Registration of Securities of a Small-Business Issuer — Form 10-SB
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10SB12G Form 10 of Bowlin Travel Centers, Inc. 34 185K
2: EX-3.1 Form of Certificate of Incorporation 3 17K
3: EX-3.2 Bylaws of Bowlin Travel Centers. Inc. 16 80K
4: EX-10.1 Management Services Agreement 2 13K
9: EX-10.10 Commercial Lease Dated 3-16-2000 13 56K
10: EX-10.12 Lease Agreement Dated 6-23-89 9 39K
11: EX-10.13 Lease Dated 9-29-83 11 44K
12: EX-10.14 Business Lease Dated 9-1-96 5 27K
13: EX-10.15 Commercial Lease Dated 9-21-96 14 75K
14: EX-10.19 "Dairy Queen" Operating Agreement - 3-10-83 26 127K
5: EX-10.2 Distributor Franchise Agreement 19± 76K
15: EX-10.20 "Dairy Queen" Operating Agreement - 5-1-82 30 126K
16: EX-10.21 "Dairy Queen" Store Operating Agreement 53 167K
17: EX-10.22 "Dairy Queen" Operating Agreement - 9-1-82 29 146K
18: EX-10.23 "Dairy Queen" Store Operating Agreement 42 148K
19: EX-10.24 "Dairy Queen" Operating Agreement - 10-30-85 21 93K
20: EX-10.25 "Dairy Queen" Operating Agreement - 6-7-89 24 116K
21: EX-10.26 Letter of Agreement Dated 3-1-87 2 15K
22: EX-10.27 Franchise Agreement Dated 2-22-82 16 74K
23: EX-10.28 Credit Agreement With First Security Bank 20 66K
24: EX-10.29 Lease Agreement Dated 8-1-2000 3 22K
6: EX-10.3 Distributor Sales Agreement 26± 99K
7: EX-10.8 Lease Dated January 12, 1987 20 41K
8: EX-10.9 Commercial Lease Dated 9-21-1996 14 70K
25: EX-27 Financial Data Schedule 1 12K
EX-10.25 — “Dairy Queen” Operating Agreement – 6-7-89
Exhibit Table of Contents
DAIRY QUEEN OPERATING AGREEMENT
"DAIRY QUEEN" OPERATING AGREEMENT
This Agreement entered into this 7th day of June 1989, by and between INTERSTATE
DAIRY QUEEN CORPORATION of the city of ATLANTA county of DEKALB and state of
GEORGIA hereinafter referred to as "Licensor", and Bowlin's, Inc. dba "DQ" at
Butterfield Location of the city of Albuquerque county of Bernalillo and state
of New Mexico hereinafter referred to as "Licensee".
WHEREAS, Licensor is a licensee of American Dairy Queen Corporation (hereinafter
referred to as "American") in certain geographical areas, including the
territory which includes the Authorized Location hereinafter set forth, of the
right to license others, in accordance with the terms of this Agreement, to use
the "Dairy Queen" trademark, service mark and trade name which have been
registered in the United States Patent Office, in each state of the union and in
foreign countries, as well as those trademarks and service marks, a list of
which is attached hereto and made a part thereof as Appendix A (hereinafter all
of the foregoing collectively referred to as "Trademarks,'); and,
WHEREAS, Licensor and its predecessors in interest acting under said license
instituted, developed, promoted and established the "Dairy Queen" franchise
business and system in the aforesaid territory which consists of the sale of
distinctive dairy products, food products, beverages and other products and
services under American's Trademarks and utilizing in connection therewith
certain types of facilities, equipment, supplies, ingredients, merchandising and
business techniques and method and sales promotion programs developed from time
to time; and,
WHEREAS, it is the purpose of Licensor to provide to Licensee in a retail store
outlet a system to control and make uniform the operation of facilities and
equipment together with the quality of products, the use and protection of the
Trademarks and to make available uniform and approved equipment, supplies,
ingredients, merchandising and business techniques and the sales promotion
programs of American; and,
WHEREAS, Licensee desires to operate a "Dairy Queen" retail store as part of the
"Dairy Queen" system and to enter into this Operating Agreement subject to the
conditions and controls herein prescribed for the purpose
AQ2A 2/77 (c)1976 AM.D.Q.Corp.
Revised Copyright 1977 Am.D.Q.Corporation
Consolidated Operation - Permitted Products
101885'
of offering to the public products and services of uniformly high quality and
standards to the end of protecting the interests of Licensee, of Licensor, of
American and of all other persons engaged in said business; and,
WHEREAS, it is the intent of both Licensor and Licensee to preserve within the
context of a "Dairy Queen" retail store continuing consumer confidence in the
reliability and quality of all products sold under any of the Trademarks; and,
each party desires that all products sold under any of the Trademarks,
consistently conform to the highest expectations of consumers of such products;
and, whereas, by this Agreement the parties contemplate that Licensee's store,
in addition to normal "Dairy Queen" food and beverage products, may also sell
Permitted Products, as defined hereinafter.
NOW, THEREFORE, in consideration of the promises and of the mutual promises and
covenants herein contained, the grant by Licensor of this Operating Agreement
and the payment by Licensee of the various fees provided in Paragraph 9 hereof,
it is agreed by and between the parties hereto as follows:
GRANT OF LICENSE
Licensor's 1. Licensor hereby grants to Licensee, subject to all the
Grant to terms, conditions and provisions hereof, the right and
Licensee license to:
1.1 Establish and operate a retail store under the name
"Dairy Queen" at
I-10 & Exit 62 (Approx 20 Miles West of Deming, NM)
------------------------------------------------------
(Street)
Deming, NM 88030
------------------------------------------------------
(City) (State) (Zip)
hereinafter referred to as the "Authorized" Location"
(provided, however, in the event an Authorized
Location is not designated on the date hereof, and
such location is not designated herein by Licensor
within ninety (90) days after such date, this
Agreement shall become null and void and all deposits
including the franchise fee shall be returned to
Licensee).
1.2 Use at the Authorized Location the Trademarks on and in
association with the sale of all uniform and approved
products and services as American may authorize from
time to time, and with approved sales promotion
programs relative thereto.
1.3 Use at the Authorized Location the Trademarks on and in
association with the uniform equipment, supplies and
ingredients for the products approved by American.
1.4 Employ in the business of said store the merchandising,
sales promotion programs and business methods and
techniques developed and approved by American.
Acceptance 2. Licensee hereby accepts the above license from Licensor
by Licensee subject to all the terms, provisions
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and conditions hereof and agrees that Licensee shall
cause to have a "Dairy Queen" store established within
180 days of the date hereof (unless an extension of
time is expressly authorized in writing by Licensor),
and thereafter maintained and operated at the
Authorized Location, under Licensee's active and
continuous supervision and management and upon the
standards hereinafter provided. Licensee further
expressly acknowledges and agrees:
2.1 American is the owner of all right, title and interest
in and to the Trademarks, and the good will
attributable thereto of the business in connection with
which said Trademarks have been, are and will be used
at the Authorized Location. Licensor is the licensee of
the right to use the Trademarks in the territory which
includes the Authorized Location. Specifically, but
without limiting the foregoing, Licensee disclaims any
and all right, title and interest in or to the
Trademarks and to the good will associated with the
Trademarks of the "Dairy Queen" retail store at the
Authorized Location and acknowledges and agrees that
all such good will is the exclusive property of
American.
2.2 The Trademarks are valuable property rights owned by
American.
2.3 The Trademarks shall be used only in connection with
such products and services as may be approved or
specified by American and shall at all times be used
only in a manner approved by American.
2.4 Licensee's right to the use of the Trademarks is
specifically limited to Licensee's retail store
operation at the Authorized Location.
2.5 Licensee shall use no other trademarks, trade names or
service marks in said business except those authorized
by American and as set forth in Appendix A except with
the prior written consent of American.
