SUB-LICENSE AGREEMENT (FOOD OUTLET)
THIS AGREEMENT made effective the ______ day of ____________, ________.
BETWEEN:
SUB-LICENSOR
(the “Sub-Licensor”)
OF THE FIRST PART
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SUB-LICENSEE
(the “Sub-Licensee”)
OF THE SECOND PART
WHEREAS:
(a) LICENSOR (the “Licensor”), as the result of the expenditure of time, effort and money, has
acquired experience and skill in the development, opening and operating of shops, restaurants or
other outlets involving the production, merchandising and sale of [food products] and other
related products utilizing a specially designed building or an alternative outlet with specified
equipment, equipment layouts, interior and exterior accessories, identification schemes, products,
management programs, standards, specifications and procedures and propriety trademarks and
trade names, all of which may be improved, further developed or otherwise modified from time
to time and all of which are referred to in this Agreement as the “Licensor’s System”;
(b) The Sub-Licensor licenses from LICENSOR, and hereby sub-licenses to the Sub-Licensee, some of
its rights to, interest in trademarks or trade names “_______________” and such other trademarks
and trade names as are now designated or which may hereafter be designated as a part of the
Licensor’s System (hereinafter called the “Trademarks”), all of which Sub-Licensor has used to
identify LICENSOR Outlet services operated pursuant to the Licensor’s System and of the food,
beverage and other products sold or used therein in order to identify for the public by the
association of the Trademarks the source of goods and services marketed thereunder and to
represent to the public the high and uniform standards of quality, cleanliness, appearance and
service available at a ________________ outlet;
(c) The Sub-Licensee desires to make use of the trademark “________________” and to enjoy the
benefits of this trademark and the other trademarks and trade names of LICENSOR and of the
Licensor’s System;
(d) The Sub-Licensee understands and acknowledges the importance of the high and uniform
standards of quality, cleanliness, appearance and service, the value of the Licensor’s System and
the necessity of opening and operating the LICENSOR Outlet in conformity with the Licensor’s
System and in accordance with the Sub-Licensor's standards and specifications, and LICENSOR's
standards and specifications which form part of the Licensor’s System.
NOW THEREFORE IN CONSIDERATION OF the mutual covenants herein contained and the
consideration paid hereunder, the parties agree as follows:
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ARTICLE I - DEFINITIONS
“Gross Sales” shall mean the total amount of all sales at or from the LICENSOR Outlet of all
merchandise of any nature, and all other receipts of business at or from the LICENSOR Outlet, either for
cash or credit/debit or both, or for any other consideration, including all orders taken and merchandise
sold at or from the LICENSOR Outlet and filled or delivered from any other store or place or any
merchandise that is produced within the Sub-Licensed Premises for the LICENSOR Outlet and sold on or
from any other store or place, but shall not include:
(a) an exchange of merchandise between stores of the Sub-Licensee where the exchange is made
solely for the convenient operation of the Sub-Licensee's business and is not the completion of a
sale on or from the Sub-Licensed Premises;
(b) returns to shippers or manufacturers;
(c) any amounts collected on behalf of and paid to a taxing authority by the Sub-Licensee for retail
sales, excise, goods and services, or similar tax imposed by a governmental authority;
but there may be deducted in the computation of Gross Sales:
(d) cash or credit refunds to customers for goods returned, but only if the selling price of the goods
returned is included in the computation of Gross Sales; or
(e) the selling price of goods returned by customers for exchange, but only if the selling price of the
goods returned and the selling price of the goods delivered to the customers in exchange are
included in the computation of Gross Sales.
“LICENSOR” shall mean the trade name by which __________________ operates under as head Licensor
of LICENSOR Outlets.
“Sub-Licensed Premises” shall mean the location of the LICENSOR outlet located at
______________________________.
ARTICLE 2 - GRANT OF SUB-LICENSE
The Sub-Licensor hereby grants to the Sub-Licensee upon the terms and conditions herein contained, the
right and license to operate one (1) LICENSOR Outlet (hereinafter referred to as the “LICENSOR Outlet”)
and to use in connection therewith the Trademarks and the Licensor’s System, including all confidential
information which now exists or may be acquired hereafter and set forth in the Licensor Operations &
Procedures Manual or other related manuals provided by the Sub Licensor or otherwise disclosed to Sub-
Licensor's licensees, at the Sub-Licensed Premises.
