Document:

Exhibit 10.64

Exhibit 10.64

2008 STOCK INCENTIVE PLAN

The principal terms of the 2008 Plan are summarized below. The following summary is
qualified in its entirety by the full text of the 2008 Plan, which is attached as Annex A to the
copy of this Proxy Statement that was filed electronically with the SEC and is accessible on the
Company’s website at www.meade.com as well as on the SEC’s website at www.sec.gov. A copy of the
2008 Plan may also be obtained by contacting Paul E. Ross, the Company’s Senior Vice
President—Finance and CFO, at 6001 Oak Canyons, Irvine, CA 92618, telephone number (949) 451-1450.

Summary Description of the 2008 Plan

Purpose. The purpose of the 2008 Plan is to promote the success of the Company by providing
an additional means to attract, motivate, retain and reward key personnel, including officers, and
experienced and knowledgeable independent through the grant of options and other awards that
provide added long term incentives for high levels of performance and for significant efforts to
improve the financial performance of the Company.

Awards. The 2008 Plan authorizes stock options (incentive or nonqualified), stock
appreciation rights (“SARs”), restricted stock, performance share awards and stock bonuses.

Administration. The 2008 Plan is administered by either the Board or a committee of the Board
(the “Administrator”). The Administrator determines the number of shares that are to be subject to
awards and the terms and conditions of such awards, including the price (if any) to be paid for the
shares or the award. The Board has appointed a subcommittee of the Compensation Committee (the
Equity Compensation Subcommittee) as the 2008 Plan’s Administrator.

No Repricing. In no case (except due to an adjustment to reflect a stock split or similar
event or any repricing that may be approved by stockholders) will any adjustment be made to a stock
option or SAR under the 2008 Plan (by amendment, cancellation and regrant, exchange or other means)
that would constitute a repricing of the per share exercise or base price of the award.

Eligibility. Persons eligible to receive awards under the 2008 Plan include officers,
directors, key employees and consultants of the Company or any of its subsidiaries. Members of the
Board who are not officers or employees of the Company (each a “Non-Employee Director”) are
eligible to receive certain automatic option grants under the Plan, as described more fully below.
Approximately 25 officers and key employees of the Company, including all of the Company’s Named
Executive Officers, are considered eligible under the 2008 Plan at the present time, subject to the
power of the Administrator to determine eligible persons to whom awards will be granted. Currently,
there are 6 Non-Employee Directors.

Limits on Awards; Authorized Shares. The maximum number of shares of Common Stock that may be
issued or delivered pursuant to awards granted under the 2008 Plan is 2,594,936 shares. (As noted
above, as of May 21, 2008, only 2,594,936 shares remain available for future award grants under the
1997 Plan, and if the 2008 Plan is approved by the stockholders no further grants will be made
under the 1997 Plan.) The maximum number of shares of Common Stock subject to awards that may be
granted to any individual during any calendar year is 500,000 shares and the maximum number of
shares of Common Stock that may be issued pursuant to automatic option grants to Non-Employee
Directors is 250,000 shares.

As is customary in incentive plans of this nature, the number and kind of shares available
under the 2008 Plan and the then outstanding awards, as well as exercise or purchase prices,
performance targets under certain performance-based awards and share limits, are subject to
adjustment in the event of certain reorganizations, mergers, combinations, consolidations,
recapitalizations, reclassifications, stock splits, stock dividends, asset sales or other similar
events, or extraordinary dividends or distributions of property to stockholders. Shares that are
subject to or underlie awards which expire or fail to vest or which are cancelled, terminated,
forfeited, or not paid or delivered under the 2008 Plan for any reason, as well as reacquired
shares, become available, except to the extent prohibited by law, for additional awards under the
2008 Plan.

 

 

 

The 2008 Plan will not limit the authority of the Board or the Compensation Committee (or the
Equity Compensation Subcommittee) to grant awards or authorize any other compensation, with or
without reference to the Common Stock, under any other plan or authority.

Transfer Restrictions. Subject to certain exceptions contained in the 2008 Plan (which
generally include transfer to the Company, a participant’s designation of a beneficiary, the
exercise of a participant’s award by the participant’s legal representative in the event of the
participant’s disability, and transfers pursuant to certain court orders), awards under the 2008
Plan are not transferable by the recipient other than by will or the laws of descent and
distribution and are generally exercisable, during the recipient’s lifetime, only by him or her.
Any amounts payable or shares issuable pursuant to an award will be paid only to the recipient or
the recipient’s beneficiary or representative. The Administrator may, however, permit the transfer
of an award if the transferor presents satisfactory evidence that the transfer is for estate or tax
planning purposes.

