Franchise Agreement

 

Article 1

Introduction

1.1

The SYSTEM.

Red Ribbo Red Ribbon's n's syste system m of opera operatio tions ns,, stand standard ards s and and proce procedur dures es are documented in a Confidential Operations Manual. All Franchisees are provided with this manual to run the store at optimum levels. It is continually updated to match the ever-increasing demands and needs of today's business. 1.2

FRANCHISEE'S Desire to be Part of the SYSTEM.

FRANCHISEE desires to be part of the SYSTEM and to establish, own and operate a Red Ribbon Bakeshop at Batangas City, subject to and in accordance with all of the terms and conditions of this AGREEMENT, and in adherence and conformity to the SYSTEM STANDARDS. 1.3

SHOPPE COMPANY'S Desire to Grant FRANCHISE.

Red Ribbon Bakeshop desires to grant Ms. Mysel O. Aguilon a franchise to establish and operate a Red Ribbon Bakeshop at Batangas City, subject to the ter erms ms and cond onditio ition ns of this AGREEMENT, and and conditi itioned upon FRAN FR ANCH CHIS ISEE EE'S 'S cont contin inua uall adher dheren ence ce and and conf confor ormi mity ty to the the SYST SYSTEM EM STANDARDS. 1.4

AGREEMENT OF THE PARTIES. PARTIES.

Consistent with these introductory Sections, and in consideration of the mutual mutu al promise promises s and covenan covenants ts containe contained d in this AGREEMEN AGREEMENT, T, Red Ribbon Ribbon Bake Ba kesh shop op and and Myse Mysell Agui Aguilo lon n agre agree e to be boun bound d by the the term terms s of this this  AGREEMENT.  AGREEM ENT.

Article 2

Certain Definitions

For the purposes of this AGREEMENT, AGREEMENT, the following following terms shall have the following meanings: 2.1

Red Ribbon® Bakeshop PRODUCTS. PRODUCTS . 

Red Ribbon is a brand to reckon with. Its name is synonymous to premium high quality delicious cakes, breads and pastries. You will surely take pride and benefit from the strong customer recognition and loyalty it has achieved in the more than twenty-eight years it has been in the market. It is manufactured under  a license from the owner of the MARKS, for distribution and sale in association

 

with the MARKS, as modified, added to, or deleted from time to time by SHOPPE COMPANY. 2.2

Red Ribbon® Bakeshop SHOP.

Red Ribbon is a brand to reckon with. Its name is synonymous to premium high quality delicious cakes, breads and pastries, store operated as part of the SYSTEM, either directly by Red Ribbon Bakeshop, or under a written franchise agreement granted by Red Ribbon Bakeshop.. 2.3

MARKS. "MARK "MA RKS" S" means means the the Red Red Ribbon Ribbon®B ®Bake akesh shop op name name and and trade trademar marks ks,, service marks, logos, trade dress, and other commercial symbols. 2.4

NOTICE. "NOTICE" means a communication satisfying the requirements of Article

20. 2.5

SHOP.

"SHOP" means the Red Ribbon® Bakeshop established and operated by Ms. Mysel O. Aguilon under the terms of this AGREEMENT. For the purposes of  determining compliance with the SYSTEM STANDARDS, "SHOP" also includes any facility, whether or not a part of the SHOP PREMISES, where Red Ribbon Bakeshop permits Ms. Mysel O. Aguilon to store, handle or display food, or other  items, which are sold or used at the SHOP. Article 3 TERRITORY

Site Selection, SHOP construction, construction, and EXCLUSIVE

The terms and conditions of Exhibits A. B, C, and D to this AGREEMENT (respectively "EXHIBIT A" EXHIBIT B" "EXHIBITinto C" and D") form a part of this AGREEMENT, and are incorporated this "EXHIBIT AGREEMENT to the same extent as if fully set forth under this Article 3. 3.1

Site Selection Process; Designation of SHOP PREMISES.

