What does the Franchisor license to the Franchisee in connection with the Carbones Pizzeria system?

W I T N E S S E T H:

WHEREAS, Franchisor controls or is the owner of certain commercial trade names, trademarks, service marks, domain names and other commercial symbols including associated logos now or hereafter selected, used or promoted by Franchisor and licensed to Franchisee in connection with the Carbone System (as defined below) (collectively, "Names and Marks"); and

WHEREAS, Franchisor has created and developed certain skill and know-how in the sale and preparation of pizza and various other food and beverage items, including the development of unique and valuable recipes and sales procedures, business plans, standards, specifications, methods, processes, techniques, and sourcing, all of which may be changed from time to time by Franchisor (collectively, the "Carbone System") but specifically excluding any employee policies or procedures that Franchisor may make available to Franchisee for its optional use during the term of this Agreement; and

WHEREAS, Franchisee wishes, upon the terms and conditions set forth in this Agreement, to be assisted and trained by Franchisor to engage in the business of operating a restaurant selling pizza and other items under the Names and Marks (the "Franchise"), all in accordance with the Carbone System, it being understood that Franchisee recognizes the importance to Franchisor and to the public of maintaining the distinctive standards, qualities and attributes of a Carbone's Pizza Restaurant, and Franchisee is willing to maintain such standards, qualities and attributes.

NOW, THEREFORE, in consideration of the foregoing recited facts and the mutual agreements and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged by each party, the parties agree as follows:

1. Grant of Franchise.

• a. Franchisor grants Franchisee a Franchise to use the Carbone System to develop and operate a restaurant selling pizza and other food items under the Names and Marks during the term of this Agreement.
• b. The location of the restaurant to be operated under this Agreement is set forth on the Rider (the "Restaurant") to this Agreement, and such address shall not be changed without the prior written approval of Franchisor.

2. Term and Renewal.

• a. The initial term of this Agreement shall be for a period of ten (10) years, commencing on the date of this Agreement, unless sooner terminated as provided in this Agreement.
• b. Franchisee may, at its option, renew the Franchise granted by this Agreement for one period of ten (10) years provided Franchisee: (i) is not in violation of any of the terms of this Agreement; (ii) executes the then-current form of franchise agreement used by Franchisor at that time in connection with the sale of Franchises; (iii) pays a renewal fee of One Thousand Five Hundred Dollars ($1,500) (the "Renewal Fee") at the time it provides its notice of renewal as discussed below; (iv) updates its Restaurant to meet all of Franchisor's then-current requirements; and (v) provides Franchisor with written notice of its intent to renew the Franchise not less than one hundred eighty (180) days and not more than three hundred sixty-five (365) days prior to the expiration of the initial ten (10) year term.
• c. Franchisee shall not be obligated to pay the franchise fee described in Section 5(a) of this Agreement in the event of any such renewal, but shall pay the Renewal Fee.

3. Territory.

• a. During the term of this Agreement, and provided that Franchisee is not in default under this Agreement, Franchisor will not grant to anyone else a Franchise to operate, and will not itself operate, a restaurant operating under the Carbone's Pizza or Carbone's Pizzeria name, the physical premises of which are located within the area described on the Rider to this Agreement (the "Franchisee Territory"). Franchisee acknowledges that the foregoing restrictions do not prevent Franchisor or its affiliates from any activity not specifically set forth in such restrictions, including:
  • (1) Franchisor and its affiliates may operate and allow others to operate similar or identical businesses within the Franchisee Territory if such businesses do not operate under the Carbone's Pizza or Carbone's Pizzeria names;
  • (2) Franchisor and its affiliates may operate similar or identical business outside of the Franchisee Territory under any trademarks even if the businesses compete with the Restaurant;
  • (3) Franchisor and its affiliates may operate or allow others to operate businesses inside the Franchisee Territory under any trademarks, including the Names and Marks, so long as the businesses are not competitive with the Restaurant;
  • (4) Franchisor and its affiliates may sell any products it or its affiliates provide to Franchisee for use in its Restaurant to any party, whether in or outside the Franchisee Territory;
  • (5) Franchisor and its affiliates may sell, or grant third parties the right to sell, goods and services that are the same as or competitive with those sold by the Restaurant under any trademarks, including the Names and Marks, through other

• distribution channels including the Internet, catalog sales, telemarketing or other direct marketing, in and outside of the Franchisee Territory;
• (6) Franchisor and its affiliates may sell frozen pizzas and other frozen items, whether under the Names and Marks or otherwise, to customers and resellers who may be located in the Franchisee Territory, including supermarkets and convenience stores; and
• (7) Franchisor and its affiliates may acquire businesses in the Franchisee Territory that are similar to the Restaurant or sell their businesses whether through a sale of assets or stock to anyone, regardless whether they operate or franchise the operation of businesses similar to the Restaurant.
• b. Franchisee may not deliver into the franchisee territory of another Carbone's Pizza franchisee, whether directly or indirectly, or via any third party.

Source: Item 23 — RECEIPTS (FDD pages 30–116)