Form of Popeyes Development Agreement

EXHIBIT 10.3


POPEYES CHICKEN & BISCUITS
DEVELOPMENT AGREEMENT
(Exclusive)


BETWEEN


AFC ENTERPRISES, INC.


AND


_________________________________


Dev. Agr. No.:________
No. Options:________
Date:______________


AFC ENTERPRISES, INC.


POPEYES CHICKEN & BISCUITS
DEVELOPMENT AGREEMENT
(Exclusive)


TABLE OF CONTENTS


I. GRANT............................................................ 2


II. DEVELOPMENT FEE.................................................. 3


III. DEVELOPMENT SCHEDULE............................................. 3


IV. FRANCHISED UNIT OPENINGS......................................... 4


V. DEFAULT AND TERMINATION.......................................... 6


VI. TRANSFERABILITY OF INTEREST...................................... 7


VII. CONFIDENTIAL INFORMATION......................................... 10


VIII. COVENANTS........................................................ 11


IX. NOTICES.......................................................... 12


X. NON-WAIVER....................................................... 13


XI. INDEPENDENT CONTRACTOR AND INDEMNIFICATION....................... 13


XII. APPROVALS........................................................ 14


XIII. ACKNOWLEDGMENT................................................... 14


XIV. SEVERABILITY AND CONSTRUCTION.................................... 15


XV. ENTIRE AGREEMENT AND APPLICABLE LAW.............................. 16


EXHIBIT A - DEVELOPMENT SCHEDULE.......................................... 18


EXHIBIT B - TERRITORY..................................................... 19


EXHIBIT C - FRANCHISE AGREEMENT........................................... 20


AFC ENTERPRISES, INC.


POPEYES CHICKEN & BISCUITS
DEVELOPMENT AGREEMENT
(Exclusive)


THIS AGREEMENT (the "Agreement"), made this ______ day of __________________________, 20___, by and between AFC ENTERPRISES, INC. (f/k/a AMERICA'S FAVORITE CHICKEN COMPANY), a Minnesota corporation, with its principal place of business at Six Concourse Parkway, Suite 1700, Atlanta, Georgia 30328- 5352, U.S.A. ("Franchisor") and _________________________________ ("Developer").


WITNESSETH:


WHEREAS, Franchisor owns a unique system for opening and operating restaurants ("Popeyes Restaurant(s)") specializing in the preparation, merchandising, advertising and sale of Popeyes uniquely seasoned fried chicken and other quick-service menu items developed and owned by Franchisor (the "Popeyes System" or the "System");


WHEREAS, the distinguishing characteristics of the Popeyes System include, without limitation, the names "Popeyes" and "Popeyes Chicken & Biscuits"; the distinguishing characteristics of which include, without limitation, uniform and distinctive building designs, interior and exterior layouts, trade dress, equipment layout standards and specifications, development and maintenance of sources of supply, operating procedures for sanitation and maintenance, food and beverage storage procedures, service procedures, and secret food preparation recipes and batter mixes, standards and specifications for equipment, equipment layouts, products, operating procedures and management programs, all of which may be changed, improved and further developed by Franchisor from time to time;


WHEREAS, Franchisor identifies the Popeyes System by means of certain trade names, service marks, trademarks, logos, emblems, and indicia of origin, including, but not limited to, the marks "Popeyes" and "Popeyes Chicken & Biscuits" and such other trade names, service marks, and trademarks as are now, or may hereafter, be designated by Franchisor for use in connection with the System ("Proprietary Marks");


WHEREAS, Franchisor continues to develop, use, and control the use of such Proprietary Marks in order to identify for the public the source of services and products marketed thereunder in the Popeyes System and to represent the Popeyes System's high standards of quality, appearance, and service;


WHEREAS, Developer wishes to be assisted, trained and licensed by Franchisor as a Popeyes developer and franchisee and licensed to use, in connection therewith, the Popeyes System;


WHEREAS, Developer understands the importance of the Popeyes System and Popeyes high and uniform standards of quality, cleanliness, appearance, and service, and the necessity of opening and operating Developer's Popeyes Restaurants in conformity with the Popeyes System; and


WHEREAS, Developer wishes to obtain the right to develop Popeyes Restaurants ("Franchised Units") in the area described in this Agreement and to use the Popeyes System in connection with those Franchised Units;


NOW, THEREFORE, the parties hereto agree as follows:


I. GRANT


1.01. Franchisor hereby grants the Developer, subject to the terms and conditions of this Development Agreement and as long as Developer shall not be in default of this Agreement or any other development, franchise or other agreement between Developer and Franchisor, development rights to obtain franchises to establish and operate ___ Franchised Units, and to use the Popeyes System solely in connection therewith, at specific locations to be designated in separate franchise agreements ("Franchise Agreements"), executed as provided in Section 3.01. hereof, and pursuant to the schedule set forth in Exhibit A to this Agreement ("Development Schedule"). Each Franchised Unit developed pursuant hereto shall be located in the area described in Exhibit B hereto "(Development Area").