If this this AGRE AGREEM EMEN ENT T was was issu issued ed in conn connec ecti tion on wi with th a Red Red Ri Ribb bbon on® ® Bakeshop, then the SHOP PREMISES will be designated under the terms of  EXHIBIT A. If this AGREEMENT was issued in connection with a SUCCESSIVE TERM FRANCHISE, then the SHOP PREMISES are designated on EXHIBIT D. 3.2

Shop Design and Construction.

 

Ms. Mysel O. Aguilon will adhere to Red Ribbon® Bakeshop COMPANY'S procedures and requirements for the design and construction of the SHOP, as more particularly described by EXHIBIT B. (a) In the case of a Red Ribbon® Ribbon® Bakeshop Bakeshop,, FRANCHI FRANCHISE SE will diligently diligently construct the SHOP at the SHOP PREMISES, if and after SHOPPE COMPANY designates the SHOP PREMISES in accordance with EXHIBIT A, time being of  the essence. (b) In the case of a SUCCESSIVE TERM FRANCHISE, FRANCHISEE shall complete comp letely ly remodel remodel the SHOP, SHOP, within within one year year from from the COMMEN COMMENCEM CEMENT ENT DATE identified on EXHIBIT D, time being of the essence. (c) FRANCHISEE FRANCHISEE shall not commence (or recommen recommence) ce) operations operations at the SHOP unless and until Red Ribbon® Bakeshop COMPANY determines that the SHOP SH OP re reaso asona nably bly confo conforms rms to the the plans plans and and spec specifi ifica catio tions ns appro approve ved d by SHOPPE COMPANY in accordance with EXHIBIT B. 3.3

EXCLUSIVE TERRITORY.

The parties acknowledge and agree that the EXCLUSIVE TERRIT TERRITORY, ORY, if  any, will be determined determined by Red Ribbon® Bakeshop COMPANY in accordance with EXHIBIT C. (a) In the case case of a Red Red Ribbo Ribbon n Bakesh Bakeshop op ®, Red Red Ri Ribb bbon on Bake Bakesh shop op COMP CO MPANY ANY will will provi provide de FRANC FRANCHI HISE SEE E wi with th wr writt itten en infor informat mation ion suffic sufficien ientt to determine the EXCLUSIVE TERRITORY, if any, using a document similar to EXHI EX HIBI BIT T D, or some some othe otherr form form of writt ritten en comm commun unic icat atio ion n Red Red Ri Ribb bbon on® ® Bakesho Bake shop p COMPANY COMPANY conside considers rs appropri appropriate, ate, when when Red Ribbon® Ribbon® Bakesho Bakeshop p COMPANY designates the SHOP PREMISES in accordance with EXHIBIT A. (b)

In the case of a SUCCESS SUCCESSIVE IVE TERM TERM FRANCH FRANCHISE ISE,, informat information ion

suff sufficien icientt D. to determi determine ne the EXCLUSIVE EXCLUSIVE TERRITORY TERRITORY,, if any, any, is set forth on EXHIBIT Article 4

Grant

4.1

The "FRANCHISE."

Subject to the provision provisions s of this AGREEMENT, AGREEMENT, Red Ribbon® Bakeshop Bakeshop COMPANY hereby grants Ms. Mysel O. Aguilon the personal, limited right and license lice nse (the "FRANCHIS "FRANCHISE") E") to, during the TERM, TERM, operate operate the Red Ribbon® Bakeshop, at Batangas City, in association with the MARKS, and in compliance with the SYSTEM STANDARDS.

 

4.2 SHOP.

No Right to Relocate, or Conduct Sales Away from the

This AGREEMENT does not grant FRANCHISEE any right to relocate the SHOP. This AGREEMENT does not grant FRANCHISEE any right to sell any goods or services associated with the MARKS or the SYSTEM, except on a retail basis from the SHOP. Without limiting the foregoing, foregoing, this AGREEMENT does not grant FRANCHISEE any right to engage in wholesale sales, mail order sales, ca cata talo log g sa sale les, s, spec specia iall even events ts sa sale les, s, cate cateri ring ng,, inte intern rnet et-b -bas ased ed sale sales s (e(eCommerce), or any other sale to a customer who is not physically present in the SHOP SHO P at the time of purchase purchase.. If Red Ribbon® Ribbon® Bakeshop Bakeshop from time to time permits FRANCHISEE to engage in any sales away from the SHOP, then those sales shall not result in any enlargement of the EXCLUSIVE TERRITORY, and FRAN FR ANCH CHIS ISEE EE sh shal alll full fully y ad adhe here re to Red Red Ri Ribb bbon on Bake Bakesh shop op COMP COMPAN ANY' Y'S S requirements and policies pertaining to those sales away form the SHOP, which shall hall be dee deemed med to be a par artt of the the SYST SYSTE EM STANDA NDARDS to which ich FRANCHISEE shall adhere.  Article 5 5.1

