Form of Cinnabon's Development Agreement

EXHIBIT 10.44


CINNABON
DEVELOPMENT AGREEMENT
(Exclusive)


Between


CINNABON, INC.


and


_______________________________


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


CINNABON, INC.


CINNABON
DEVELOPMENT AGREEMENT
(Exclusive)


TABLE OF CONTENTS I. GRANT...................................................... 2


II. DEVELOPMENT FEE............................................ 2


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


IV. DEVELOPMENT PROCEDURES..................................... 3


V. DEFAULT AND TERMINATION.................................... 9


VI. TRANSFERABILITY OF INTEREST................................ 10


VII. CONFIDENTIAL INFORMATION................................... 13


VIII. COVENANTS.................................................. 13


IX. NOTICES.................................................... 14


X. NON-WAIVER................................................. 15


XI. INDEPENDENT CONTRACTOR AND INDEMNIFICATION................. 15


XII. APPROVALS.................................................. 16


XIII. ACKNOWLEDGMENT............................................. 16


XIV. SEVERABILITY AND CONSTRUCTION.............................. 16


XV. ENTIRE AGREEMENT AND APPLICABLE LAW........................ 17


EXHIBIT A - DEVELOPMENT SCHEDULE


EXHIBIT B - TERRITORY


EXHIBIT C - FRANCHISE AGREEMENT


CINNABON, INC.


CINNABON
DEVELOPMENT AGREEMENT
(Exclusive)


THIS AGREEMENT (the "Agreement"), made this ______ day of __________________________, 20___, by and between CINNABON, INC., a Washington 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 has developed and owns a unique system (the "CINNABON System", or "System") for the development, establishment and operation of retail bakeries, that feature proprietary cinnamon rolls, bakery products, specialty coffee and other menu items developed and owned by Franchisor ("Cinnabon Bakeries");


WHEREAS, the distinguishing characteristics of the CINNABON System include, without limitation, the name "CINNABON"; distinctive interior and exterior design and layouts, decor, color schemes, and furnishings; confidential food formulae and recipes used in the preparation of food products, formulas and specifications for baking cinnamon rolls and other bakery products; specialized menus; 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 CINNABON System by means of certain trade names, service marks, trademarks, logos, emblems, and other indicia of origin, including, but not limited to, the marks "CINNABON", "MAKARA" and such other trade names, service marks, trademarks and trade dress as are now, or may hereafter, be designated by Franchisor for use in connection with the CINNABON System (collectively referred to as the "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 CINNABON System and to represent the CINNABON System's high standards of quality, appearance, and service;


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


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


WHEREAS, Developer wishes to obtain the right to develop CINNABON Bakeries ("Franchised Units") in the area described in this Agreement and to use the CINNABON 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 CINNABON 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 CINNABON 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 CINNABON System.


II. DEVELOPMENT FEE


2.01. In consideration of the development rights granted herein, Developer has paid to the Franchisor upon execution of this Agreement a non-refundable development fee ("Development Fee") of ___________________ Dollars ($_____________) which Development Fee shall be fully earned by Franchisor upon execution of this Development Agreement for administrative and other expenses


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incurred by Franchisor and for the development opportunities lost or deferred as a result of the rights granted Developer herein. Developer shall execute a separate Franchise Agreement for each CINNABON Bakery which Developer opens pursuant to this Development Agreement, and shall pay the Franchise Fees set forth in Section 2.02 below in connection therewith.


2.02. In consideration of the establishment of each CINNABON Bakery to be developed hereunder and the assistance and services which will be received by Developer under the franchise agreements, Developer shall pay to Franchisor a non-refundable franchise fee of Thirty Five Thousand U.S. Dollars ($35,000.00) for the first CINNABON Bakery developed hereunder, Twenty Five Thousand Dollars ($25,000.00) for the second and third CINNABON Bakeries developed hereunder and Twenty Thousand Dollars ($20,000.00) for each additional CINNABON Bakery developed hereunder. The Franchise Fee for each CINNABON Bakery shall be payable to Franchisor no later than the date of execution of the franchise agreement for such CINNABON Bakery, as described in Section IV hereof. Provided Developer is not otherwise in default under the terms of this Development Agreement and/or any other agreement between Developer and Franchisor, Developer shall receive a credit in the amount of Five Thousand Dollars and NO/CENTS ($5,000.00) towards the Franchise Fee payable under each Franchise Agreement issued hereunder, until the total amount of the credits equals the Development Fee paid by Developer hereunder. In no event shall the total amount of such credits exceed the Development Fee paid by Developer to Franchisor hereunder.


