What is the relationship between the Area Development Agreement and the Franchise Agreement for Lees Famous Recipe?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
the System unique as a whole; and (ii) the combined methods, information, procedures, and theories that make up the total System or are contained in the relevant manuals are proprietary and confidential.
- C. The System and Lee's Famous Recipe Restaurants are identified by the "Lee's Famous Recipe®," "Famous Recipe®," and "Lee's: Famous for Chicken®" service marks, and other related trademarks and service marks as we periodically may modify (the "Marks") used in operating the System. The parties agree and acknowledge that we have established substantial goodwill and business value in its Marks, expertise, and System.
- D. We grant qualified third parties the right to develop a certain number of Lee's Famous Recipe Restaurants within a Development Area in accordance with the terms of this Agreement to which Developer must strictly adhere, with each Lee's Famous Recipe Restaurant within the Development Area being opened and operating utilizing the Marks and System pursuant to the terms and conditions set forth in our separate and then-current form of franchise agreement (each, a "Franchise Agreement").
- E. You recognize the benefits from receiving the right to operate a Lee's Famous Recipe Restaurant utilizing the System and desire to: (i) become a multi-unit operator subject to the terms of this Agreement; and (ii) receive the benefits provided by us under this Agreement.
- F. You have applied for the right to open and operate a certain number of Lee's Famous Recipe Restaurants within the Development Area as set forth in this Agreement (each, a Restaurant), and we have approved such application in reliance on Developer's representations made therein.
- G. You hereby acknowledge that adherence to the terms of this Agreement, including our Operations Manual and other System standards and specifications, are essential to the operation of all Lee's Famous Recipe Restaurants and the System as a whole. You further acknowledge that time is of the essence in all actions required under this Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
AGREEMENT
1. DEFINITIONS
- A.
Source: Item 23 — RECEIPTS (FDD pages 70–287)
What This Means (2025 FDD)
According to Lees Famous Recipe's 2025 Franchise Disclosure Document, the Area Development Agreement grants a developer the right and obligation to develop a certain number of Lees Famous Recipe restaurants within a specific area, provided they adhere to the development schedule. Each restaurant opened within the development area must operate under a separate Franchise Agreement, which outlines the terms and conditions for using the Lees Famous Recipe system and marks.
The Area Development Agreement does not grant the developer the right to use Lees Famous Recipe's marks or system; these rights are only conferred through the individual Franchise Agreements executed for each restaurant. The developer must open and operate each restaurant according to the development schedule outlined in the Area Development Agreement and in compliance with the terms of the Franchise Agreement.
Lees Famous Recipe applies a portion of the development fee paid under the Area Development Agreement towards the initial franchise fee owed under each individual franchise agreement, specifically crediting $17,500 against the initial franchise fee for the second and subsequent restaurants developed. Failure to comply with either the Area Development Agreement or any individual Franchise Agreement can result in termination of the Area Development Agreement. Upon termination or expiration of the Area Development Agreement, the developer loses the right to develop new restaurants in the area, although they retain any territorial rights granted under the Franchise Agreements for restaurants already opened.