1.02. Subject to the terms and conditions herein, Franchisor shall neither establish nor license anyone other than Developer to establish a Franchised Unit in the Development Area until sixty (60) days after the commencement of operations of the final Franchised Unit under this Agreement, without Developer's prior written consent.


1.03. Each Franchised Unit for which a development right is granted hereunder shall be established and operated pursuant to a Franchise Agreement to be entered into between Developer and Franchisor in accordance with Section 3.01. hereof.


1.04. This Agreement is not a franchise agreement, and does not grant the Developer any right to use Franchisor's Proprietary Marks or the Popeyes System, but merely sets forth the terms and conditions under which Developer will be entitled to obtain a franchise agreement.


1.05. Developer shall have no right under this Agreement to license others under the Proprietary Marks or to use the Popeyes System.


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II. DEVELOPMENT FEE


In consideration of the development rights granted herein, Developer has paid to the Franchisor upon execution of this Agreement a non-refundable development fee of _____________ Dollars ($__________) which development fee has been fully earned by Franchisor for administrative and other expenses incurred by Franchisor and for the development opportunities lost or deferred as a result of the rights granted Developer herein.


III. DEVELOPMENT SCHEDULE


3.01. Developer shall exercise each development right granted herein only by executing a Franchise Agreement for each Franchised Unit for a site accepted by the Franchisor in the Development Area as hereinafter provided. Developer's right to execute such a Franchise Agreement shall be contingent upon Developer's continuous performance of all of the terms and conditions of this Agreement and any other development, franchise or other agreements between Developer and Franchisor. The Franchise Agreement for each Franchised Unit developed pursuant to this Agreement shall be in the form of the Franchise Agreement attached hereto as Exhibit C.


3.02. Recognizing that time is of the essence in this Agreement, Developer agrees to exercise the development rights granted hereunder in the manner specified in Section IV hereof and to satisfy the Development Schedule. Failure by Developer to adhere to the Development Schedule shall constitute a default under this Agreement, as provided in Section 5.03. hereof.


3.03. In addition to the development fee required by Section II hereof, Developer shall pay (i) an initial franchise fee for each Restaurant developed hereunder in the amount of Twenty Thousand Dollars ($20,000) upon execution of a Franchise Agreement for each such Franchised Unit, all of which amount shall be non-refundable and fully earned by Franchisor upon execution of the Franchise Agreement for a Franchised Unit.


3.04 Franchisor reserves the right, in its sole discretion, to grant Developer one or more extensions to the Development Schedule (a "Development Schedule Extension") provided, however, Franchisee shall be required to pay Franchisor a fee (the "Development Schedule Extension Fee") in an amount not to exceed Five Thousand Dollars and No/Cents ($5,000.00) for each Development Schedule Extension of three (3) months duration or less. Notwithstanding the foregoing, Franchisor reserves the right to waive the applicable Development Schedule Extension Fee, in its sole discretion, upon a showing, by Franchisee, to Franchisor's satisfaction, that (1) Developer has used its best efforts to comply with the Development Schedule and (b) Franchisee has been unable to comply with the Development Schedule as a result of conditions or events beyond Franchisees control. Nothing herein shall be deemed to require Franchisor to grant Franchisee a Development Schedule Extension at any time. Furthermore, the grant of one Development Schedule Extension to Franchisee shall not be deemed approval of any further Development


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IV. FRANCHISED UNIT OPENINGS


4.01. Developer shall submit a proposed site for each Franchised Unit for acceptance by Franchisor, together with such site information as required by Franchisor to evaluate the proposed site. Franchisor shall, provided there exists no default by Developer under this Agreement or any other development, franchise or other agreement between developer and Franchisor, evaluate each site proposed for which Developer has provided all necessary evaluation information, and shall promptly, but not more than 30 days after receipt of Developer's proposal, send to Developer written notice of acceptance or non- acceptance of the site. Site approval does not assure that a Franchise Agreement will be executed. Execution of the Franchise Agreement is contingent upon Developer purchasing or leasing the proposed site and securing acceptance of the final plans and specifications as provided below.


4.02. With respect to each Franchised Unit to be developed hereunder, Franchisor shall conduct one site visit for up to two (2) proposed sites, at no cost to Developer. If Developer has not received a site acceptance after the second site visit, Developer shall pay Franchisor the amount of One Thousand Five Hundred Dollars ($1,500.00) for each additional site visit until such time as a site is approved by Franchisor.


Within ninety (90) days after notice of Franchisor's site acceptance, Developer shall:


A. Submit, in writing to Franchisor, satisfactory proof to
Franchisor that Developer:


(i) owns the accepted site;


(ii) has leased the accepted site for a term which, with
renewal options, is not less than the initial term of the Franchise
Agreement; or


(iii) has entered into a written agreement to purchase or to
lease the accepted site on terms provided herein, subject only to
obtaining necessary governmental permits. If Developer leases the
accepted site, the lease must provide: (a) that, in the event
Developer defaults under or otherwise ceases operating the Franchised
Unit at the accepted site during the term of the lease, Franchisor
shall have the right, at its option, to assume Developer's position
under the lease; (b) that, in the event Developer defaults under the
lease, notice of the default shall immediately be forwarded to
Franchisor; and (c) that Franchisor shall have the right, upon default
under the lease or other cessation of operation at the accepted site,
to make the modifications and alterations to the Franchised Unit set
forth in Section 16.01.D. of the Franchise Agreement. The proof
required by this Section includes, but is not limited to, submission
of executed copies of all leases and deeds, as well as all
governmental approvals if effectiveness of the leases or deeds is
conditioned thereon.