2.6 Licensee shall not use the words "Dairy Queen" or any
of the Trademarks, or any word or mark similar thereto,
as a part of its corporate or business name unless
first approved in writing by American, and shall only
use the words "Dairy Queen" and no other words
whatsoever except with the express written consent of
American as the trade name on the store from which the
said products and services are sold. In the event
American does approve the use of the words "Dairy
Queen", or any of the Trademarks, as a part of
Licensee's corporate or business name, Licensee shall
cause such name to be changed so as to eliminate those
words and Trademarks from the
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name within thirty (30) days after termination of this
Agreement.
2.7 Licensee shall adopt and follow in good faith the
systems, programs and methods prescribed by Licensor
for Licensee's retail operation in accordance with
this Operating Agreement.
2.8 Neither Licensee nor any person owning an interest
directly or indirectly in Licensee shall directly or
indirectly operate or permit to be operated or hold
any interest (other than 1% or less of the outstanding
stock or debt of any class of any public company) in
any restaurant or fast-food business other than a
Bowlin's or its affiliates at the time of signing or
one authorized by this Agreement without the prior
written consent of Licensor.
TERM
Term 3. The License granted herein shall continue until terminated
by Licensee, with or without cause, on sixty (60) days prior
written notice to Licensor, or until otherwise terminated by
either Licensee or Licensor in accordance with the
provisions of this Agreement.
TRADEMARK STANDARDS AND REQUIREMENTS
General 4. Licensee agrees that nothing in this Agreement gives him any
Declarations title to or interest in the Trade-marks except the right to
use the same under the terms and conditions of this
Agreement and that Licensee's use thereof inures to the
benefit of American. Specifically, but without limiting the
foregoing, Licensee acknowledges and agrees that American
has the right: and may distribute for its own account
products identified by the Trademarks through not only
"Dairy Queen" retail stores but through any other
distribution method which may from time to time be
established.
Use of 4.1 Licensee shall confine his use of the Trademarks to or
Trademarks in association with the sales promotion programs and
sale of products and services which shall in quality,
mode and conditions of manufacture and sale, comply
with such reasonable standards as are established or
approved by American. In order to promote and protect
the business interests of each of the parties, the
value of the "Dairy Queen" business and the business
interests of other persons engaged therein, uniformity
shall be maintained in the type, standard and quality
of stores, equipment, supplies and ingredients used
therein, and the conditions of preparation and the
procedures employed in the sale of said products and
services.
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Acknowledgment 4.2 Licensee agrees that the provisions, restrictions and
of, controls provided in this Operating Agreement are all
Necessity of necessary, reasonable and desirable for the purposes
Uniformity expressed herein and that Licensee's business shall be
conducted in accordance with Licensor's and American's
uniform requirements with respect to quality,
production, appearance, cleanliness, service,
merchandising and sales promotion standards. Licensee
acknowledges and agrees that substantial uniformity in
facilities, products, services and operations are
essential to the conduct of a system such as the "Dairy
Queen" system, and therefore further agrees to honor
and implement recommendations of American and Licensor
directed to enhancing and furthering such uniformity.
Equipment 4.3 Licensee agrees to purchase and use, in the operation
and Supplies of Licensee's "Dairy Queen" retail store, only
equipment, supplies, ingredients and services which
are approved by American or by Licensor. Nothing
herein shall by construed as an attempt to limit
unreasonably the sources from which Licensee may
procure equipment, supplies, ingredients or services.
Rather, it is the intention of the parties that such
items conform to American's standards and
specifications of consistent quality and uniformity.
Nothing contained herein shall be deemed to require
American or Licensor to approve an inordinate number
of suppliers of a given item or service which in the
reasonable judgment of American or Licensor would
result in higher cost generally to Licensor's
licensees or prevent effective and economical
supervision of suppliers by American or Licensor.
Requests for approval of additional suppliers shall be
in writing and shall contain such information as
American and Licensor may reasonably request. American
and Licensor reserve the right to charge back to
Licensee or the proposed supplier all reasonable
expenses incurred in considering requests for
approval.
Approved 4.4 Complete and detailed uniformity under many varying
Adaptations conditions may not be possible or practical and
Licensor and American reserve the right and privilege,
at Licensor's and American's sole discretion and as
Licensor and American may deem in the best interest of
all concerned in any specific instance, to vary
standards to accommodate special needs of Licensee's
Authorized Site or that of any other licensee based
upon the peculiarities of a particular site or
location, density of population, business potential,
population of trade area, existing business practices,
requirements of local law or any condition which
Licensor and American deem to be of importance to the
successful operation of such licensee's business.
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Litigation 4.5 In the event any person, firm or company, who is not a
licensee or franchisee of American or Licensor, uses
or infringes upon the Trademarks, American shall
control all litigation and shall be the sole judge as
to whether or not suit shall be instituted or other
action taken.
Notice of 4.6 Licensor and American hereby advise Licensee that
Potential Licensor, American and/or affiliates of American and/or
American and/or Licensor may from time to time make available to
Licensor Profit Licensee goods, products and/or services for use in
Licensee's "Dairy Queen" retail store in respect to the
sales or provision of which Licensor, American and/or
Also See Addendum affiliates of American and/or Licensor may make a
to Paragraph 4.6 profit. Licensor further advises Licensee that
Licensor, American and/or affiliates of American and/or
Licensor may from time to time receive consideration
from suppliers and/or manufacturers in consideration of
services provided or rights licensed to such persons by
American, Licensor or their respective affiliates.
FACILITY STANDARDS AND MAINTENANCE
5. The following provisions and conditions shall control with
respect to Licensee's Authorized Location and retail store:,
Store Facility 5.1 Licensee agrees that the retail store shall be
constructed and equipped in accordance with American's
currently approved specifications and standards in
respect to building, equipment, inventory, signage,
fixtures, location and design and accessory features.
Future 5.2 Any replacement, reconstruction, addition or
Alteration modification in building, equipment or signage, to be
made hereafter, whether at the request of Licensee or
of Licensor shall be made in accordance with written
specifications approved in advance by Licensor or
American. Licensor and American shall not unreasonably
withhold such approval.
Maintenance 5.3 The building, equipment and signage employed in the
conduct of Licensee's business shall be maintained in
accordance with maintenance schedules and procedures or
specific lists prepared by Licensor and based upon
periodic inspections of the premises by Licensor's
representatives. Within a period of ninety (90) days
after the receipt of such maintenance list, Licensee
shall effect the items of maintenance reasonably
provided therein including the repair of defective
items and/or the replacement of unrepairable or
obsolete items of equipment and signage. Routine
maintenance shall be conducted in accordance with
general schedules published by Licensor or American and
made available to Licensee. -6-
Relocation 5.4 Should it become necessary, on account of condemnation,
sale or other cause, including expiration or
cancellation of lease or rental contract, to relocate
said store, Licensor shall grant Licensee authority to
do so within a radius of 1,000 yards of the Authorized
Location, provided the new site is reasonably suited
for a "Dairy Queen" retail store in accordance with
Licensor's standards for store sites, does not infringe
on rights of another licensee, is reasonably distant
from other "Dairy Queen" retail stores, and the new
retail store is constructed, equipped and opened for
business in accordance with the current standards of
American at that time within one year after
discontinuing operation of a "Dairy Queen" retail store
at the previous Authorized Location.
Modernization 5.5 Each and every transfer as provided in Paragraph 9.10
and/or Replacement hereof shall be expressly conditioned upon Licensee
of Time promptly performing and effecting such items of
of Transfer modernization and/or replace ment of building,
equipment and signage as may be reasonably necessary to
permit the same to conform to the standards then
prescribed by American for similarly situated store
operations. Licensee recognizes and acknowledges that
the requirements of this Paragraph 5.5 are both
reasonable and necessary to insure continued public
acceptance and patronage of, and to avoid deterioration
or obsolescence in the business conducted hereunder.
PRODUCTS AND OPERATIONS STANDARDS AND REQUIREMENTS
6. The following provisions shall control with respect to
products and operations:
Authorized 6.1 Licensee's business shall be confined to the
Product Line preparation and sale of only such products as from time
to time are designated and approved by American for
sale by Licensees which are parties to this form of
Operating Agreement. The premises upon which said
business is operated shall not be used for any other
business and there shall not be sold or offered for
Also See Addendum sale therefrom any other product or service (excepting
to Paragraph 6.1 the preparation, storage and sale of Permitted
Products) without the written consent of American.