Commencement, Commencement, TERM and Renewal The "TERM."

The term of the FRANCHISE (the "TERM") will commence on the "14 th of  Sept Se ptem embe ber, r, 2012 2012"" dete determ rmin ined ed unde underr this this Arti Articl cle e 5, and and will ill end end on the the EXPIRATION DATE determined under this Article 5; unless this AGREEMENT is sooner cancelled or terminated in accordance with its provisions. 5.2

RED RIBBON BAKESHOP BAKESHO P ® SHOP. 

Each of the provisions of this Section 5.2 applies if, and only if, this  AGREEMENT  AGREEM ENT was entered into in contemplation contemplation of a Red Ribbon Bakeshop® Bakeshop® SHOP. 5.2.1

COMMENCEMENT DATE.

The COMMENCEMENT DATE will be the day the SHOP first opens for  business. 5.2.2

Commencement of Operations.

FRANCHISEE shall exert its best efforts to open the SHOP on or before the day that is exactly 3 years from the date of this AGREEMENT (appearing on the top of the COVER SHEET) (the "OUTSIDE OPENING DATE"). 5.2.3

EXPIRATION DATE.

 

The EXPIRATION DATE is the day immediately before the tenth anniversary of: (a) the 14th of September, 2012 DATE; or  (b) the 17th of September, 2015; whichever is earlier. 5.2.4

Failure to Open by OUTSIDE OPENING DATE.

Irrespective of the cause of any delay, if FRANCHISEE fails to open the SHOP fo SHOP forr busi busine ness ss by the the OUTS OUTSID IDE E OPEN OPENIN ING G DATE DATE,, then then,, SHOP SHOPPE PE COMPANY shall have the absolute right to elect to: (a) permi permitt FRAN FRANCH CHISE ISEE E addit addition ional al time time to open open SHOP SHOP under under this this  AGREEMENT,  AGREEM ENT, provided however that the EXPIRATION EXPIRATION DATE shall remain the same; or  (b (b)) requ requir ire e FRAN FRANCH CHIS ISEE EE to ente enterr into into Red Red Ri Ribb bbon on® ® Bake Bakesh shop op COMPANY'S most current form of franchise agreement in replacement of this  AGREEMENT,  AGREEM ENT, and permit FRANCHISEE additional additional time to open Shop, in which case SHOPPE COMPANY may at its election require that the EXPIRATION DATE remain the same, or may extend the EXPIRATION DATE; or  (c (c)) ca canc ncel el this this AGRE AGREEM EMEN ENT T and and retu return rn the the FRAN FRANCH CHIS ISE E FEE FEE paid paid by FRAN FR ANCH CHIS ISEE EE unde underr Ar Artic ticle le 7, less less 50,00 50,000, 0, which which Red Red Ri Ribbo bbon n Bakes Bakeshop hop COMPANY shall have an absolute right to retain, in which case Red Ribbon Bakeshop COMPANY shall have no further obligations to FRANCHISEE under  this AGREEMENT. 5.2.5

Renewal Opportunity.

FRANCHISEE shall have the opportunity to continue the operation of the SHOP during a second 10-year term (the "RENEWAL TERM"), subject to and conditioned upon each and every one of the following provisions: 5.2.5.1

Written Request for Grant of RENEWAL TERM.

