder and, to the extent permitted by
law, shall bear interest at a percentage rate two points above Franchisor's then-current cost of
borrowing, (subject to highest rate permitted by law). Franchisee agrees that he will not, on
grounds of the alleged nonperformance by Franchisor of any of its obligations hereunder,
withhold payments of any rents, royalties, advertising contributions, amounts due to Franchisor
or its affiliates for purchases by Franchisee, or any other amounts due Franchisor for its
affiliates.
18.7 Independent Contractor
At all times during the term of this Agreement, Franchisee shall be considered an
independent contractor, and not an agent or employee of, or partner or joint venturer with,
Franchisor.
18.8 Liability of Multiple and Corporate Franchisees
The term Franchisee is applicable to one or more persons, a corporation or partnership. If
Franchisee consists of more than one person, each person's liability under this Agreement shall
be joint and several. References to "Franchisee" and "assignee" which are applicable to an
individual or individuals shall mean the principal owner or owners of the equity or operating
control of Franchisee or the assignee if Franchisee or the assignee is a corporation or partnership.
18.9 Heirs, Successors and Assigns
Subject to the provisions hereof relating to transfer and assignment, this Agreement is
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intended to and does bind the heirs, executors, administrators, successors and assigns of any or
all of the parties hereto.
18.10 Survival
Any provision of this Agreement which imposes an obligation after termination or
expiration of this Agreement shall survive such termination or expiration.
18.11 Time is of the Essence
Time is of the essence of each and every provision hereof.
18.12 Unavoidable Delays
Delays in the performance of any duties hereunder which are not the fault or within the
reasonable control of the party due to perform, including but not limited to, transportation
shortages, inadequate supplies of goods, fire, flood, labor disputes or work slowdowns or
stoppages, natural disasters, or acts of God, governmental acts or orders, or civil disorders shall
not cause a default hereunder, but the parties shall extend the time of performance for the period
of such delay or for such other reasonable period of time as the parties shall agree in writing.
18.13 Costs and Expenses of Enforcement
In the event any legal or arbitration proceeding is brought to enforce any provision
hereof, including the payment of any moneys to Franchisor or one of its affiliates, the prevailing
party shall recover its reasonable costs and expenses (including reasonable accounting and
attorneys' fees) incurred in connection therewith.
18.14 Amendments
Except for changes in the Manual, the terms of which are expressly incorporated herein,
no agreement of any kind or any amendments hereto shall be binding upon either party unless
and until the same has been made in writing and duly executed by both parties.
18.15 Assignment by Franchisor
Franchisor may assign this agreement to any third party upon notice to Franchisee.
Franchisor will not directly or indirectly convey, assign or otherwise transfer its obligations
under any Franchise Agreement unless its commitments to establish the franchise have been met
or provided for and Franchisor has made adequate provisions (as it, in its sole discretion, deems
necessary or desirable) for providing further services required under the Franchise Agreement.
18.16 Representations
NO REPRESENTATION, PROMISE, GUARANTEE, INDUCEMENT,
UNDERTAKING OR WARRANTY WAS MADE IN CONNECTION HEREWITH OR TO
INDUCE THE EXECUTION THEREOF WHICH IS NOT EXPRESSLY CONTAINED
HEREIN. FRANCHISEE RECOGNIZES THAT NEITHER FRANCHISOR NOR ANY
OTHER PERSON CAN GUARANTEE FRANCHISEE'S SUCCESS IN THE FRANCHISED
BUSINESS. BY THE EXECUTION AND ACCEPTANCE OF THIS AGREEMENT, THE
PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ THE SAME AND
UNDERSTAND EACH PROVISION HEREOF. THIS AGREEMENT, ALTHOUGH DRAWN
BY FRANCHISOR, SHALL BE CONSTRUED FAIRLY AND REASONABLY AGAINST
Capital City-Shrimadhu, Inc.