Specifically, but without limiting the foregoing,
alcoholic or intoxicating beverages shall not be sold
or offered for sale or otherwise handled upon said
premises.
Approved Menu 6.2 Attached hereto as Appendix B is the currently approved
menu for Licensee's retail store. American may from
time to time make reasonable modifications to said
approved menu provided said modifications are made in
respect to all licensees which have this form of
Operating Agreement and are located in similar areas of
the country. In addition, Licensee may from time to
time request variation from
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the currently approved menu. Such variations shall
only be made with the prior written consent of
American.
Authorized 6.3 Licensee shall use in preparing products only such
Ingredients, ingredients, formulas and supplies as are specified by
Formulas, American and in such portions, sizes, appearance and
Supplies, packaging as are set forth in American's most current
Preparation; "Store Management Operations Manual" and "product
Subject to Change preparation charts". Copies of the current "Store
by American Management Operations Manual" and "product preparation
charts" have been supplied to Licensee by Licensor
contemporaneously with the execution of this Operating
Agreement. Licensee acknowledges and agrees that these
may be changed from time to time by American and that
Licensee is obligated to conform to the requirements as
so changed from time to time. All other supplies,
including cones, cups, containers, eating utensils,
napkins, and all other customer service materials of
all descriptions and types shall meet the standards of
uniformity and quality as now or hereafter are
reasonably set by American. Licensee shall be furnished
with lists of approved equipment, supplies, ingredients
and services.
Serving and 6.4 All sales promotion material, customer "good will"
Promotion Items items, cartons, containers, wrappers and paper goods,
eating and serving utensils, customer convenience items
(including napkins, baby bibs and disposal containers)
used in the sales promotion, sale and distribution of
all products covered by this Operating Agreement shall,
where practicable, contain one or more of the
Trademarks and indicate that it is produced and sold
under the authority of American and shall be subject to
approval by Licensor or American before being used.
Maintenance 6.5 Licensee's said business shall be operated and
and Sanitation maintained at all times in compliance with any and all
applicable health and sanitary standards prescribed by
American, Licensor and by governmental authority. In
addition to complying with such standards, if such
store shall be subject to any sanitary or health
inspection by any governmental authorities under which
it may be rated in one or more than one classification,
it shall be maintained and operated so as to be rated
in the highest available health and sanitary
classification with respect to each governmental agency
inspecting the same.
Inspection and 6.6 American, Licensor or the authorized representative of
Recommendation either shall have the right to enter Licensee's store
at all reasonable times during the business day for the
purpose of making periodic inspections to ascertain if
all the provisions of this Operating Agreement are
being observed by Licensee
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and to inspect Licensee's said store land and
equipment, and to test, sample and inspect his
supplies, ingredients and products, as well as the
storage, preparation and formulation thereof and the
conditions of sanitation and cleanliness in the
storage, production, handling and serving thereof.
Period of 6.7 Licensee's store shall be opened to the public and
Operation operated twelve months per year and at least twelve
hours each day of the year. Any variance from this
provision must be authorized in writing by Licensor.
Acts of God, war, strikes or riots preventing Licensee
from temporarily complying with the foregoing shall to
that extent suspend compliance therewith.
Notice of 6.8 Licensee acknowledges that he is aware of the fact that
Existence of present licensees of Licensor and American operate
Different Forms under a number of different forms of agreement and that
of License consequently Licensor's and American's obligations and
Agreements rights in respect to their respective licenses may
differ materially in certain instances.
PERSONNEL AND SUPERVISION STANDARDS
7. The following provisions and conditions shall control with
respect to personnel, training and supervision:
Management 7.1 Licensee shall adopt and use as his continuing
System operational routine the standard "Dairy Queen"
management system as well as American's standards with
respect to product preparation, merchandising, employee
recruitment and training, equipment and facility
maintenance and sanitation. From time to time American
will revise these programs to meet changing conditions
of retail operation in the best interest of "Dairy
Queen" retail stores, and Licensee shall adopt and
implement any such changes.
Training 7.2 Licensee shall, at Licensee's expense, attend
American's store management training program, at a
place to be designated by American, prior to the
opening of Licensee's store. In the event Licensee
fails to complete such training to the reasonable
satisfaction of American or Licensor, Licensor may
within thirty (30) days thereafter declare this
Agreement null and void whereupon all deposits
including the franchise fee shall be returned to
Licensee. If during the term hereof Licensee operates
said store with a manager other than himself, Licensee
shall, at Licensee's expense, cause such person to
attend and successfully complete such training program.
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Staffing 7.3 Licensee shall hire and supervise efficient, competent,
sober and courteous operators and employees for the
operation of the busi-. ness and set and pay their
wages, commis- sions and incentives with no liability
there- for on American or Licensor. Licensee shall
require all his employees to work in clean uniforms
approved by Licensor but furnished at the cost of
Licensee or his employees as Licensee may determine. No
employee of Licensee shall be deemed to be an employee
of Licensor or American for any purpose(s) whatsoever.
Internal 7.4 Licensor shall provide or make available to Licensee an
Training in-store training program for all store employees.
Program Licensee shall train and periodically re-train all
store employees using the training aids made available
by Licensor. From time to time, American will revise
such training materials and aids and it or Licensor
make the same available to Licensee for purchase.
Attendance at 7.5 Licensee, or manager of Licensee, at Licensee's
Meetings expense, shall attend at least one national, regional
or approved local marketing area meeting each year
which Licensor and/or American originates for and on
behalf of "Dairy Queen" operators to set forth new
methods and programs in store operation, training,
management, sales and sale promotion programs. Licensor
further strongly recommends that key employees of
Licensee also attend such meetings.
SALES PROMOTION PROGRAMS
Sales Promotion 8.1 Licensor and Licensee, together with other licensees of
Programs and American, shall cooperate in the sales promotion
Payment to programs of approved products. To this end, American
American of has reserved the right to establish and organize sales
Expenses for promotion programs from time to time and Licensee
Adminstering agrees to pay to Licensor for remittance to American a
Same sales promotion program fee as set forth in Paragraph
9.1 hereof. Licensee acknowledges and agrees that
American has had in the past, and shall in the future
have, the discretion to determine expenditures of funds
collected in respect to sales promotion programs and as
to the selection of the promotional materials and
programs for which said expenditures are made,
provided, however, that American shall make a good
faith effort to expend such funds in the general best
interest of participating licensees. Licensee
acknowledges and agrees that American may compensate
itself and/or its affiliates for the expense of
administering such sales promotion programs. Licensor
shall advise Licensee annually of American's expenses
in administering said sales promotion programs.
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Sales Promotion 8.2 Licensee shall only use such sales promotion program or
Materials other advertising materials as are furnished, approved
or made available by or through American. Said
materials shall be used only in a manner prescribed by
American. American shall not unreasonably withhold
approval of any reasonable sales promotion materials.
Yellow Pages 8.3 Licensee shall, if requested by Licensor, list
separately, or participate in a listing, in the Yellow
Pages of his local telephone directory containing such
copy as may reason- ably be specified by Licensor. The
cost of such listing shall be paid by Licensee, or by
Licensee and other participating licensees in the case
of a joint listing. Licensor shall not specify an
unreasonably expensive listing.