If FRAN FRANCH CHIS ISEE EE desi desire res s to cont contin inue ue to oper operat ate e the the SHOP SHOP for for the the RENEWAL TERM, then FRANCHISEE must in writing, at least 180 days before the EXPIRATION DATE, but no more than 270 days before the EXPIRATION DATE, request that Red Ribbon® Bakeshop Bakeshop COMPANY issue its then current st stan anda dard rd for form fran franch chis ise e agre agreem emen entt for for ren renewal ewal ter terms (a "RE "RENEWA NEWAL L  AGREEMENT"),  AGREEM ENT"), contemplating contemplating a single ten-year ten-year franchise term for the SHOP, SHOP, at the Batangas Batangas City. FRANCH FRANCHISEE ISEE acknowle acknowledges dges and agrees agrees that terms of a RENEWAL AGREEMENT, including the amount of the ROYALTY payable during the RENE RENEWAL WAL TERM TERM,, may be substa substanti ntiall ally y diffe differen rentt from from the terms terms of this this  AGREEMENT,  AGREEM ENT, and may be substantially different from the terms of the standard

 

form fr form franc anchis hise e agreem agreement ent that that Red Red Ribbo Ribbon® n® Bakes Bakesho hop p is then then issuin issuing g in connection with a new Red Ribbon® Bakeshop. 5.2.5.2 Operation in Compliance with Red Ribbon ® Bakeshop COMPANY Requirements. Red Ribbon® Bakeshop COMPANY shall have no obligation to issue a RENEWAL AGREEMENT to FRANCHISEE, unless FRANCHISEE meets each and every one of the following conditions, each of which FRANCHISEE agrees is reasonable. (a) FRANCHISEE FRANCHISEE shall have continuously continuously been, during the last 2 years of  th the e TERM TERM,, curr curren entt in its its fina financ ncia iall obli obliga gati tion ons s to Red Red Ri Ribb bbon on® ® Bake Bakesh shop op COMPANY, Red Ribbon® Bakeshop COMPANY'S affiliates, and Red Ribbon® Bakesho Bake shop p COMPAN COMPANY'S Y'S designa designated ted supplier suppliers, s, under under this AGREEM AGREEMENT ENT,, and unde un derr any any othe otherr agre agreem emen entt exis existi ting ng betw betwee een n Red Red Ri Ribb bbon on® ® Bake Bakesh shop op COMPANY and FRANCHISEE. (b) FRANCHISEE FRANCHISEE shall have continuously, continuously, during the last 2 years of the TERM, operated the Red Ribbon® Bakeshop, as well as any other Red Ribbon® Bakes Ba kesho hop p in which which FRAN FRANCH CHIS ISEE EE has has an inter interest est,, in accor accorda dance nce with with Red Red Ribbon® Bakeshop COMPANY'S COMPANY'S operational operational requirements; and, in particular, during such time period shall have received only passing scores during any operatio oper ational nal audit audit or inspect inspection, ion, irrespectiv irrespective e of whether whether a non-pas non-passin sing g score score result res ulted ed in a NOTI NOTICE CE of defau default, lt, and irresp irrespec ectiv tive e of whet whether her defic deficie ienci ncies es identified were timely corrected. (c) FRAN FRANCH CHIS ISEE EE shall shall have have,, during during the the last last 2 years years of the the TERM TERM,, consistently operated the Red Ribbon® Bakeshop in accordance with each of the terms of this AGREEMEN AGREEMENT T and the Red Ribbon® Ribbon® Bakes Bakeshop hop OPERATIONS OPERATIONS MANUAL, and, during such period, shall not have been declared to be in default of any of the terms of this AGREEMENT, or any other franchise agreement exis ex isti ting ng betw betwee een n FRANCHISEE.

SHO SHOPP Red Red

Ribb Ribbon on® ®

Bakes akesho hop p

E

COMP COMPAN ANY Y

and and

(d) FRAN FRANCH CHIS ISEE EE shall shall have have,, during during the the last last 10 years years of the TERM TERM,, consistently participated in all marketing promotions conducted by Red Ribbon® Bakeshop COMPANY. (e) FRANCHISEE FRANCHISEE shall meet Red Ribbon® Bakeshop Bakeshop COMPANY'S COMPANY'S then current financial requirements for the grant of a RENEWAL TERM, which may requir req uire e that that FRAN FRANCH CHIS ISEE EE demon demonstr strate ate the the finan financia ciall abili ability ty to contin continue ue to operate the SHOP, and to timely remodel the SHOP to the extent required by Red Ribbon® Bakeshop COMPANY under Section 5.2.5.2(g), 5.2.5.2(g), or the RENEWAL  AGREEMENT.  AGREEM ENT.