B. Submit to Franchisor, and obtain Franchisor's written approval of,
the final and complete plans and specifications for the construction (or
renovation) and decoration


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of the Franchised Unit, which must be in conformity with Franchisor's
standards and specifications for Franchised Units, as set out in the
current Confidential Operating Standards Manual (as defined in the
Franchise Agreement) or otherwise in writing (hereinafter, the
"Construction Plans"). The final Construction Plans shall include, but are
not limited to, floor plans, equipment layouts, decor, and interior and
exterior elevations. For each Franchised Unit to be developed hereunder,
Franchisor shall provide Developer up to two (2) equipment layout drawings
for an accepted site at no cost to Developer. Developer shall pay
Franchisor the amount of One Thousand Dollars ($1,000.00) per revision
("Plan Revision Fee") thereafter. Franchisor may, in its discretion, reduce
or waive the Plan Revision Fee in the case of minor revisions.


C. Execute the Franchise Agreement and pay all fees required
thereunder. If Developer is a partnership, each general partner shall, and
if Developer is a corporation, each stockholder holding a beneficial
interest of five percent (5%) or more of the securities with voting rights
of Developer or any corporation directly or indirectly controlling
Developer shall, guarantee the performance of the Franchise Agreement by
executing the Franchisor's Franchise Agreement Guarantee form. Franchisor
shall not approve the final construction plans until the Franchise
Agreement is executed and all fees are paid by Franchisee.


4.04. Developer shall procure the insurance coverage provided for in Section XI of the Franchise Agreement, prior to commencement of construction of a Franchised Unit, and shall maintain such insurance coverage throughout the term of the Franchise Agreement.


4.05. Developer shall commence construction or renovation of the Franchised Unit on the earlier to occur of (i) ninety (90) days after the Franchisor approves Developer's Construction Plans, or (ii) fifteen (15) days after issuance of all requisite construction permits. Developer shall at all times, use its best efforts to obtain all necessary construction permits in order to avoid delays in commencement of construction of the Franchised Units. In the construction of the Franchised Unit, Developer shall only use general contractors and architects duly licensed by the jurisdiction in which the Franchised Unit is to be constructed. If commencement of construction or renovation is delayed by a cause beyond the reasonable control of Developer, the date upon which commencement of construction or renovation is to begin may be extended by obtaining written approval of Franchisor.


4.06. Upon commencement of construction or renovation of the Franchised Unit, Developer shall notify Franchisor on such form as Franchisor may prescribe.


4.07. Developer shall have completed construction or renovation and commenced operation of the Franchised Unit within one-hundred eighty (180) days from execution of the Franchise Agreement as provided in Section 4.02.C. hereof. Franchisor may, in its sole discretion, extend this period to address unforeseen construction delays, not within the control of Developer. Nothing herein shall be deemed to relieve Developer of the obligation of complying with the Development Schedule.


4.08. At least ten (10) days prior to the proposed commencement of operation of each


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Franchised Unit, Developer shall notify Franchisor in writing of such proposed opening. If the Franchised Unit is Developer's first Franchised Unit opened hereunder, Developer shall give Franchisor at least thirty (30) days prior written notice. Upon receipt of such notice, Franchisor shall provide a representative to be present at the opening of the first Franchised Unit. The first Franchised Unit shall not be opened unless such representative is present. Thereafter, each Franchised Unit shall not open until Developer has received Franchisor's prior written approval to open. Should commencement of operation of the First Franchised Unit be delayed by the failure of Franchisor to provide such a representative, the date upon which commencement of operation of such Franchised Unit is required pursuant to Exhibit A of this Agreement, shall be extended until such time as such assistance is provided by Franchisor. Should Developer reschedule the opening date of Developer's first Franchised Unit less than thirty (30) days prior to the date scheduled with Franchisor, the Developer shall reimburse Franchisor for any out-of-pocket expenses incurred by Franchisor in connection with the reschedule, unless such delay was caused solely by Franchisor or as otherwise agreed to by Franchisor in writing.


V. DEFAULT AND TERMINATION


5.01. The rights granted to Developer in this Agreement have been granted based upon Developer's representations and assurances, among others, that the conditions set forth in Sections III and IV of this Development Agreement will be met by Developer in a timely manner.


5.02. Developer shall be deemed to be in default under this Agreement, and all rights granted herein shall automatically terminate without notice to Developer, if Developer shall become insolvent or make a general assignment for the benefit of creditors; if a petition in bankruptcy is filed by Developer or such a petition is filed against Developer and not opposed by Developer; or if Developer is adjudicated bankrupt or insolvent; or if a receiver or other custodian (permanent or temporary) of Developer's assets or proper ...