ARTICLE 3 - DURATION
Except as is otherwise provided in this Agreement, the term of this Agreement (the “Term”) shall be as
follows:
(a) The term of this Agreement shall commence on the ___ day of ____________, ________ and shall
expire on the ___ day of ____________, ________ and thereafter shall automatically renew for
successive periods of ___ year(s) each, unless:
(i) either Sub-Licensor or Sub-Licensee terminates this Agreement as of the expiration of the
initial or any successive period by giving the other party at least _____ days' prior written
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notice of termination, and this Agreement shall terminate on the anniversary date of the
initial or successive period, or
(ii) any third party lease under which Sub-Licensor now holds the Sub-Licensed Premises
expires or is terminated.
(b) In addition to the other rights of the parties hereunder the Sub-Licensor shall have the right on
______ days' written notice to the Sub-Licensee, to close the LICENSOR Outlet and terminate this
Agreement.
(c) Without limiting the generality of the foregoing, the Sub-Licensee acknowledges and agrees that
the Sub-Licensor or LICENSOR each have the right to terminate the head license agreement,
between the Sub-Licensor and LICENSOR, with respect to the LICENSOR Outlet, and the Sub-
Licensee acknowledges and agrees that the Sub-Licensor has the right hereunder to terminate this
Agreement, on _______ days' written notice to the Sub-Licensee, if the following conditions have
been met:
(i) Gross Sales of the LICENSOR Outlet are less than $__________ per year; and
(ii) the LICENSOR Outlet has been operated by the Sub-Licensee, the Sub-Licensor or any
other sub-licensee of the Sub-Licensor, at the Sub-Licensed Premises for a minimum of
one (1) year.
The Sub-Licensee agrees that if rights of termination are exercised by the Sub-Licensor or
LICENSOR to terminate the head license agreement as hereinbefore provided, this Agreement
shall terminate concurrently.
ARTICLE 4 - DUTIES OF THE SUB-LICENSEE
The Sub-Licensee understands and acknowledges that every detail of the Licensor’s System is important
to the Sub-Licensor, to the Sub-Licensee and to other Sub-Licensees in order to develop and maintain
high and uniform standards of quality, cleanliness, appearance, service, facilities, and techniques, to
increase the demand for LICENSOR products and to protect and enhance the reputation and goodwill of
LICENSOR. The Sub-Licensee therefore hereby covenants as follows:
4.1 Training
The Sub-Licensee is responsible for and shall undertake to provide all required training with respect to
the LICENSOR Outlet and Licensor’s System as and when requested by the Sub-Licensor.
4.2 Hiring and Training of Employees
The Sub-Licensee shall hire and train, at its expense, all employees of the LICENSOR Outlet and shall be
exclusively responsible for the terms of their employment and compensation and for the proper training
of such employees in the operation of the LICENSOR Outlet. All employees of the Sub-Licensee shall at
all times present a neat and clean appearance to the public and shall wear uniforms, including footwear
and hair covering, of the colour and design specified by the Sub-Licensor from time to time. The Sub-
Licensee shall at all times maintain a sufficient number of trained employees to service the Sub-Licensee's
customers but in any event, the LICENSOR Outlet shall at all times be staffed by the minimum number
specified in the Licensor Operations & Procedures Manual or as otherwise agreed between the Sub-
Licensor and the Sub-Licensee.
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4.3 Use of the Sub-Licensed Premises
The Sub-Licensee shall use the LICENSOR Outlet solely for the operation of a ______________ Outlet and
keep the LICENSOR Outlet open for business and in normal operation, at a minimum, during the hours
of ___ a.m. to _____ p.m., seven (7) days per week during the currency of this Agreement subject to local
by-laws and regulations and to any federal or state/provincial legislation regulating hours of business.
These minimum hours may be reduced by the Sub-Licensee only after obtaining the prior written consent
of the Sub-Licensor, which consent shall not be unreasonably withheld.