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, upon execution of the Franchise Agreement for each Franchised Unit issued hereunder, pay an initial franchise fee in the amount referred to in Section 2.02 hereof, all of which amount shall be non-refundable and fully earned by Franchisor upon execution of the Franchise Agreement for such Franchised Unit.


IV. DEVELOPMENT PROCEDURES


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4.01. Developer assumes all cost, liability and expense for locating, obtaining and developing the site for the Franchised Bakery. Developer shall not make any binding commitments to lease and/or purchase a site until the site has been approved by Franchisor.


4.02. Franchisor will provide Developer with the following site selection assistance: (1) Cinnabon site selection guidelines and, as Developer may request, a reasonable amount of consultation with respect thereto; and (2) such on-site evaluation as Franchisor may deem advisable as part of its evaluation of Developer's request for site approval. Developer agrees that Franchisor will incur no liability to Developer for site selection assistance provided by Franchisor, except for gross negligence or willful misconduct.


4.03. Site Selection.
--------------


A. Franchisor establishes, from time to time, site selection
criteria for demographic characteristics, traffic patterns, parking,
character of the neighborhood, competition from other businesses in the
area, the proximity to other businesses (including other Cinnabon
Bakeries), the nature of other businesses in proximity to the site and
other commercial characteristics (including the purchase price, rental
obligations and other lease terms for the proposed site) and the size,
appearance, other physical characteristics, and a site plan of the
premises. Developer shall select a site that it reasonably believes to
conform to the site selection criteria and, if requested by Franchisor,
submit to Franchisor a complete real estate site package (containing that
information as Franchisor may reasonably require) for the proposed site
(hereinafter a "Site Acceptance Request" or "SAR").


B. Developer acknowledges that, in order to preserve and enhance
the reputation and goodwill of all Cinnabon Bakeries and the goodwill of
the Proprietary Marks, all Cinnabon Bakeries must be properly developed,
operated and maintained. Accordingly, Developer agrees that Franchisor may
refuse to approve a site for a proposed Franchised Bakery unless Developer
demonstrates sufficient financial capabilities, in Franchisor's sole
judgment, applying standards consistent with criteria Franchisor uses to
establish Cinnabon Bakeries in other comparable market areas, to properly
develop, operate and maintain the proposed Cinnabon Bakery. To this end,
Developer shall furnish Franchisor with such financial statements and other
information regarding Developer and the development and operation of the
proposed Cinnabon Bakery, including, without limitation, investment and
financing plans for the proposed Cinnabon Bakery, as Franchisor reasonably
may require.


4.04. Site Approval.
-------------


A. Within 45 days after Franchisor's receipt of the information
described in Section 4.03., Franchisor shall advise Developer in writing
whether it has approved a particular site. Franchisor may approve a site
subject to certain conditions which Franchisor shall specify in writing. If
Franchisor does not respond to a completed Site Acceptance Request within
45 days, Franchisor shall be deemed to have denied approval of the proposed


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site for the Franchised Bakery. Franchisor>s approval or denial of approval
of a site for a Franchised Bakery may be subject to reasonable conditions
as determined in its sole discretion. If review of the site requires
Franchisor personnel to visit the site, Developer shall reimburse
Franchisor for the travel and living expenses incurred by Franchisor's
personnel in connection with the site visit.


B. Franchisor's approval of a site for a Franchised Location is not a
representation or a promise by Franchisor that a Franchised Bakery at that
Franchised Location will achieve any particular sales volume or that it
will be profitable. Similarly, Franchisor's approval of a site and its
refusal to approve other sites is not a representation or a promise that
the Franchised Location will have a higher sales volume or be more
profitable than a site which Franchisor did not approve. Franchisor assumes
no liability or responsibility for: (1) inspection of any structure on the
Franchised Location for asbestos or other toxic or hazardous materials;
(2) compliance with the Americans With Disabilities Act ("ADA"); or (3)
compliance with any other applicable law. It is Developer's sole
responsibility to obtain satisfactory evidence and/or assurances that the
Franchised Location (and any structures thereon) is free from environmental
contamination and in compliance with the requirements of the ADA.


4.05. Franchisor has the right, from time to time, to delegate the performance of any portion or all of its obligations and duties under this Agreement to designees, whether agents of Franchisor or independent contractors with which Franchisor has contracted to provide this service.


4.06. Site Acquisition.
----------------


A. Within ninety (90) days after notice of Franchisor's
acceptance of a proposed site, Developer shall submit, in writing to
Franchisor, satisfactory proof to Franchisor that Developer:


(i) owns the accepted site; or


(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.