Stock Options. A stock option is the right to purchase shares of Common Stock at a future
date at a specified price (the “exercise price” of the option). An option may either be an
“incentive stock option” or a “nonqualified stock option.” Incentive stock option benefits are
taxed differently than nonqualified stock option benefits, as described under “Federal Income Tax
Consequences” below. Incentive stock options are also subject to more restrictive terms and are
limited in amount by the Code and the 2008 Plan.

The exercise price of options granted under the 2008 Plan will be determined by the
Administrator, but may be no less than the fair market value of a share on the date of grant;
provided, however, that the exercise price may be no less than 110% of fair market value for
incentive stock options granted to an employee who owns 10% or more of the outstanding Common
Stock. Full payment for shares purchased on the exercise of any option must be made at the time of
such exercise in a manner approved by the Administrator (which may include cash, a check, a
promissory note, notice and third party payment, or delivery of previously owned Common Stock,
subject to certain limitations set forth in the 2008 Plan). Options granted under the 2008 Plan may
be exercised at the time or times determined by the Administrator, but in no event may options be
exercised after ten years from the date of grant; provided, however, that incentive stock options
granted to an employee who owns 10% or more of the outstanding Common Stock may not be exercised
after five years from the date of grant.

Stock Appreciation Rights. An SAR is the right to receive a number of shares of Common Stock
or an amount of cash, or a combination of shares and cash, the aggregate amount or value of which
is determined by reference to a change in the fair market value of the Common Stock. SARs may be
granted in connection with other awards or independently. The Administrator may also grant limited
SARs exercisable only upon or in respect of a change in control or any other specified event; such
limited SARs may relate to or operate in tandem with other SARs, options or other awards under the
2008 Plan.

Restricted Stock Awards. A restricted stock award is an award typically for a fixed number of
shares of Common Stock subject to restrictions. The Administrator specifies the price, if any, the
participant must pay for such shares and the restrictions (which may include, for example,
continued service only and/or performance standards) imposed on such shares.

Performance-Based Awards. Performance share awards may be granted on the basis of such
factors as the Administrator deems appropriate. Generally, these awards will be based upon specific
agreements and will specify the number of shares of Common Stock subject to the award, the
consideration, if any, to be paid for such shares by the participant and the conditions upon which
the issuance of the shares will be based. In addition to awards under the other provisions of the
2008 Plan, the 2008 Plan provides that the Administrator may grant to eligible officers
performance-based awards designed to satisfy the requirements for deductibility of compensation
under Section 162(m) of the Code (“Section 162(m) Performance-Based Awards”). Options with an
exercise price and SARs with a base price not less than fair market value on the date of grant
will, generally speaking, be considered Section 162(m) Performance-Based Awards. Other
Section 162(m) Performance-Based Awards must be based on performance relative to pre-established
goals over performance periods not shorter than one year nor longer than ten years. The business
criteria on which performance goals may be established include one or more of the following as
applied to the consolidated operations, or one or more subsidiaries or business segments of the
Company: (1) net cash flow (including cash and cash equivalents) from operations or net cash flow
from operations, financing and investing activities,

 

 

 

(2) earnings per share of Common Stock on a
fully diluted basis determined by dividing (a) net earnings less dividends on Preferred Stock, if any, of the Company and its subsidiaries by
(b) the weighted average number of shares of Common Stock and Common Stock equivalents outstanding,
(3) consolidated net income of the Company and its subsidiaries (less, if any, preferred
dividends), divided by the average consolidated common stockholders’ equity, or (4) change in the
market price of the Company’s Common Stock plus dividends and other distributions paid, divided by
the beginning market price of the Common Stock, adjusted for any changes in equity structure.
Section 162(m) Performance-Based Awards (other than options and SARs) are earned and payable only
if performance meets the specific, pre-established performance goals approved by the Administrator
in advance of applicable deadlines under the Code and while the performance relating to the goals
remains substantially uncertain. Performance goals may be adjusted to reflect certain changes,
including reorganizations, liquidations and capitalization and accounting changes, to the extent
permitted by Section 162(m). Grants of Section 162(m) Performance-Based Awards in any calendar year
to any individual participant may not be made with reference to more than 350,000 shares.
Section 162(m) Performance-Based Awards that do not relate to shares and are payable in cash and
that are granted in any calendar year to any individual participant can not provide for payment of
more than $1,000,000. Before any of the Section 162(m) Performance-Based Awards (other than by
exercise of qualifying options or SARs) are paid to a covered officer, the Administrator must
certify that the performance goals have been satisfied. The Administrator will have discretion to
determine the performance goals and restrictions or other limitations of the individual awards and
is expected to reserve “negative” discretion to reduce the number of shares delivered pursuant to
payments of awards below maximum award limits.