4.4 Supply of Product
The Sub-Licensee shall purchase its supplies for the LICENSOR Outlet as follows:
(a) All containers, cartons, bags, napkins, forks, knives, spoons and other utensils shall be purchased
from LICENSOR or manufacturers or suppliers designated by the Sub-Licensor from time to time
and shall comply with the specifications provided by the Sub-Licensor from time to time. Any
and all of the ingredients and commodities which may form any part of the products or the
whole product of any food or beverage made, sold or consumed from the LICENSOR Outlet shall
be purchased from LICENSOR or manufacturers or suppliers designated by the Sub-Licensor
from time to time. Except as otherwise agreed between the Sub-Licensor and the Sub-Licensee,
payment to LICENSOR or such manufacturers or suppliers for the products for all of the
aforementioned commodities and supplies shall be made on delivery or within ____ days of
delivery as specified by LICENSOR or such manufacturers or suppliers during the currency of
this Agreement.
(b) All orders for the aforementioned products and commodities shall be submitted to LICENSOR or
manufacturers or suppliers designated by the Sub-Licensor from time to time in sufficient time as
prescribed by LICENSOR or such manufacturers or suppliers to enable LICENSOR or such
manufacturers or suppliers to fill the order.
(c) In the event that the Sub-Licensee is required to procure products, commodities or equipment as
set out in paragraph (a) for its current needs from a manufacturer or supplier other than
LICENSOR or manufacturers or suppliers designated by LICENSOR, it agrees that in order to
ensure a uniform standard of quality in all LICENSOR Outlets, it will purchase such products or
commodities from suppliers who will supply such goods in compliance with LICENSOR
standards and specifications and which suppliers shall be approved by LICENSOR provided that
such approval shall not be withheld unreasonably.
4.5 Physical Condition of the Sub-Licensed Premises
The Sub-Licensee shall, at all times during the term of this Agreement, at its sole cost and expense, keep
and maintain in good order, first-class condition and repair, as determined by the Sub-Licensor in
conformity with the Sub-Licensor's high standards and public image, and shall make all needed repairs
thereto and replacements thereof with due diligence and dispatch to:
(a) the Sub-Licensed Premises;
(b) all signs (both interior and exterior), partitions, doors and fixtures located in or upon the Sub-
Licensed Premises as they relate to the LICENSOR Outlet; and
(c) all equipment in and appurtenances of the Sub-Licensed Premises (including, without limitation,
lighting, wiring, plumbing fixtures and equipment, and the heating, ventilation and air-
conditioning equipment and distribution systems) as they relate to the LICENSOR Outlet.
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The Sub-Licensee further covenants to repaint the interior and exterior of the LICENSOR Outlet during
the currency of this Agreement upon request by the Sub-Licensor, acting reasonably, in the colour scheme
approved by the Sub-Licensor.
4.6 Operation of the LICENSOR Outlet
The Sub-Licensee shall operate the LICENSOR Outlet in conformity with such uniform methods,
standards and specifications as LICENSOR may from time to time prescribe in the Licensor Operations &
Procedures Manual or otherwise in writing to ensure that the highest degree of quality and service is
uniformly maintained, to refrain from any deviation therefrom and from otherwise operating in any
manner which reflects adversely on LICENSOR name and goodwill or on the Trademarks. Sub-Licensee
agrees:
(a) to use all materials, supplies, paper goods, uniforms, fixtures, furnishings, signs, equipment,
prescribed by or which conform with LICENSOR standards and specifications unless otherwise
agreed upon between the Sub-Licensor and the Sub-Licensee;
(b) to refrain from using or selling from the LICENSOR Outlet any products, materials, supplies,
paper goods, uniforms, fixtures, furnishings, signs and equipment which do not meet LICENSOR
or the Sub-Licensor's standards and specifications;
(c) to offer for sale from the LICENSOR Outlet only such products as shall be expressly approved for
sale in writing by the Sub-Licensor and to offer for sale all products that have been designated as
approved by the Sub-Licensor; and
(d) to maintain at all times in the LICENSOR Outlet a sufficient supply of approved products for sale
to the public as set out in the Licensor Operations & Procedures Manual.