BOTH PARTIES.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
ATTEST: FRANCHISOR:
BOARD
WITNESS: FRANCHISEE:
Corp. Name: Shrimadhu,
V4A By:
WITNESS: Ajit Smith,
FRIES, INC.
2s
.(SEAL)
n
D (SEAL)
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I Ajit Smith hereby agree to be personally liable to Franchisor for performance of Franchisee
under the above Agreement.
WITNESS
Ajit Smith
EXHIBITS FOR FRANCHISE AGREEMENT
BY AND BETWEEN BOARDWALK FRIES AND
I t Iur
Capital City-Shrimadhu, Inc.
SHRIMADHU, INC.
EXHIBIT A-1: EXCLUSIVE AREA - BOADWALK FRIES LOCATION AT
CAPITAL CITY MALL, 3441 CAPITAL CITY MALL DRIVE,
CAMP HILL, PA 17011
EXHIBIT A-2: FIRST RIGHT OF REFUSAL AREA - THA CAPITAL CITY
MALL, 3411 CAPITAL MALL DRIVE, CAMP HILL, PA
EXHIBIT B: EQUITY PARTICIPATION: 100% Ajit Smith
EXHIBIT B-1: ASSIGNMENT OF LEASE - N/A
EXHIBIT B-2: CONDITIONAL REASSIGNMENT OF LEASE - N/A
EXHIBIT C: ROYALTY-5%
EXHIBIT C-1: TRANSFER FEE - $15,000.00
EXHIBIT D: BASE LEASE - FRANCHISEE
EXHIBIT E: ADVERTISING - NONE
EXHIBIT F: BROKER FEE - NONE
EXHIBIT I: BANK DRAFT - ATTACHED HERETO
NOTE: Section 3.7(c) Hours of operation to be mall hours as defined by Landlord.
TRAINING: Date To be determined for training as outlined in Franchise Agreement
FRANCHISOR:
WITNESS: BO FRIE C.
(SEAL
iFerdin do
President
WITNESS:
FRANCHISEE:
30
,IN
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Ajit Smit
President
(SEAL)
Capital City-Shrimadhu, Inc.
EXHIBIT 8
29
I Ajit Smith hereby agree to be personally liable to Franchisor for performance of Franchisee
under the above Agreement.
WITNESS
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Ajit Smith
EXHIBITS FOR FRANCHISE AGREEMENT
BY AND BETWEEN BOARDWALK FRIES AND
(SEAL)
Capital City-Shrimadhu, Inc.
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CASE NO: 2009-01004 P
SHERIFF'S RETURN - REGULAR
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
BOARDWALK FRIES INC
VS
SHRI MADHU INC ET AL
NOAH CLINE
Sheriff or Deputy Sheriff of
Cumberland County,Pennsylvania, who being duly sworn according to law,
says, the within COMPLAINT & NOTICE was served upon
SHRI MADHU INC T/A BOARDWALK FRIES the
DEFENDANT , at 0017:21 HOURS, on the 20th day of October , 2009
at 3441 CAPITAL CITY MALL DR
CAMP HILL, PA 17011 by handing to
TINA TAN ADULT IN CHARGE-EMPLOYEE
a true and attested copy of COMPLAINT & NOTICE
together with
and at the same time directing Her attention to the contents thereof.
Sheriff's Costs:
Docketing
Service
Affidavit
Surcharge
Postage
Sworn and Subscibed to
before me this
So Answers:
18.00
12.60
.00 ,
10.00 R. Thomas Kline
.42
41.02 02/23/2009
D'S INC.
By.
day Deputy Sheriff
of A. D.
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CASE NO: 2009-01004 P
SHERIFF'S RETURN - REGULAR
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
BOARDWALK FRIES INC
VS
SHRI MADHU INC ET AL
NOAH CLINE , Sheriff or Deputy Sheriff of
Cumberland County,Pennsylvania, who being duly sworn according to law,
says, the within COMPLAINT & NOTICE was served upon
SMITH AJIT the
DEFENDANT , at 0018:31 HOURS, on the 19th day of February-, 2009
at 3441 CAPITAL CITY MALL DRIVE
CAMP HILL, PA 17011 by handing to
NIBHI CHAKSHI ADULT IN CHARGE-EMPLOYEE
a true and attested copy of COMPLAINT & NOTICE
together with
and at the same time directing Her attention to the contents thereof.