Stock Bonuses. The Administrator may grant a stock bonus to any eligible person to reward
exceptional or special services, contributions or achievements in the manner and on such terms and
conditions (including any restrictions on such shares) as determined from time to time by the
Administrator. The number of shares so awarded is determined by the Administrator, and such an
award may be granted independently or in lieu of a cash bonus.

Acceleration of Awards; Possible Early Termination of Awards. Unless prior to a Change in
Control Event the Administrator determines that, upon its occurrence, benefits will not be
accelerated, then generally upon the Change in Control Event each option and SAR will become
immediately exercisable, restricted stock will vest, and cash and performance-based awards will
become payable. A “Change in Control Event” under the 2008 Plan generally includes (subject to
certain exceptions) certain mergers or consolidations approved by the Company’s stockholders, or
stockholder approval of a liquidation of the Company or sale of substantially all of the Company’s
assets.

Effect of Termination of Employment. Options which have not yet become exercisable will
generally lapse upon the date a participant is no longer employed by the Company. Options which
have become exercisable must be exercised within three months after such date if the termination of
employment was for any reason other than retirement, total disability, death or discharge for
cause. In the event a participant is discharged for cause, all options will lapse immediately upon
such termination of employment. If the termination of employment is due to retirement, total
disability or death, the options which are exercisable on the date of such termination must
generally be exercised within twelve months of the date of such termination. In no event may an
option be exercised after its stated term. SARs generally have the same termination provisions as
the options to which they relate. In respect of each other award granted under the 2008 Plan, a
participant’s rights and benefits (if any) in the event of a termination of employment will be
determined by the Administrator, which may make distinctions based upon the cause of termination
and the nature of the award. The Administrator may increase the portion of a participant’s award
available to the participant in connection with a participant’s termination of employment (other
than termination by the Company for cause).

Amendments. The Board may amend or terminate the 2008 Plan at any time. If any amendment to
the 2008 Plan would (1) materially increase the benefits accruing to participants, (2) materially
increase the aggregate number of shares which may be issued under the 2008 Plan or (3) materially
modify the requirements of eligibility for participation in the 2008 Plan, then, to the extent then
required by applicable law or deemed advisable by the Board, such amendment will be subject to
stockholder approval. Outstanding awards may be amended, subject, however, to the consent of the
holder if the amendment materially and adversely affects the holder. If the 2008 Plan is approved
by the stockholders, the 2008 Plan will terminate on February 4, 2014, unless previously terminated
by the Board.

 

 

 

Automatic Option Grants to Non-Employee Directors. The 2008 Plan provides that each person
who first becomes a Non-Employee Director is granted automatically a nonqualified stock option to
purchase 5,000 shares of
Common Stock. In addition, in each calendar year, there will be granted automatically (without
any action by the Administrator) immediately following the Annual Meeting of Stockholders in each
such year, a nonqualified stock option to purchase 5,000 shares of Common Stock to each
Non-Employee Director who is re-elected as a member of the Board or who continues as a member of
the Board. A Non-Employee Director may not receive more than one nonqualified stock option under
the Non-Employee Director program in any calendar year, nor more than 75,000 shares on exercise of
all options awarded under such program. The purchase price per share of Common Stock covered by
each such option will be the fair market value of the Common Stock on the date the option is
granted. The 2008 Plan provides that Non-Employee Director Options expire on the tenth anniversary
of the award date and become exercisable at the rate of 33 1/3% on each of the first three
anniversaries of the date of grant. Immediately prior to the occurrence of a Change in Control,
each option granted under the Non-Employee Director program will become exercisable in full.