4.7 Sub-Licensor's Right of Inspection
The Sub-Licensee shall grant to LICENSOR and the Sub-Licensor or their respective duly authorized
representatives or agents the right to enter upon the Sub-Licensed Premises at any time for the purpose of
conducting inspections of the LICENSOR Outlet, and shall co-operate in such inspections by rendering
such assistance as LICENSOR or the Sub-Licensor may reasonably request and, upon notice from the
Sub-Licensor, shall take such steps as may be necessary immediately to correct the deficiencies detected
during any such inspection that do not conform with LICENSOR or the Sub-Licensor's then current
standards and specifications.
4.8 Monthly Sales Report
The Sub-Licensee shall submit a written monthly sales report setting out the Gross Sales for the past
month in the form of report prescribed by the Sub-Licensor from time to time. Monthly Sales Reports
shall be provided to the Sub-Licensor within _____ days of the last day of each month during the term of
this Agreement.
ARTICLE 5 – THE TRADEMARKS
5.1 Restrictions on Use of the Trademarks
(a) It is agreed that this sub-license to use the Trademarks applies only to their use in connection
with the operation of the LICENSOR Outlet at the location designated herein, and includes only
the Trademarks as are now designated or which may hereafter be designed as a part of the
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Licensor’s System and no other trademarks of LICENSOR now existing or to be developed or
acquired by LICENSOR.
(b) The Sub-Licensee shall not use the Trademarks as part of the Sub-Licensee's corporate or other
business name, nor shall the Sub-Licensee hold out or otherwise employ the Trademarks to
perform any activity, or to incur any obligation or indebtedness in such a manner as might in any
way make the Sub-Licensor or LICENSOR liable therefor, without being explicitly authorized in
writing by the Sub-Licensor.
5.2 Ownership of Trademarks
The Sub-Licensee expressly acknowledges LICENSOR’s ownership of and the Sub-Licensor's rights in
and to the Trademarks and agrees not to represent in any manner that the Sub-Licensee has any
ownership in the Trademarks. The Sub-Licensee further agrees that its use of the Trademarks shall not
create in its favour any right, title or interest in or to the Trademarks except as the right to use same is
expressly set forth herein, but that all of such use shall enure to the benefit of LICENSOR.
5.3 Infringement by Sub-Licensee
The Sub-Licensee acknowledges that the use of the Trademarks outside the scope of this Agreement,
without LICENSOR's prior written consent, is an infringement of LICENSOR'’s ownership and the Sub-
Licensor's rights in and to the Trademarks and expressly covenants that during the term of this
Agreement, and after the expiration or termination hereof, the Sub-Licensee shall not, directly or
indirectly, commit an act of infringement or contest or aid in contesting the validity or right of
LICENSOR to the Trademarks, or take any other action in derogation thereof. In the event of termination
or expiration of this Agreement, the Sub-Licensee shall immediately cease any and all use and display of,
and shall make no attempt to associate itself in any way with, the Trademarks and acknowledges that any
such acts would constitute an infringement of LICENSOR’s ownership and Sub-Licensor's rights in and
to the Trademarks.
5.4 Claims Against the Trademarks
The Sub-Licensee shall promptly notify the Sub-Licensor of any claim, demand, or cause of action based
upon or arising from any attempt by any other person, corporation or other entity to use the Trademarks
licensed hereunder, or any colourable variation thereof, in which LICENSOR has or claims a proprietary
interest. The Sub-Licensee also agrees to notify the Sub-Licensor promptly of any litigation instituted by
any person, corporation or other entity or by any governmental agency against LICENSOR, the Sub-
Licensor or Sub-Licensee involving the Trademarks. If the Sub-Licensor undertakes the defense or
prosecution of any litigation relating to the Trademarks, the Sub-Licensee agrees to execute any and all
documents and to do such acts and things as may, in the opinion of counsel for the Sub-Licensor, be
necessary to carry out such defense or prosecution. The Sub-Licensor makes no warranty, express or
implied, as to the use, validity or enforceability of the Trademarks. If the Sub-Licensor decides against
undertaking the defence or prosecution of any litigation relating to the Trademarks, the Sub-Licensee
shall not be entitled to do so without the prior written approval of the Sub-Licensor.