Sheriff's Costs:
Docketing
Service
Affidavit
Surcharge
Sworn and Subscibed to
before me this
of
So Answers:
6.00
12.60
00
10.00 R. homas Kline
.00
28.60 02/23/2009
D'S INC
By:
day Deputy S eriff
A.D.
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BOARDWALK FRIES, INC.,
Plaintiff
SHRI MADHU, INC
And AJIT SMITH,
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 09-1004 Civil Term
CIVIL ACTION - LAW
Defendants :
PRAECIPE
TO THE PROTHONOTARY OF CUMBERLAND COUNTY, PENNSYLVANIA:
Kindly enter my appearance, Brian K. Zellner of Hynum Law on behalf of the
Defendants, Shri Madhu, Inc. and Ajit Smith in regard to the above-captioned matter.
Date: March 10, 2009
Brian K. Zellner, Esquire
Supreme Court ID #59262
2608 North 3`d Street
Harrisburg, PA 17110
(717) 774-1357
Attorney for Defendant
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BOARDWALK FRIES, INC.,
Plaintiff
Y.
SHRI MADHU, INC.,
And AJIT SMITH,
Defendants
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY, PENNSYLVANIA
NO. 09-1004 Civil Term
CIVIL ACTION - LAW
DEFENDANTS' PRELIMINARY OBJECTIONS TO THE PLAINTIFF'S COMPLAINT
1. On or about February 19, 2009, the Plaintiff filed a Complaint against the
above-captioned Defendants.
2. The Plaintiff's Complaint consists of two Counts. The first Count is Breach of
Contract and the second count is Unjust enrichment/ Promissory Estoppel.
3. The Complaint references several writings including a Franchise Agreement
and a Personal Guaranty of the Franchise Agreement.
4. Pa. R.C.P. 1019(1) states that "[w]hen any claim or defense is based upon a
writing, the pleader shall attach a copy of the writing, or the material part thereof, but if
the writing or copy is not accessible to the pleader, it is sufficient so to state, together
with the reason, and to set forth the substance of the writing."
5. In violation of Pa. R.C.P. 1019(i), a complete copy of the Franchise
Agreement is not attached. The copy attached to the Complaint is missing Exhibits A-1
through I.
6. In violation of Pa. R.C.P. 1019(i), the Personal Guaranty of the Franchise
Agreement is not attached.
7. The Defendants can not properly respond to the Complaint without complete
copies of the writings.
8. The Plaintiff has also failed in Count II to state grounds for which relief can be
granted.
WHEREFORE, the Defendants request their Preliminary Objections be granted
and the Complaint dismissed.
Date: 3 [o d
L `C? ??------
Br'(an K. Zellner, Esquire
Michael A. Hynum, Esquire
Attorney for the Defendants
Hynum Law
Supreme Court ID # 59262
2608 N. Third Street
Harrisburg, PA 17110
(717) 774-1357
CERTIFICATE OF SERVICE
On this 10th day of March, 2009, 1 certify that a copy of the foregoing
DEFENDANT'S PRELIMINARY OBJECTIONS TO THE PLAINTIFF'S
COMPLAINT was served upon the following counsel for Plaintiff, Boardwalk
Fries, Inc. by placing the same in the United States mail,'first class, postage
prepaid, addressed as follows:
C. Ann Sheehan, Esquire
206 S. West Street
Carlisle, PA 17013
&' L
Brian K. Zellner, Esquire
Attorney for Plaintiff
Hynum Law
Attorney Id. 59262
2608 N. Third Street
Harrisburg, PA 17110
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