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. If Developer proposes to lease or sublease the Franchised
Location,


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Developer shall provide Franchisor with a copy of the fully-executed lease
for the Franchised Location within 90 days after Franchisor's acceptance of
a proposed site, but, in any event, prior to the commencement of
construction at the Franchised Location. The lease or sublease shall not
contain any covenants, use clauses or other obligations that would prevent
Developer from performing its obligations under the Franchise Agreement.
Any lease, sublease, letter of intent or lease memorandum for the
Franchised Location shall contain provisions that satisfy the following
requirements during the entire term of the lease, including any renewal
terms:


1. The landlord consents to Developer's use of the proprietary
signs, distinctive designs and layouts of the Cinnabon System, the
Proprietary Marks, and upon expiration or the earlier termination of
the lease, consents to permit Developer, at Developer's expense, to
remove all such items and other trade fixtures, so long as Developer
makes repairs to the building caused by such removal.


2. The landlord agrees to provide Franchisor (at the same time
sent to Developer) a copy of all amendments and assignments and notices
of default pertaining to the lease and the leased premises.


3. Franchisor shall have the right to enter the leased premises
to make any modifications or alterations, at its own cost, necessary to
protect the Proprietary Marks and the Cinnabon System and to cure,
within the time periods provided by the lease, any default under the
lease, all without being guilty of trespass or other tort, and to
charge Developer for these costs.


4. The landlord agrees that Developer shall be solely
responsible for all obligations, debts and payments under the lease.


5. The landlord agrees that, following the expiration or
earlier termination of the Franchise Agreement, Developer shall have
the right to make those alterations and modifications to the premises
as may be necessary to clearly distinguish to the public the premises
from a Cinnabon Bakery and also make those specific additional changes
as Franchisor reasonably may request for that purpose. The landlord
also agrees that, if Developer fails to promptly make these alterations
and modifications, Franchisor shall have the right to do so without
being guilty of trespass or other tort so long as Franchisor makes
repairs to the building caused by such removal.


6. The landlord agrees not to amend or otherwise modify the
lease in any manner that would affect any of the foregoing requirements
without the prior written consent of Franchisor, which consent shall
not be unreasonably withheld.


7. Developer may assign the lease to Franchisor or its designee
with


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landlord's consent (which consent shall not be unreasonably withheld)
and without payment of any assignment fee or similar charge or
increase in any rentals payable to the landlord.


4.07. Construction of the Franchised Bakery.
-------------------------------------


A. Franchised Bakery Development.
-----------------------------


1. Developer assumes all cost, liability and expense for
developing, constructing and equipping the Franchised Bakery.
Franchisor will furnish to Developer prototypical plans and
specifications for a Franchised Bakery, including requirements for
dimensions, design, image, interior layout, decor, fixtures, equipment,
signs, furnishings, storefront and color scheme. It shall be
Developer's responsibility to have prepared all required construction
plans and specifications to suit the shape and dimensions of the
Franchised Location and Developer must ensure that these plans and
specifications comply with applicable ordinances, building codes and
permit requirements and with lease requirements and restrictions.
Developer shall use only registered architects, registered engineers,
and professional and licensed contractors.


2. Within ninety (90) days after notice of Franchisor's
acceptance of a proposed site, Developer shall submit proposed
construction plans, specifications and drawings for the Franchised
Bakery ("Plans") to Franchisor 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, and shall, upon
the request of Franchisor, submit all revised or "as built" Plans
during the course of such construction. Franchisor will approve or
refuse to approve the Plans and notify Developer within 30 days after
Franchisor receives the Plans. (Approval shall not be unreasonably
withheld.). The Plans shall include, but are not limited to, floor
plans, equipment layouts, decor, and interior and exterior elevations.
Once Franchisor has approved the Plans, no substantial change shall be
made to the Plans without the prior approval of Franchisor, which shall
not to be unreasonably withheld. If, in the course of construction, any
such change in the Plans is contemplated, the approval of Franchisor
must first be obtained before proceeding. Franchisor shall approve or
disapprove Plan changes within 10 business days of receipt.


3. Developer may not commence construction of the Franchised
Bakery prior to receiving written notification from Franchisor that it
has approved the Plans. All construction must be in accordance with
Plans approved by Franchisor and must comply in all respects with
applicable laws, ordinances and local rules and regulations. The
Franchised Bakery may not open if construction has not been performed
in substantial compliance with Plans approved by Franchisor, and this
Agreement may be terminated if such no ...