5.5 Sub-Licensee's Use Non-Exclusive
The Sub-Licensee agrees that its sub-license under the Trademarks is nonexclusive and that the Sub-
Licensor has and retains the right:
(a) to grant additional sub-licenses to use the Trademarks in addition to those sub-licenses granted
to existing Sub-Licensees;
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(b) to develop and establish other sub-license systems for the same or similar products or services
utilizing the same or similar trademarks and to grant sub-licenses thereto without providing the
Sub-Licensee any right therein; and
(c) to develop and establish other sub-license systems for the same or similar products or services
under any trademarks not now or hereafter designated in writing as part of the system licensed
by this Agreement and to grant sublicenses thereto without providing the Sub-Licensee any right
therein.
5.6 Enurement Solely to Sub-Licensor
The Sub-Licensee agrees that all goodwill associated with the Licensor’s System and identified by the
Trademarks used in connection therewith shall enure directly and exclusively to the benefit of
LICENSOR and is the property of LICENSOR and that upon expiration or termination of this Agreement,
no monetary amount shall be assigned as attributable to any goodwill associated with any of the Sub-
Licensee's activities in the operation of the LICENSOR Outlet sub-licensed herein, or the Sub-Licensee's
use of the Trademarks.
5.7 Licensor’s System
The Sub-Licensee acknowledges that every detail of the Licensor’s System is important to itself, the Sub-
Licensor and other sub-licensees in order to develop and maintain high and uniform standards of quality
and service and, hence, to protect the reputation of LICENSOR Outlets. Accordingly, the Sub-Licensee
covenants:
(a) to operate the LICENSOR Outlet and advertise under the name “______________” without prefix
or suffix;
(b) to adopt and use the Trademarks sub-licensed hereunder solely in the manner prescribed by the
Sub-Licensor;
(c) to observe such requirements with respect to trademarks registration and copyright notices as the
Sub-Licensor or LICENSOR may from time to time direct in the Licensor Operations &
Procedures Manual or otherwise in writing; and
(d) to use the Trademarks only in connection with the advertisement and sale of products and
services specifically approved in advance by the Sub-Licensor and for no other purpose.
5.8 Limitations on Use of Names and Trademarks
The Sub-Licensee agrees that it will not make use of the name “______________” or any part thereof in the
partnership or corporate name of any company incorporated to act as the Sub-Licensee hereunder. If local
laws require that the Sub-Licensee file an affidavit, or other registration, of conducting business under an
assumed or trade name, the Sub-Licensee shall state in such filing or affidavit that the same is made as a
Sub-Licensee of the LICENSOR Outlet. All such registrations shall be cancelled in the event of
termination or expiration of this Agreement, and, if the Sub-Licensee fails to do so within a reasonable
period of time, the Sub-Licensee hereby irrevocably appoints the Sub-Licensor as its attorney to execute
and file such documents on its behalf. By virtue of such registration, no property right in or privilege to
use said name is created which will extend beyond termination or expiration of this Agreement. The Sub-
Licensee will place in a conspicuous manner at its location a notice in a form designated by the Sub-
Licensor that it is an independent operator of the _____________ Outlet and a sub-licensed user of the
Trademarks and is not in any other way related to or affiliated with LICENSOR. If it becomes advisable at
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any time in the opinion of the Sub-Licensor for the Sub-Licensee to modify or discontinue use of any of
the names or the Trademarks, or use one or more additional or substitute names or trademarks, the Sub-
Licensee agrees to do so upon reasonable notice.
5.9 Use of Name by Other Sub-Licensees
The Sub-Licensee further agrees not to interfere with in any manner nor attempt to prohibit the use or
registration of the name “______________” by any other sub-licensee of the Sub-Licensor. If the consent of
the Sub-Licensee to such use is requested, the Sub-Licensee irrevocably appoints the Sub-Licensor as its
attorney to execute all required documents to effect such consent.
ARTICLE 6 - LICENSOR OPERATIONS & PROCEDURES MANUAL
6.1 General Conduct of Business
In order to protect the reputation and goodwill of the Licensor’s System and to maintain uniform
standards of operation under the Trademarks, the Sub-Licensee shall conduct the LICENSOR Outlet
business in accordance with the Licensor Operations & Procedures Manual, as amended or replaced from
time time, (the “Licensor Operations & Procedures Manual”) for the term of this Agreement, receipt of
one (1) copy of which is hereby acknowledged by the Sub-Licensee.