FEES, REPORTING AND FINANCIAL MANAGEMENT
Service, Set-up, 9.1 Licensee shall pay to Licensor as a service and set-up
Franchise, fee $ 0 of which $ 0 has been paid upon the execution
License and of this Agreement and a balance of $ O is payable in
Sales Promotion accordance with the terms of Appendix C attached
Program Fees hereto. Said service and set-up fee is intended to
compensate Licensor for its expenses incurred, and
services rendered in establishing and setting up
Licensee's initial operation. In addition to said
service and set-up fee, during the full term of this
Operating Agreement, and in consideration of the rights
granted hereunder, Licensee shall pay to Licensor as
license fee in respect to the rights granted herein a
sum equal to 4% of gross retail sales, exclusive of
retail sales taxes, of all products, goods and wares of
every kind and nature sold from, or in connection with
the operation of, Licensee's "Dairy Queen" retail
store, including, but without limiting the generality
of the foregoing, sales of all products of any of the
Trademarks as well as sales of other merchandise
whether or not identified by other brand names and
which may be authorized for sale by American or
Licensor from time to time; provided, notwithstanding
the foregoing, that no such continuing license fee
shall be payable with respect to sales of Permitted
Products. in addition, Licensee shall pay to Licensor
for remittance to American a sales promotion fee to be
expended in accordance with the provisions of Paragraph
8.1. The sales promotion fee shall be a sum equal to
not less than 3% nor more than 5% of Licensee's gross
retail sales net of sales taxes (excluding sales of
Permitted Products). Licensor shall
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determine and notify Licensee of the exact percentage
prior to the first day of each fiscal year of Licensor
(except no notification will be given with respect to
any year for which the percentage is to be unchanged
from the preceding year). Such percentage shall be the
same as that to be employed during such succeeding
year by the majority of "Dairy Queen" licensees within
the marketing area as determined by American within
which Licensee's store is located.
Computations 9.2 All amounts due and owing hereunder shall be computed
and Remittances at the end of each month's operation and remittance for
the same shall be made to Licensor on or before the
fourteenth day of the following month accompanied by
the reports provided for in Paragraph 9.4 hereof. The
computation of said amounts shall be certified and
sworn to by Licensee in the manner specified by
Licensor and Licensee shall supply to Licensor such
supporting or supplementary materials as Licensor may
reasonably require to verify the accuracy of such
remittances.
Surcharge 9.3 At Licensor's option, Licensor may require Licensee to
Method of pay to suppliers of mix, meat and other products and
Precollection ingredients used in the conduct of the business a
surcharge on all units of such commodities purchased by
Licensee. Said surcharge shall be paid to such supplier
by Licensee at the time of purchase of such
commodities. Said surcharge shall be established by
Licensor at a reasonable rate so as to approximate the
amount of license fee and sales promotion fee which
will be payable by Licensee. Said surcharge shall be
paid to said supplier or suppliers for the account of
Licensor, the same to be regarded by the parties as a
method of precollection of said license and sales
promotion fees. The amounts so collected shall be
credited by Licensor against the license and sales
promotion fees due from Licensee to Licensor at the end
of each month's operations. Licensor shall submit to
Licensee on a monthly or quarterly basis a
reconciliation of said license and sales promotion fees
account setting forth the credits to Licensee's account
by reason of amounts collected for Licensor by
suppliers by way of the aforesaid surcharge method. In
the event Licensee shall fail to submit reports in
accordance with Paragraph 9.4, Licensor may make said
reconciliation of amounts due in conformance with its
best judgment with regard to said amounts due and same
shall be conclusive as to the amounts due Licensor from
Licensee unless within a period of ten (10) days after
mailing of said reconciliation to Licensee by Licensor,
Licensee provides evidence in a form satisfactory to
Licensor of the correct amounts due.
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Licensee shall pay such amounts, if any, determined to
be owed pursuant to Licensor's reconciliation within
ten (10) days after a mailing of notice to Licensee by
Licensor. If Licensor determines that Licensee has
over-paid license or sales promotion fees on the
surcharge basis, Licensor shall remit to Licensee an
amount equal to the excess fees collected at the time
the monthly or quarterly reconciliation is provided
Licensee.
Reports and 9.4 Licensee shall keep true records from which all sums
Records payable under this Agreement and the dates of accrual
thereof may be readily determined. Licensee shall make
written reports to Licensor in such form as Licensor
may from time to time prescribe within fourteen (14)
days after the end of each month's operation setting
forth the amount of gross sales of all products from,
or in connection with the operation of, said store and
the business thereof during said month. In addition to
the foregoing, and in addition to such other
information as Licensor may from time to time require,
said monthly report shall accurately set forth the
total number of gallons of mix, the total number of
pounds of meat, and the quantity of other basic
commodities used during said month and the sources from
which said mix, meat and other commodities were
purchased together with a complete statement of
Licensee's cost of labor, utilities, rent and each
other cost of operation. For the purpose of said
reports the date of use of such mix, meat and other
commodities shall be deemed to be the date of receipt
at the store. Licensor, American or the authorized
representative of either shall have the right at all
times during the business day to enter Licensee's
premises where books and records relative to said store
are kept, and to inspect, copy and audit such books and
records. In the event that any such inspection or audit
reveals a variance of 3% or more from data reported to
Licensor or American, in addition to any other rights
it may have, Licensor or American may conduct such
further periodic audits and/or inspections of
Licensee's books and records as it reason- ably deems
necessary for up to one year thereafter and such
further audits and/or inspections shall be at
Licensee's sole expense including without limitation
reasonable professional fees, travel and room and board
expenses directly related thereto.
Financial 9.5 Licensee agrees to employ sound financial management
Planning and practices in connection with the operation of said
Management business and to that end Licensee shall maintain on
forms approved or provided by Licensor or American
Also See Addendum
to Paragraph 9.5
-13-
a monthly profit plan, a monthly profit and loss
statement and a monthly balance sheet accurately
reflecting the operations and condition of said
business. In addition to the foregoing, Licensee shall
employ such methods of recordkeeping, bookkeeping and
reporting as Licensor shall from time to time
reasonably require and copies of all monthly profit
plans, profit and loss statements, sales summaries and
breakdowns for the preceding month shall be forwarded
to Licensor on or before the fourteenth day of the
following month.
9.6 Licensee agrees to pay promptly, when due, all taxes
and assessments that may be assessed against said
premises or the equipment or supplies used in
connection with Licensee's business, all liens and
encumbrances of every kind and character created or
placed upon or against any of said property and all
accounts and other indebtedness of every kind incurred
by Licensee in the conduct of said business. In the
event Licensee should default in making any such
payment, Licensor shall be authorized but not required,
to pay the same on Licensee's behalf and Licensee's
covenants promptly to reimburse Licensor on demand for
any such payment. to Licensor by the same arise this
Paragraph vision of this interest at 12% per annum and
all amounts owing Licensee hereunder, whether under the
provisions of 9.6 or under any other pro Agreement,
shall bear annum or the maximum rate permitted by law,
whichever is less, from and after the date of accrual
thereof.
Timely 9.7 The default by Licensee in the timely payment of any
Payment indebtedness owing to Licensor and/or American, or to
any affiliates of Licensor and/or American, or the
default by Licensee in the payment of any indebtedness
of Licensee with respect to which Licensor or American
or any of Licensor's and/or American's affiliates is a
guarantor, co-signer, endorser or obligor, shall
constitute a breach of this Operating Agreement,
rendering the same subject to termination in accordance
with the provisions of Paragraphs 10.1 and 10.2 hereof.
Insolvency, 9.8 In the event that Licensee be declared insolvent or
Etc. bankrupt, or in the event a receiver is appointed, this
Operating Agreement shall automatically terminate as of
the date of such declaration or appointment.
Liability and 9.9 Licensee hereby waives all claims against Licensor
Insurance and/or American for damages to property or injuries to
persons arising out of the operation of Licensee's
business, and Licensee shall indemnify and save
Licensor and/or American and/or the affiliates of
either harmless of and from
-14-
any damage or injury to property or persons arising
from or in connection with the operation of said
business or the consumption of the product thereof.
Licensee further agrees to purchase and maintain in
full force and effect during the term of this
Agreement, at Licensee's sole expense, liability
insurance in an aggregate amount not less than $300,000
insuring Licensee, Licensor and American from li4
ability for any and all such damage or injury and
Licensee further agrees to deliver to Licensor a proper
certificate evidencing the existence of such insurance
coverage and Licensee's compliance with the provisions
of this paragraph and which provides that Licensor and
American will be given thirty (30) days prior written
notice of material change, termination or cancellation
of the policy. Said insurance coverage shall commence
as of the date Licensee commences operating a "Dairy
Queen" retail store or as of the date the Authorized
Location is first identified as a site on which a
"Dairy Queen" retail store will be operated, whichever
shall first occur.