If a Non-Employee Director’s services as a member of the Board terminate by reason of
retirement, death or total disability, any option granted under the Non-Employee Director program
held by such Non-Employee Director will immediately become and will remain exercisable for two
years after the date of such termination or until the expiration of the option’s term, whichever
occurs first. If a Non-Employee Director’s services as a member of the Board terminate for any
other reason, any portion of an option granted under the Non-Employee Director program held by such
Non-Employee Director which is not then exercisable will terminate, and any portion of an option
which is then exercisable may be exercised for three months after the date of such termination or
until the expiration of the option’s term, whichever occurs first.

Securities Underlying Awards. The reported closing price of the Company’s Common Stock on the
Nasdaq Global Market on May 21, 2008 was $1.35 per share.

Federal Income Tax Consequences. With respect to nonqualified stock options, upon exercise,
the participant generally will be taxed as ordinary income (and the Company is generally entitled
to deduct) an amount equal to the difference between the option exercise price and the fair market
value of the shares at the time of exercise. However, there will be no income tax to the
participant (and there will be no deduction to the Company) upon the grant of a nonqualified stock
option. With respect to incentive stock options, the participant will not receive income tax (and
the Company is generally not entitled to a deduction) either upon grant of the option or at the
time the option is exercised. If incentive stock option shares are not held for specified
qualifying periods, however, the difference between the fair market value of the shares at the date
of exercise (or, if lower, the sale price) and the cost of such shares is taxed as ordinary income
(and the Company will receive a corresponding deduction) in the year the shares are sold.

The current federal income tax consequences of other awards authorized under the 2008 Plan
generally follow certain basic patterns: SARs are taxed and deductible in substantially the same
manner as nonqualified stock options; nontransferable restricted stock subject to a substantial
risk of forfeiture results in income recognition only at the time the restrictions lapse (unless
the recipient elects to accelerate recognition as of the date of grant); and performance share
awards generally are subject to tax at the time of payment. In each of the foregoing cases, the
Company will generally have a corresponding deduction at the time the participant recognizes
income. If an award is accelerated under the 2008 Plan in connection with a change in control (as
this term is used in the Internal Revenue Code), the Company may not be permitted to deduct the
portion of the compensation attributable to the acceleration (“parachute payments”) if it exceeds
certain threshold limits under the Internal Revenue Code (and certain excise taxes may be
triggered). Further, if the compensation attributable to awards is not “performance based” within
the meaning of Section 162(m) of the Internal Revenue Code, the Company may not be permitted to
deduct the aggregate non performance-based compensation in excess of $1,000,000 per individual in
certain circumstances.

The above tax summary discusses general tax principles applicable to, and income tax consequences
of, the 2008 Plan under current federal law, which is subject to change. This summary is not
intended to be exhaustive and, among other considerations, does not describe state, local, or
international tax consequences.exv10w1

Exhibit 10.1

ROCKY MOUNTAIN CHOCOLATE FACTORY

FRANCHISE AGREEMENT

Franchisee:          
                        
                       

Date:                      
                        
                     

Franchised Location:                   
                        

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	1.	 	 	PURPOSE	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	2.	 	 	GRANT OF FRANCHISE	 	 	1	 
	 

	 	 	2.1	 	 	Grant of Franchise
	 	 	1	 
	 

	 	 	2.2	 	 	Scope of Franchise Operations
	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	3.	 	 	FRANCHISED LOCATION AND DESIGNATED AREA	 	 	2	 
	 

