Franchise Agreement (2008)Full Document 

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KRISPY KREME DOUGHNUT CORPORATION
FRANCHISE AGREEMENT
BASIC TERMS

A. Effective Date   
  (Insert date Franchisee   
  executes the agreement):   
B. Franchisor:  Krispy Kreme Doughnut Corporation, a North Carolina corporation 
C. Store Number:   
D. Store Address:   
E. Store Type & Initial  _____________ Factory Store  $50,000 
  Franchise Fee:  _____________ Hot Shop  $30,000 
    _____________ Fresh Shop/Kiosk  $20,000 
F. Franchisee:   
  Franchisee’s Address:     
  Telephone:    Fax No.:  
  E-mail Address:     
G. Principal Owners:   
H. Managing Director:   
I. General Manager:   
J. Term: The time period commencing on the Effective Date and expiring 15 years after the Effective Date.

Franchisor:   
  (initials) 
 
Franchisee:   
  (initials) 


TABLE OF CONTENTS

           Page
1. BACKGROUND  1
2. DEFINITIONS  1
3. ACKNOWLEDGMENTS, REPRESENTATIONS, AND WARRANTIES  5
4. GRANT OF FRANCHISE  7
5. FRANCHISOR’S RESERVATION OF RIGHTS  7
6. SITE SELECTION  8
7. LEASE OR PURCHASE OF SITE  9
8. STORE DEVELOPMENT  9
9. BUILDING, EQUIPMENT, FIXTURES, FURNISHINGS, SIGNS AND SUPPLIES  10
10. COMPUTER SYSTEM  11
11. STORE OPENING  12
12. CAPITAL IMPROVEMENTS  12
13. INITIAL FRANCHISE FEE AND ROYALTIES  13
14. TRAINING AND GUIDANCE  14
15. SYSTEM STANDARDS  14
16. MARKS  15
17. CONFIDENTIAL INFORMATION  16
18. PATENTS AND INVENTIONS  17
19. WORKS OF AUTHORSHIP AND COPYRIGHTS  18
20. EXCLUSIVE RELATIONSHIP  19
21. COMPLIANCE WITH LAW  19
22. MARKETING AND ADVERTISING  20
23. ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS  22
24. TRANSFER  22
25. SUCCESSOR FRANCHISE  25
26. TERMINATION OF FRANCHISE  26
27. EFFECT OF TERMINATION OR EXPIRATION  27
28. RELATIONSHIP OF PARTIES/INDEMNIFICATION  30
29. MISCELLANEOUS  32
30. ACKNOWLEDGMENTS  35

EXHIBIT A         FRANCHISEE INFORMATION 
EXHIBIT B  PRINCIPAL OWNERS’ PERSONAL GUARANTY 
EXHIBIT C  INVESTOR PERSONAL COVENANTS 
EXHIBIT D  AUTHORIZATION FOR ACH DEBITS OR CREDITS 
EXHIBIT E  AUTHORIZED OFF-PREMISES SALES 

i


KRISPY KREME DOUGHNUT CORPORATION
FRANCHISE AGREEMENT

     THIS FRANCHISE AGREEMENT (this “Agreement”) is made and entered into as of the Effective Date by and between Franchisor and Franchisee.

1. BACKGROUND
 
1.1       Franchisor has developed, as a result of considerable time, skill, effort, and money, a distinctive system for operating stores called “Krispy Kreme Stores” that offer and serve a variety of doughnuts, beverages, and other authorized products and services under the Marks.
 
1.2 Franchisor’s Affiliate, HDN Development Corporation, owns the Marks and has granted Franchisor the right to sublicense the Marks to its franchisees for their use in operating Krispy Kreme Stores and Commissary Facilities.
 
1.3 Franchisor grants Franchises to own and operate Krispy Kreme Stores and Commissary Facilites to Persons who meet its qualifications and are willing to undertake the investment and effort to properly develop and operate them.
 
1.4 Franchisee has submitted a Franchise Application to own and operate a Krispy Kreme Store at the Site, and Franchisor has accepted the application in reliance on all information Franchisee has provided in connection therewith.
 
2. DEFINITIONS
 
2.1 Capitalized terms used in this Agreement have the meanings given to them in this Section and in the Basic Terms.
 
  Account – Franchisee’s bank account as to which Franchisee has provided Franchisor with all appropriate account information and from which Franchisee has authorized Franchisor to withdraw funds by electronic funds transfers.
 
  Affiliate – Any person that directly or indirectly owns or controls, that is directly or indirectly owned or controlled by, or that is under common ownership or control with the referenced person, including parents and subsidiaries.
 
  Authorized Off-Premises Sales – Sales to wholesale customers pursuant to an express authorization by Franchisor, the current form of which is attached as Exhibit E.
 
  Basic Terms – The terms of this Agreement set forth on the Krispy Kreme Doughnut Corporation Franchise Agreement Basic Terms section on the first page hereof.
 
  Brand Fund – As defined in Section 22.
 
  Commissary Facility – A manufacturing facility for doughnuts and other Products that are supplied to Hot Shops and Fresh Shops/Kiosks. Commissary Facilities are not used for retail sales, but may distribute and sell to wholesale customers, subject to Franchisor’s authorization pursuant to the Commissary Facility Agreement.
 
  Commissary Facility Agreement – An agreement used by Franchisor to grant the right to operate a Commissary Facility at a specific location.
 
  Competitive Business – A business, other than a Krispy Kreme Store or Commissary Facility, that: (a) makes, sells or distributes yeast-raised doughnuts, cake doughnuts, or any other types of doughnuts, miniature doughnuts, doughnut holes or any other bakery products in any distribution channel to any customer for consumption or resale, and such sales constitute ten percent (10%) or more of its total sales (or such sales from any single location constitute 10% or more of the total sales of that location) during any calendar quarter or calendar
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