Assignment and 9.10 Licensee agrees not to transfer, assign or alienate
Transfer his interest herein or hereunder in whole or in part
without the prior written consent of Licensor, which
consent shall not be withheld unreasonably, but
Licensor may insist that any proposed assignment be an
Also See Addendum assignment of all of Licensee's interest hereunder and
to Paragraph 9.10 that any proposed assignee be a person, in Licensor's
reasonable judgment, qualified to provide active
supervision over the operation of said store in
compliance with Licensee's obligations hereunder and
who has sufficient net worth and sources of capital
which meet Licensor's then current requirements for a
store operation of the type contemplated by this form
of agreement. In the event Licensee's said interest
should be so transferred or assigned, Licensee shall
pay to Licensor contemporaneously therewith the sum of
One Thousand Five Hundred Dollars ($1,500), or an
amount equal to one-half of the license fees paid or
payable by Licensee in respect of operations in the
twelve (12) months ending with the month prior to the
month in which the assignment is approved, whichever is
the greater amount, as a fee for the preparation of a
new Operating Agreement in assignee's name, for
Licensor's assistance in reset-up of the retail store
and for any and all other expenses incurred and
services rendered by Licensor in effecting said
tran@fer. In the event of any such assignment, the
assignee, as a condition of Licensor approving such
assignment, must attend and to the reasonable
satisfaction of Licensor
-15-
successfully complete, at assignee's expense,
American's training program at American's training
center. In the event Licensee is a corporation,
partnership or other entity, any transfer or transfers
of stock (or other form of ownership interest)
constituting in the aggregate a controlling interest
in Licensee shall be subject to the consent, transfer
fee and all other applicable provisions of this
Agreement. Licensor may withhold its consent to any
proposed transfer until all amounts owed by Licensee
to Licensor, American, the affiliates or subsidiaries
of either and approved "Dairy Queen" suppliers have
been paid in full.
Offsets 9.11 Licensee waives any and all existing and future claims
and offsets against any amounts due hereunder, which
amounts shall be paid when due. Licensor and American
shall be entitled to apply or cause to be applied
against amounts due to either of them or any of their
respective affiliated com- panies any amounts which may
from time to time be held by either of them or their
respective affiliates on Licensee's behalf or be owed
to Licensee by Licensor or American or their respective
affiliates.-
CONTRACT VIOLATION
Remedies, 10. In the event of any dispute between the parties hereto
Arbitration arising under, out of, in connection with or in relation to
this Agreement, said dispute shall be submitted by the
parties to binding arbitration in accordance with the Rules
and Procedures and under the auspices of the American
Arbitration Association. The arbitration shall take place at
the capital of the state of the Authorized Location of
Licensee or at such other place as may be mutually agreeable
to the parties. The decision of the arbitrators shall be
final,and binding on all parties. Notwithstanding the
foregoing, Licensee recognizes that his "Dairy Queen" store
is one of a large number of stores similarly situated and
selling to the public similar products, and hence the
failure on the part of a single licensee to comply with the
terms of his Operating Agreement could cause irreparable
damage to Licensor, American and/or to some or all other
"Dairy Queen" licensees. Therefore, it is mutually agreed
that in the event of a breach or threatened breach of any of
the terms of this Operating Agreement by Licensee, Licensor
shall forthwith be entitled to an injunction restraining
such breach and/or to a decree of specific performance
without having to show or prove any actual damage, together
with recovery of reasonable attorney's fees and other costs
incurred in obtaining said equitable relief, until such time
as a final and binding determination is made by the
-16-
arbitrators. The foregoing equitable remedy shall be in
addition to, and not in lieu of, all other remedies and
rights which Licensor might otherwise have by virtue of any
breach of this Agreement by Licensee.
Breach of 10.1 Licensee shall be in default hereunder if Licensor
Contract determines that Licensee has made any false report to
Licensor, or has failed to pay when due any amounts
owed to Licensor, or has in Licensor's judgment in any
other way breached any of the terms of this Agreement,
including but not limited to, failing to submit
Also See Addendum required reports, failing to meet any requirements or
to Paragraph 10.1 specifications established with respect to product
quality, physical property, conditions or equipment or
materials used, products manufactured, menu or use of
approved products, packages or promotional materials.
Failure of Licensee to pay to Licensor any past due
amount owed within fourteen (14) days of Licensor's
written notice of default therein shall be construed as
Licensee's voluntary abandonment of this Agreement and
the franchised business hereunder operated.
10.2 Except as hereinafter provided, failure of Licensee to
cure a default by Licensee hereunder within fourteen
(14) days from the date of a written notice of default
mailed or delivered to Licensee, which notice states to
such default, shall give Licensor good cause to
Also See Addendum terminate this Agreement. Termination shall be
Paragraph 10.2 accomplished by mailing or delivering to Licensee
written notice of termination, which notice shall state
the grounds therefore and shall be effective (i)
immediately in any case of voluntary abandonment of
this Agreement by Licensee of conviction of Licensee of
an offense directly related to the business conducted
hereunder; or (ii) sixty (60) days after the date of
such notice of termination in all other cases;
provided, however, that notwithstanding any other
provision of this Paragraph 10, this Agreement may be
terminated immediately upon failure of Licensee to cure
within twenty-four (24) hours of notice thereof any
default under this Agreement which materially impairs
the good will associated with any of the Trademarks. In
addition to the foregoing, this Agreement may be
terminated by Licensor upon any ground or by any period
of notice as may be permitted from time to time by
applicable law or regulation. Any notice of default of
termination shall be personally delivered or be mailed
by certified or registered mail, return receipt
requested, postage prepaid.
-17-
Land, Building 10.3 Subject to the provisions of Paragraph 5.4 hereof, any
Lease, or Failure failure to rebuild or repair and reopen for operation
to Reopen Licensee's destroyed or damaged store or store whose
lease has been terminated or not renewed within one
year of the date of occurence of such termination,
destruction or damage, shall automatically terminate
this Operating Agreement.
TERMINATION RIGHTS
11. Upon the termination of this Operating Agreement:
Reversion of 11.1 All rights to the use of the Trademarks and the right
Trademark and license to conduct said business at the Authorized
Rights Location shall revert to Licensor and Licensee shall
immediately cease all use of the Trademarks and pay all
monies due at said date. Licensee shall promptly and at
his own expense remove or obliterate all store signage
and displays furnished to Licensee by Licensor and
shall remove or obliterate and thereafter discontinue
all use of any signage or displays at the Authorized
Location or in his possession bearing any of the
Trademarks or names or material confusingly similar to
any of the Trademarks.
11.2 All right, title and interest of Licensee in and to
this Operating Agreement shall become the property of
Licensor.
Purchase 11.3 Licensor shall have the first option to purchase any or
all equipment, fixtures, furnishings or supplies, of
whatever kind, owned by Licensee and used by him in the
production of the "Dairy Queen" product, or any of the
other approved products under any of the Trademarks
hereunder at a price determined by a qualified
appraiser selected with the consent of both parties. if
the parties cannot agree upon the selection of such an
appraiser he shall be appointed by a Judge of the
United States District Court of Licensee's Authorized
Location upon petition of either party. Said option to
purchase may be exercised by Licensor at any time
within thirty (30) days from the date of such
termination or within thirty (30) days after the date
of the receipt by Licensor of the appraiser's
determination, whichever shall be the later date, and
shall not be impaired or terminated by the attempted
sale or other transfer of any such equipment or
supplies by Licensee to a third party. Upon the
exercise of such option and tender of payment for any
such equipment or supplies, Licensee agrees to sell and
deliver the same to Licensor free and clear of all
encumbrances, and to execute and deliver to Licensor a
bill of sale therefore. -18-
Non-Compete 11.4 Licensee shall not directly or indirectly engage in any
competitive business within 2,000 yards of the
Authorized Location for a period of one year after said
date of termination of this Agreement except through a
Bowlin' s or an af filiate in operation at the time of
signing.