 

(f) If required by Red Ribbon® Bakeshop Bakeshop COMPANY, COMPANY, then FRANCHISEE FRANCHISEE shall have, during the last year of the TERM, caused its DESIGNATED SHOP MANAGER to attend Red Ribbon® Bakeshop COMPANY'S training program, irrespective of any prior training and experience. (g) If required by Red Ribbon® Bakeshop Bakeshop COMPANY, COMPANY, then FRANCHISEE FRANCHISEE shall have, during the last year of the TERM, completely remodeled remodeled the SHOP in accordance with Red Ribbon® Bakeshop COMPANY'S procedures to bring the SHOP into conformity with Red Ribbon® Bakeshop COMPANY'S then current design and operational requirements. 5.2.5.3

RENEWAL AGREEMENT Execution .

If Red Ribbon® Bakeshop COMPANY issues a RENEWAL AGREEMENT to FRAN FRANCH CHIS ISEE EE,, then then FRAN FRANCH CHISE ISEE E must must timel timely y exec execute ute that that RENE RENEWAL WAL  AGREEMENT  AGREEM ENT in accordance accordance with Red Ribbon® Bakeshop Bakeshop COMPANY'S COMPANY'S then curren cur rentt re requi quirem rement ents. s. FRAN FRANCH CHISE ISEE E wi willll not be requir required ed to pay an initi initial al franchise fee to enter into the RENEWAL AGREEMENT. 5.3

SUCCESSIVE TERM FRANCHISE.

Each of the provisions of this Section 5.3 applies if, and only if, this  AGREEMENT  AGREEM ENT is for for a SUCCESSIVE SUCCESSIVE TERM FRANCHI FRANCHISE. SE. 5.3.1

COMMENCEMENT DATE. The COMMENCEMENT DATE is set forth on the EXHIBIT D.

5.3.2

EXPIRATION DATE.

The EXPI The EXPIRA RATI TION ON DATE DATE is the the day day im imme medi diat atel ely y befo before re the the tent tenth h anniversary of the COMMENCEMENT DATE. 5.3.3

No Opportunity to Renew.

FRANCHISEE acknowledges and agrees that this AGREEMENT confers no right to continuation, renewal, or a subsequent franchise agreement on or  after the EXPIRATION DATE. 5.4

Limitation on Conditional Renewal Opportunity.

FRANCHISEE understands and agrees that, except as set forth in Section 5.2.5, which Section applies solely in the case of a Red Ribbon® Bakeshop, Bakeshop, this  AGREEMENT  AGREEM ENT confers no right to continuation, continuation, renewal, renewal, or a subsequent subsequent franchis fran chise e agreeme agreement nt on or after after the EXPIRATIO EXPIRATION N DATE, DATE, and Red Ribbon® Ribbon® Bakeshop COMPANY shall not have any obligation to continue its relationship

 

with FRANCHISEE in connection with the SHOP after the EXPIRATION DATE. If  FRANCHISEE enters the LEASE for a tenancy extending beyond the TERM, or  enters into an extension of the LEASE, a new lease for the SHOP PREMISES, or  any other commitment related to the SHOP, for a period after the TERM, then FRANCHISEE shall be doing so at its own risk. Article 6

Red Ribbon® Bakeshop  Bakeshop COMPANY'S Obligations

Except as explicitly set forth in this Article 6, or explicitly contemplated by a particular provision of this AGREEMENT, Red Ribbon® Bakeshop COMPANY has no obligations to FRANCHISEE under this AGREEMENT. 6.1

Plans and Specifications. Specifications.