6.2 Confidential Use
Sub-Licensee shall at all times treat the Licensor Operations & Procedures Manual, and other manuals
created for or approved for use in the operation of the LICENSOR Outlet, and the information contained
therein (as well as any and all other trade secrets and confidential information, knowledge and know-
how concerning the construction and operation of the LICENSOR Outlet that may be imparted to the
Sub-Licensee from time to time) as confidential, and shall use all reasonable efforts to maintain such
information as secret and confidential. The Sub-Licensee shall divulge such trade secrets and secret and
confidential information only to such of its employees as must have access to it in order to operate the
LICENSOR Outlet, and shall not at any time, without the Sub-Licensor's prior written consent, copy or
otherwise reproduce the foregoing, in whole or in part, nor otherwise make the same available to any
unauthorized person or source. Any and all information, knowledge and know-how, including, without
limitation, drawings, materials, equipment, recipes and other data which the Sub-Licensor or LICENSOR
designates as proprietary, secret or confidential and the Licensor Operations & Procedures Manual shall
be deemed confidential for purposes of this Agreement.
6.3 Sole Property of LICENSOR
The Licensor Operations & Procedures Manual and all other manuals, documents or materials developed
for or approved for use in the operation of the LICENSOR Outlet shall at all times be deemed and remain
the sole property of LICENSOR and the Sub-Licensee shall acquire no right, title or interest thereto under
this Agreement except to possess and use the Licensor Operations & Procedures Manual or other
approved manuals during the term of this Agreement.
6.4 Changes in the Licensor Operations & Procedures Manual
(a) In order that the Sub-Licensee may benefit from new knowledge gained by the Sub-Licensor or
LICENSOR as to improved methods, procedures and techniques in the merchandising and sale of
____________ and other food items, and in the operation of the LICENSOR Outlet, the Sub-
Licensor or LICENSOR may from time to time revise the contents of the Licensor Operations &
Procedures Manual and such other manuals, if any, as it may develop and the Sub-Licensee
covenants to forthwith comply with all changes to the contents of the Licensor Operations &
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Procedures Manual and such other manuals, if any, as the Sub-Licensor or LICENSOR may
develop from time to time during the term of this Agreement.
(b) The Sub-Licensee shall at all times ensure that its copy of the Licensor Operations & Procedures
Manual and other manuals are kept current and up-to-date, and in the event of any dispute as to
the contents of the Licensor Operations & Procedures Manual, the terms of the master copy of the
Licensor Operations & Procedures Manual and other manuals developed and maintained by
LICENSOR at its principal place of business shall apply.
6.5 Limitation on Disclosure
The Sub-Licensee recognizes the value of the LICENSOR name, image, unique style and merchandising
methods, and agrees to uphold the same and not to disclose any trade secrets or proprietary or
confidential information to any unauthorized persons. The Sub-Licensee further agrees to disclose only to
those individuals who have a realistic need to know the trade secrets and confidential information
hereinafter revealed by the Sub-Licensor to the Sub-Licensee and then only after such individuals have
been hired as employees of the Sub-Licensee. The Sub-Licensee for itself and all employees from time to
time employed by the Sub-Licensee at the LICENSOR Outlet does hereby agree that all trade secrets and
other confidential information concerning LICENSOR’s method of doing business shall not be used for
other purposes or in other areas. The Sub-Licensee further acknowledges that every policy, rule,
regulation, advice and direction contained in the Licensor Operations & Procedures Manual and such
other manuals, if any, as LICENSOR may develop, is essential to the preservation of the favourable
public image of LICENSOR. The Sub-Licensee covenants and agrees to scrupulously observe each such
policy, rule, regulation, advice and direction contained in the Licensor Operations & Procedures Manual
and such other manuals, if any, as LICENSOR may develop, during the term of this Agreement.
ARTICLE 7 - ADVERTISING
7.1 Sub-Licensor Has No Obligations
The parties recognize the value of advertising and the importance of the standardization of advertising
and promotion to the furtherance of the public image of all LICENSOR Outlets operated pursuant to the
Licensor’s System. The Sub-Licensee acknowledges that such advertising is intended to maximize the
public's awareness of LICENSOR Outlets and that the Sub-Licensor accordingly undertakes no obligation
to ensure that any individual sub-licensee benefits direct