PERMITTED PRODUCTS
12. It is mutually understood and agreed that the store
facilities and operations of Licensee hereunder may include
in addition to "Dairy Queen" or "Dairy Queen/Brazier" food
and beverage service the sale of various other products not
identified or designated by Company's Trademarks, including,
but not limited to, motor vehicle fuel, oil and related
automotive products, souvenir-type products, tobacco
products, sundries, and packaged food products not intended
for consumption on the premises where sold and which are not
competitive with food and beverage products identified or
designated by the Trademarks (all of said products
collectively referred to in this Agreement as "Permitted
Products"). In order to prevent public confusion, preserve
and protect the Trademarks and establish the principles
which shall govern Licensee's sale of Permitted Products and
usage of the Trademarks, the parties agree that
notwithstanding any provision of this or any other Agreement
to the contrary, the following provisions shall control with
regard to Permitted Products:
12.1 Licensee may sell Permitted Products from its licensed
store. Licensee may use in the business operated
hereunder in the manner and to the extent permitted by
this Agreement marks and names identifying Permitted
Products.
12.2 The Trademarks shall not under any circumstances be
used to identify or designate Permitted Products or any
other productcs) for which use of the Trademarks has
not been specifically authorized by American. Permitted
Products shall be sold only from physical facilities
(such as a different area, room or building) which are
clearly distinct and apart from the "Dairy Queen"
retail store.
12.3 No product shall be sold from any part of any
sublicensed store's site which detracts or threatens to
detract from the reputation or goodwill of the "Dairy
Queen" trade name or any of the Trademarks. Licensor
shall have the right to direct Licensee to remove from
the store and discontinue the sale of any product item
or items which in American's good faith judgment
violates the quality standard of the preceding
sentence. No product shall under any circumstances be
sold from the "Dairy Queen" portion of the licensed
store which has not received
-19-
the specific prior approval of Licensor.
12.4 A building design and related facility standards, based
upon American's existing design and specifications for
"Dairy Queen"/ "Brazier" stores, shall be developed by
mutual consultation and agreement, which shall take
into account the particular requirements for a "Dairy
Queen" or "Dairy Queen"/"Brazier" facility to be
situated along an Interstate highway. Licensee shall
comply strictly with the design and facility standards
developed hereunder.
12.5 Notwithstanding Paragraph 8.2 hereof, Licensee may
employ off-site advertising media such as billboards
and radio commercials, provided such advertising is
approved by Licensor and American, and provided further
that no such advertising shall be used which creates or
fosters any confusion as to the identity, source or
quality of goods identified or designated by the
Trademarks. Licensor acknowledges that it may be
necessary to share extant billboard space with an
existing Stuckey's, Wayfara or other store, and
Licensor requires that advertising for the "Dairy
Queen" store be as visually and physically separate
from the other advertising as is feasible.
12.6 Because the "Dairy Queen" store hereunder may also sell
Permitted Products, the parties agree that
notwithstanding any other provision of this Agreement
or any other contract between the parties, Licensor
deems it to be necessary and desirable, to permit the
following:
a. To allow Licensee to sell Permitted Products in
conjunction with a "Dairy Queen" or "Dairy
Queen"/"Brazier" store;
b. To allow the principal shareholders of Licensee
and members of their immediate families to own
any amount or class of stock or debt in any
Bowlln's business;
c. To the extent and in the manner permitted
hereunder, to allow Licensee to sell and to
advertise Permitted Products in conjunction with
products identified or designated by the
Trademarks;
d. Subject to Paragraph 6.1 hereof, to relieve
Licensee from the obligation with respect to
Permitted Products, to purchase and use
equipment, supplies, ingredients and services
approved by American;
e. To allow Licensee to construct and equip its
retail store in accordance
-20-
with building design and related facility
standards developed under Paragraph 12.4 hereof;
f. To relieve Licensee: (i) from the obligation of
using, in preparing or selecting Permitted
Products, ingredients, formulas and supplies
specified by American; (ii) from the obligation
to observe, with respect to Permitted Products,
the requirements relative to portions, sizes,
appearance and packaging set forth in American's
"Store Management Operations Manual" and "product
preparation charts"; and (iii) with respect to
Permitted Products, to allow the use of other
supplies and customer service materials without
regard to standards of uniformity and quality as
are now or hereafter set by American;
9. To allow Licensee its principal shareholders or
members of their immediate families to engage in
a competitive business within 2,000 yards of the
Authorized Location of the store licensed
hereunder, as defined in the Operating Agreement,
but only through a Bowlin's business; and
h. To relieve stockholders of this corporate
Licensee from the obligation of personally
guarantying the obligations of Licensee under the
Operating Agreement. Sale or transfer of this
License to another corporation shall include the
then customary guarantees required of
corporations.
GENERAL PROVISIONS
13.1 In the event any one or more clauses of this Agreement
shall be held to be void or unenforceable for any
reason by any court of competent jurisdiction such
clause or clauses shall be deemed to be separable and
of no force or effect in such jurisdiction and the
remainder of this Agreement shall be deemed to be valid
and in full force and effect, and the terms of this
Operating Agreement shall be equitably adjusted so as
to compensate the appropriate party for any
consideration lost because of the elimination of such
clause or clauses.
13.2 Any waiver by Licensor of any breach or default by
Licensee shall not be deemed to be a waiver of any
other or subsequent breach or default nor an estoppel
to enforce its rights in the event of any other or
subsequent breach.
13.3 This Agreement, and the application form executed by
Licensee requesting Licensor
-21-
to enter into this Agreement, constitute the sole
agreement between the parties with respect to the
entire subject matter of this Operating Agreement and
embodies all prior agreements and negotiations with
respect to the "Dairy Queen" business. There are no
representations of any kind except as contained herein
and in the aforesaid application.
13.4 Except as otherwise provided in this Agreement, any
notice, demand or communication provided for herein
shall be in writing, signed by the party giving the
same, deposited in the registered or certified United
States mail, return receipt requested, postage prepaid,
and;
a. If intended for American shall be addressed to
American Dairy Queen Corporation at 5701 Green
Valley Drive, Minneapolis, Minnesota, 5S437;
b. If intended for Licensor shall be addressed to
Licensor at the address hereinabove set forth;
c. If intended for Licensee, shall be addressed to
Licensee at the Authorized Location hereinabove
designated;
or to such other address as may have been given to the
other party by notification as herein provided.
Notices for purposes of this Agreement shall be deemed
**Refer to Addendum to to have been received **
Paragraph 13.4
13.5 If Licensee consists of two or more individuals, such
individuals shall be jointly and severally liable and
references to Licensee in this Agreement shall include
all such individuals. Reference to Licensee as male
shall also include a female licensee, partnership or
corporation or any other business entity. Headings and
captions contained herein are for convenience of
reference only and shall not be taken into account in
construing or interpreting this Agreement.
13.6 Subject to the terms of Paragraph 9.10 hereof, this
Agreement shall be binding upon and inure to the
benefit of the administrators, executors, heirs,
successors and assigns of the parties.
13.7 This Agreement shall be effective only when approved by
an officer of American and shall be governed by and
interpreted in accordance with the law of the state in
which the Authorized Location is Located.
-22-
13.8 This Agreement shall be deemed to be amended from time
to time as may be necessary to bring any of its
provisions into conformity with valid applicable laws
or regulations.
IN WITNESS WHEREOF, the parties hereto have executed the foregoing "Dairy Queen"
Operating Agreement the date first above written.
LICENSEE
Bowlin's Inc.
-------------------------------------------
ATTEST: By: M.L. Bowlin
---------------------------------------
Signature Illegible Its: President
-------------------------- -------------------------------------------
LICENSOR
ATTEST: INTERSTATE DAIRY QUEEN CORPORATION
-------------------------------------------
Cathryn E. Campbell By Signature Illegible
-------------------------- ----------------------------------------
Its President
----------------------------------------
APPROVED:
AMERICAN DAIRY QUEEN CORPORATION
By Signature Illegible
----------------------------------------
Its Vice President
-----------------------------------
-23-
I-10 & Exit 62 Approx. 20 Miles
West of Deming, NM
DATE: ________________________
INITITALS:_____________________
SALES PROMOTION PROGRAM FEE ADDENDUM TO PARAGRAPH 9.1
OF "DAIRY QUEEN" OPERATING AGREEMENT
Licensee is obligated to pay sales promotion fees as specified in Paragraph 9.1
of the Agreement.