In connection with the initial construction of the SHOP, or a remodel of the SHOP SH OP if requ requir ired ed by Sect Sectio ions ns 3.2( 3.2(b) b) or 11.1 11.15, 5, Red Red Ri Ribb bbon on® ® Bake Bakesh shop op COMP CO MPANY ANY shall shall,, at no charg charge, e, provi provide de FRAN FRANCH CHIS ISEE EE or FRANC FRANCHI HISE SEE'S E'S architect with standard criteria for the design and configuration of a typical Red Ribbon® Bakeshop, including exterior and interior design and layout, fixtures, fFRANCHISEE'S ur urni nish shin ing gs, equexpense, ipme ipment nt and an d to sigconform nag nage, w ic h characteristics FRANCHIS HISEEof the shall haSHOP ll,, at adapt tohich the PREMISES in accordance with the terms of EXHIBIT B. 6.2

Training.

Before Befo re the the .ini .initi tial al open openin ing g of the the SHOP SHOP,, Red Red Ri Ribb bbon on® ® Bake Bakesh shop op COMPANY shall, at no charge to FRANCHISEE, provide initial training for the DESIGNATED SHOP MANAGER and up to one additional person in accordance with Section 11 11.3.1. .3.1. 6.3

SHOP OPERATIONS MANUAL.

During the TERM, Red Ribbon® Bakeshop COMPANY shall at no charge loan one copy of the SHOP OPERATIONS MANUAL to FRANCHISEE in accordance with Article 10. 6.4

Final Inspection.

 At a mutually convenient time agreed upon sufficiently sufficiently in advance of the initial init ial opening opening of the SHOP, Red Ribbon® Ribbon® Bakeshop Bakeshop COMPAN COMPANY Y shall, shall, at no charge char ge to FRANCH FRANCHISE ISEE, E, inspect inspect the SHOP SHOP to determin determine e that it reason reasonably ably co conf nfor orms ms to the the plan plans s and and spec specif ific icat atio ions ns appr approv oved ed by RED RED RI RIBB BBON ON® ® BAKESHOP COMPANY under the procedures described by EXHIBIT B. 6.5

Opening Assistance. Assistance.

 

Before and Before and in conn connect ection ion with with the the ini initia tiall open opening ing of the the SHOP SHOP,, Red Red Ribbon® Bakeshop COMPANY shall, at no charge, provide FRANCHISEE with such pre-openin pre-opening g and opening opening assistance assistance and guidanc guidance e as RED RIBBON® RIBBON® BAKE BA KESH SHOP OP COMP COMPANY ANY deems deems approp appropria riate te.. If FRANCH FRANCHIS ISEE EE is a NEW NEW FRAN FR ANCH CHIS ISEE EE,, then then the assist assistan ance ce prov provide ided d by Red Red Ribb Ribbon® on® Bakes Bakesho hop p COMPANY under this Section 6.5 will include the physical presence of one or  more Red Ribbon® Bakeshop COMPANY representatives for a total of at least five person-days (based on an 8-hour work day) before, during, and/or just after  the SHOP first opens for business. 6.6 Ongo Ongoing ing Source Sour ce of Red Ribbon Ribb on ® Bakeshop Bakes hop PROD PRODUCTS UCTS and Other Products. During the TERM. Red Ribbon® During Ribbon® Bakesho Bakeshop p COMPAN COMPANY Y will designate designate a source sou rce from from which which FRAN FRANCH CHISE ISEE E shall shall purch purchase ase Red Red Ri Ribb bbon® on® Bakes Bakesho hop p PRODUCTS, and will designate or approve sources for other items purchased by FRANCHISEE in connection with the operation of the SHOP, as more particularly described under Section 11.7. 6.7

Ongoing Advice and Assistance. Assistance.

During the TERM, TERM, RED RIBBON® RIBBON® BAKESHO BAKESHOP P COMPANY COMPANY shall, at no charge, from time to time provide FRANCHISEE with such advisory assistance, information, techniques, data, and instructional materials concerning the sale of  items from the SHOP, operation of the SHOP, marketing programs applicable to the SYSTEM, local marketing of the SHOP, and adherence to the SYSTEM STANDARDS as RED RIBBON® BAKESHOP COMPANY deems advisable.