However, in recognition that Licensor's Licensees in the past have expended more
than 3% of sales on sales promotion (primarily in an outdoor setting in order to
attract highway travellers), American and Licensor have temporarily without
prejudice allowed ADI #0069 Licensees to retain all or a portion of sales
promotion fees and to credit certain sales promotion expenditures against these
fees provided that:
(1.) Such expenditures are certified annually as specified in each fiscal
year's ADI #0069 Requirements Bulletin, and;
(2.) Unspent portions of the fiscal-year sales promotion fee are remitted
to Licensor by January 31 of the following year.
Events in American's and Licensor's exclusive discretion and judgement may, in
the future, require, and Licensee hereby agrees to make, full and regular
monthly payments of the sales promotion program fee to Licensor or American.
Licensee is obligated to participate annually in the Annual Marketing Program
(AMP) and the Interstate Marketing Program (IMP) each year that these programs
are in effect. In cases where Licensee pays all, or a portion, of the sales
promotion fee monthly to Licensor, the annual AMP and IMP fees will be paid from
amounts remitted to Licensor. The AMP fee will then be forwarded by Licensor to
American. In cases where Licensee does not pay sales promotion fees monthly to
Licensor, but instead retains them for local expenditure as specifed above,
Licensee shall remit the AMP and IMP annual fees to Licensor upon being invoiced
for these fees. Licensor will forward the AMP fee to American. Such AMP and IMP
fees are certifiable expenditures that can be credited against the total sales
promotion fee due for that fiscal year.
I-10 & Exit 62 Approx. 20 Miles
West of Deming, NM
DATE: ________________________
INITITALS:_____________________
ADDITIONAL STORE DEVELOPMENT PROGRAM ADDENDUM TO PARAGRAPH 9.10
OF THE "DAIRY QUEEN" OPERATING AGREEMENT
In the event of any assignment of the franchise, transfer of assets or stock of
the franchisee, or change of management of franchisee which requires the prior
approval of Licensor, Licensor may at its election require Licensee to pay a
transfer fee in addition to that fee specified in Paragraph 9.10. This
supplemental fee is based on the following formula:
TRANSFER & ASSIGNMENT WITHIN SUPPLEMENTAL TRANSFER FEE
One Year of Opening $25,000
First Year to Second Year 18,000
Second Year to Third Year 13,000
Third Year to Fourth Year 9,000
The supplemental transfer fee reimburses Licensor for the loss of the service
and set-up fee of $25,000 in respect to a "Dairy Queenlt/"Brazier" operation,
which was waived in connection with Licensor's Additional Store Development
Program, inasmuch as said program is intended to promote development and
operation of additional stores by a seasoned Licensee.
APPENDIX "A"
Licensee has the right to use the following trademarks and service marks In
accordance with the attached Operating Agreement.
This Appendix "A" may be amended by Company from time to time in order to make
available additional trademarks or service me unavailable. Licensee agrees to
use only those trademarks and service marks which are mark* or to delete those
which then currently authorized.
DAIRY QUEEN(R) DQ(R)
BRAZIER(R) DAIRY QUEEN IN ELLIPSE LOGO(R)
MR. MISTY(R) BROWNIE DELIGHT(R)
MR. MISTY KISS(R) THE CONE WITH THE CURL ON TOP(R)
LET'S ALL GO TO THE DAIRY QUEEN(TM) DESIGN:THE CONE WITH THE CURL ON TOP(R)
FIESTA(TM) QUEEN'S CHOICE AND DESIGN(R)
FULL MEAL DEAL(TM) DOUBLE DELIGHT(R)
CHILI DOG SPLIT(R) STARKISS(R)
PEANUT BUSTER(R) PARFAIT BIG "Q"(R)
FUDGE NUT BAR(TM) IT'S A REAL TREAT(TM)
BANANA SUPREME(R) DQ CHIPPER SANDWICH(R)
WE TREAT YOU RIGHT(R) BLIZZARD(R)
MORE BURGER THAN BUN(R) CHOCOLATE PEANUT BUTTER CRUNCH(TM)
SUPER DOG(TM) MR. MALTIE(R)
ROYAL BANANA SPLIT(TM) DQ CHOCOLATE CHIP COOKIE SANDWICH(R)
SNAK DEAL(TM) CHOCOLATE MOUNTAIN SUNDAE(R)
BUSTER BAR(R) BIG CONE AND DESIGN(R)
DILLY(R) BAR DQWICH(R)
DILLYWICH(R)
Each of the above trademarks and/or service marks must be used only in the
manner specified by the Company and in connection with the goods and/or services
specified by the Company. No deviations will be permitted.
4/88
(R) Reg. U.S. Pat. Office Am. D.Q. Corp. (TM)Trademark, Am. D.Q. Corp.
APPENDIX "B" Date:___________________ Initials:__________
Dairy Oueen'D /BrazierO
(Please attach to copy of current operating aiprooment)
Below is listed the approved menu of Company for Dairy Queens /BrazierO stores
which is in current use and effect. Licensee is authorized to use this menu in
accordance with the attached Operating Agreement.
This Appendix "B" may be amended by Company from time to time in order to make
available additional products or to delete those which become unavailable.
Licensee agrees to use only those products which are then currently authorized
for use in Dairy Queen/Brazier stores.
Licensee shall use in preparing products only such ingredients, formulas and
supplies as are specified by Company and in such portions, sizes. appearance and
package as set forth in Company's most current "Store Management Operations
Manual" and "Product Preparation Charts."
[Enlarge/Download Table]
Required Required Required
-------- -------- --------
Brazier(R) Food Items Dairy Queen* Soft Serve Items Beverage Items
--------------------- ----------------------------- --------------
Homestyle Hamburgers: Cones A minimum of three carbonated
Single Dipped Cones soft drinks"
Double Sundaes Mr. Misty(R)
Triple Shakes/Malts
w/Lettuce and Tomato Float
w/Cheese Mr. Misty Float
DQ Homestyle(TM) Ultimate Burger Freeze
HotDog Mr. Misty* Freeze Optional
w/Chili Banana Split --------
w/Cheese Peanut Buster* Parfait Beverage Items
DQ Pounder- Nutty Double Fudges --------------
w/chili Hot Fudge Brownie Delight*
W/Cheese Blizzards Flavor Treats Soft Drink 32 fl. oz.
DQ Pounder Basket Deal(TM) Home Pak: Milk
Fish Fillet Sandwich Pint Coffee
w/Choose Novelties: Hot Chocolate
Chicken Breast Fillet Sandwich Dilly* Bar Iced Tea
w/Choose Buster Bar and/or Fudge Nut Bar Lemonade
French Fries DQ* Sandwich and/or DQwich Diet Soft Drinks"
Regular
Large
Onion Rings
Regular
Optional Optional
-------- --------
Brazier(R) Food Items Dairy Queen* Soft Serve Items
--------------------- -----------------------------
Super Dog- Cone 9 oz.
W/Chili Dipped Cone 10 oz.
w/Cheese Strawberry Shortcake
Basket Deals: Banana Supreme
Chicken Breast Fillet Shake 'N Sundae
Fish Fillet Parfait
Pork Loin Fritter Soda
Polish Sausage Sundae 14 oz.
Barbecue Sandwich Float 21 fl. oz.
Chill BovA Mr. Misty(R) Float 21 fl. oz.
Nachos Freeze 21 ff. oz. -
Pork Loin Fritter Mr. Misty(R) Freeze 21 H. oz.
Chicken Nuggets Blizzard(R) Flavor Treat 32 fl. oz.
Fried Mushrooms Mr. Misty Klass and/or Starki
Turnover DQ Chipper Sandwich* or
Prepackaged Lettuce & Tomato Salads DQ Chocolate Chip Cookie Sandwich
Biscuit Breakfast DQ Push
Traditional Breakfast Low-Fat Soft Frozen Yogurt
Salad Bar... Dairy Queen* Frozen Cakes and
Onion Rings Blizzards Pies
Mandatory for Franchise
Large Queen'& Cho@ Premium Hard
Agreement I after 2/86.
lee Cr@. )
* Mr. Misty* contract stores only.
** All carbonated drinks must be of high quality in national distribution and
made by a primary manufacturer.
*** These items are Optional menu additions to be sold only by Dairy Queen or
Dairy Queen/Brazier store operators who have been certified to do so by
American Dairy Queen Corporation or a Territory Operator for store
franchise owners franchised directly by them in their respective area. The
product weights portions for these items are filled in the r product
preparation procedure* from ADQC.
4/86 Note: The Dairy Queen soft serve and Braizer food and beverage items listed
on the National Optional Menu, shown above, may be sold by Licensee if
Licensee desires to do so, but are not required to be sold.
(R) Reg. U.S. Pat. Off., Am. D.Q. Corp.
DATE:_________________
INITIALS:_______________
APPENDIX D: ADDITIONAL ADDENDA TO
"DAIRY QUEEN" OPERATING AGREEMENT DATED ___/___/___
1. PARAGRAPH 4.6 (page 6). Licensor advises that the purpose of this paragraph
is full disclosure.
2. PARAGRAPH 6.1 (page 7). Licensee sells packaged alcoholic beverages
intended for off-premise consumption in Licensee's store building adjoining
the "Dairy Queen"/"Brazier" store. Licensee will not dispense alcohol
intended for on-premise consumption from the adjoining non-"Dairy
Queen"/"Brazier" store and will not sell any alcoholic beverages from the
"Dairy Queen"/"Brazier" store.
3. PARAGRAPH 9.5 (pages 13 & 14). Licensor will allow Licensee to submit
monthly the profit and loss statement and consolidated balance sheet
generated by Licensees in-house computer in lieu of American's standard
profit and loss statement form, provided Licensee's form identifies a
separate "Dairy Queen"/"Brazier" profit center.
4. PARAGRAPHS 10.1, 10.2 AND 13.4 (pages 17 & 22). Licensor will mail any
notices specified in said paragraphs via certified mail, return receipt
requested. For purposes of this Agreement, notice will be deemed to have
been received by Licensee on the earlier of the date of delivery or the
date of the first attempted delivery as indicated on the return receipt. In
the absence of a noted delivery date or a noted attempted delivery date,
notice will be deemed to have been received 15 days from the noted date of
mailing.
AGREEMENT
THIS AGREEMENT made and entered into by and between American Dairy Queen
Corporation, hereinafter referred to as "ADQ," and Bowlin's, Inc., hereinafter
referred to as "Bowlin's."
WHEREAS, a certain "Dairy Queen" Operating Agreement, hereinafter referred
to as "Operating Agreement," dated July 29, 1976, was entered into by and
between Richard G. Kassel and G. Leone Kassel as Licensor, hereinafter referred
to as "Kassels," and Garland Sarratt and Virginia Sarratt as Licensee,
hereinafter referred to as "Sarratts," covering the operation of a "Dairy
Queen"/"Brazier" store in Deming, New Mexico; and
WHEREAS, ADQ has acquired Kassel's rights as Licensor and Bowlin's have
acquired Sarratts rights as Licensee under said Operating Agreement; and
WHEREAS, Paragraph 1.1 of said Operating Agreement precludes the Licensor
(ADQ) from establishing another "Dairy Queen" retail store in Luna County, New
Mexico, hereinafter referred to as "protected area"; and
WHEREAS, Bowlin's wish to develop a store under ADQ's territory operator
Interstate Dairy Queen Corporation at the southwest quadrant of I-10 and exit 62
in Luna County, New Mexico; and
WHEREAS, the parties hereto, in order to facilitate such development, have
mutually agreed to modify said protected area;
NOW, THEREFORE in return for the mutual conveyance herein contained, the
parties agree as follows:
1. Paragraph 1.1 of the Operating Agreement, referred to above, is hereby
deleted in its entirety and the following substituted therefor:
1.1 Establish and operate a retail store under the name "Dairy Queen"
at 1414 E. Spruce, Deming, New Mexico 88030 and Licensor agrees
that it will not establish another "Dairy Queen" retail store
within the following defined territory: County of Luna, New
Mexico, except for a location to be developed by Licensee as a
sublicensee of Interstate Dairy Queen Corporation at the
southwest quadrant of I-10 and exit 62.
-1-
2. All of the terms and conditions of the Operating Agreement referred to
above shall remain unchanged.
IN WITNESS WHEREOF the parties have executed this Agreement the 23 day of
October, 1989.
LICENSOR:
AMERICAN DAIRY QUEEN CORPORATION
By: Signature Illegible
----------------------------
Its: Vice President
----------------------------
LICENSEE:
BOWLIN'S, INC
By: Signature Illegible
----------------------------
Its: E.V.P
----------------------------
-2-
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT is made and entered into as of the 23rd day of October 1989
with respect to the "Dairy Queen" Operating
Agreement dated June 7, 1989 between BOWLIN'S, INCORPORATED, a New Mexico
Corporation whose head office is located in Albuquerque, NM (hereinafter
"Licensee") and INTERSTATE DAIRY QUEEN CORPORATION, a Georgia Corporation whose
head office is located in Washington, DC (hereinafter "IDQC").
WITNESSETH:
WHEREAS, The parties desire to amend the aforesaid Operating Agreement,
NOW, THEREFORE, In consideration of the premises and of the considerations set
forth herein, the parties hereby agree as follows:
1. It is understood that, in the event that by December 31, 1991, ID(2C shall
have executed six or more sublicense agreements with respect to locations
in the I-10 territory as defined in the Territory Agreement dated January
8, 1988 between American Dairy Queen Corporation (hereinafter "ADQ") and
IDQC, IDQC may elect, under terms of the Developmental Rights Agreement
dated January 1, 1977 between ADQ and IDQC, to enter into a territory
agreement (hereinafter "the New I-10 Territory Agreement") with respect to
the entire corridor area lying within one-half mile of the center line of
I-10, excluding therefrom any portion of said corridor area within the
state of Texas and any portion for which ADQ has prior to that time granted
"Dairy Queen"/"Brazier" franchise or license rights to any third party.
2. In the event that IDQC does so enter into the New I-10 Territory Agreement,
effective upon execution of said Agreement, IDQC will pay to Licensee
one-third (1/3) of the continuing license fee that IDQC receives from its
sublicensee for the "Dairy Queen"/"Brazier" store located at the southwest
quadrant of I-10 and Exit 62 (hereinafter "the Site"). The continuing
license fee payable to IDQC by its sublicensee will be no less than 4% of
gross retail "Dairy Queen"/"Brazier" restaurant sales, exclusive of retail
sales tax and exclusive of sales of permitted products as these products
are defined in the Operating Agreement.
3. The IDQC payment specified in Paragraph 2 of this Amendment Agreement will
be payable to Licensee but will not be assignable.
4. If the Operating Agreement is terminated pursuant to provisions of said
Operating Agreement, this Amendment Agreement will become null and void.
5. IDQC will require sublicensee for the "Dairy Queen"/"Brazier" store at the
Site to furnish a store monthly report accurately setting forth total
sales, by department, on which a continuing license fee is payable, as well
as such other information as IDQC requires in accordance with Paragraph 9.4
of the Operating Agreement. Effective upon execution of the New 1-10
Territory Agreement, IDQC will forward to Licensee a copy of each report
and payment of the one-third (1/3) portion of the continuing license fee by
the 25th of the month following the month in which said report and
continuing license fee is received by IDQC, unless Licensee is also the
sublicensee for the "Dairy Queen"/"Brazier" store at the Site. In such
event. IDQC will not forward a copy of each report back to Licensee and
Licensee will retain the one-third portion of the continuing license fee
each month. The parties to this Amendment Agreement acknowledge that ADQ
and IDQC have the right to audit the sublicensee and agree that Licensee
will receive its pro-rated share of any continuing license fee assessment
as a result of an audit.
IN WITNESS WHEREOF, The parties have executed this Amendment Agreement effective
as of the day and year first above written.
BOWLIN'S INCORPORATED
Signature Illegible
---------------------
Witness
By: Signature Illegible
-----------------------------
E.V.P
Its:
-----------------------------
INTERSTATE DAIRY QUEEN CORPORATION
Signature Illegible
---------------------
Witness By: Signature Illegible
-----------------------------
Its: President
-----------------------------
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