	 	 	3.1	 	 	Franchised Location
	 	 	2	 
	 

	 	 	3.2	 	 	Limitation on Franchise Rights; Relocation
	 	 	2	 
	 

	 	 	3.3	 	 	Franchisor’s Reservation of Rights
	 	 	2	 
	 
	 	 	 	 	 	 	 	 	 	 
	4.	 	 	INITIAL FEES	 	 	3	 
	 

	 	 	4.1	 	 	Initial Franchise Fee
	 	 	3	 
	 
	 	 	 	 	 	 	 	 	 	 
	5.	 	 	DEVELOPMENT OF FRANCHISED LOCATION	 	 	3	 
	 

	 	 	5.1	 	 	Approval of Lease
	 	 	3	 
	 

	 	 	5.2	 	 	Conversion and Design
	 	 	3	 
	 

	 	 	5.3	 	 	Signs
	 	 	4	 
	 

	 	 	5.4	 	 	Equipment
	 	 	4	 
	 

	 	 	5.5	 	 	Electronic Communications
	 	 	4	 
	 

	 	 	5.6	 	 	Permits and Licenses
	 	 	5	 
	 

	 	 	5.7	 	 	Anti-Terrorism Representation
	 	 	5	 
	 

	 	 	5.8	 	 	Commencement of Operations
	 	 	5	 
	 
	 	 	 	 	 	 	 	 	 	 
	6.	 	 	TRAINING	 	 	6	 
	 

	 	 	6.1	 	 	Initial Training Program
	 	 	6	 
	 

	 	 	6.2	 	 	Length of Training
	 	 	6	 
	 

	 	 	6.3	 	 	Additional Training
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	7.	 	 	DEVELOPMENT ASSISTANCE	 	 	6	 
	 

	 	 	7.1	 	 	Franchisor’s Development Assistance
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	8.	 	 	OPERATIONS MANUAL	 	 	7	 
	 

	 	 	8.1	 	 	Operations Manual
	 	 	7	 
	 

	 	 	8.2	 	 	Confidentiality of Operations Manual Contents
	 	 	7	 
	 

	 	 	8.3	 	 	Changes to Operations Manual
	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	9.	 	 	OPERATING ASSISTANCE	 	 	8	 
	 

	 	 	9.1	 	 	Franchisor’s Services
	 	 	8	 
	 

	 	 	9.2	 	 	Additional Franchisor Services
	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	10.	 	 	FRANCHISEE’S OPERATIONAL COVENANTS	 	 	9	 
	 

	 	 	10.1	 	 	Store Operations
	 	 	9	 
	 

	 	 	10.2	 	 	Factory Candy Purchases
	 	 	11	 
	 

	 	 	10.3	 	 	Payment for Factory Candy
	 	 	11	 
	 

	 	 	10.4	 	 	Limitations on Supply Obligations
	 	 	12	 
	 

	 	 	10.5	 	 	Changes in Products
	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 	 
	11.	 	 	ROYALTIES	 	 	12	 
	 

	 	 	11.1	 	 	Monthly Royalty
	 	 	12	 
	 

	 	 	11.2	 	 	Gross Retail Sales
	 	 	12	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	11.3	 	 	Royalty Payments
	 	 	13	 
	 

	 	 	11.4	 	 	Authorization for Electronic Funds Transfers
	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 
	12.	 	 	ADVERTISING	 	 	13	 
	 

	 	 	12.1	 	 	Approval of Advertising
	 	 	13	 
	 

	 	 	12.2	 	 	Local Advertising
	 	 	14	 
	 

	 	 	12.3	 	 	Marketing and Promotion Fee
	 	 	14	 
	 

	 	 	12.4	 	 	Regional Advertising Programs
	 	 	15	 
	 

	 	 	12.5	 	 	Marketing Services
	 	 	15	 
	 

	 	 	12.6	 	 	Electronic Advertising
	 	 	15	 
	 
	 	 	 	 	 	 	 	 	 	 
	13.	 	 	QUALITY CONTROL	 	 	16	 
	 

	 	 	13.1	 	 	Compliance with Operations Manual
	 	 	16	 
	 

	 	 	13.2	 	 	Standards and Specifications
	 	 	16	 
	 

	 	 	13.3	 	 	Inspections
	 	 	16	 
	 

	 	 	13.4	 	 	Restrictions on Services and Products
	 	 	16	 
	 

	 	 	13.5	 	 	Approved Suppliers
	 	 	17	 
	 

	 	 	13.6	 	 	Request to Change Supplier
	 	 	17	 
	 

	 	 	13.7	 	 	Approval of Intended Supplier
	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	14.	 	 	TRADEMARKS, TRADE NAMES AND PROPRIETARY INTERESTS	 	 	17	 
	 

	 	 	14.1	 	 	Marks
	 	 	17	 
	 

	 	 	14.2	 	 	No Use of Other Marks
	 	 	18	 
	 

	 	 	14.3	 	 	Licensed Methods
	 	 	18	 
	 

	 	 	14.4	 	 	Effect of Termination
	 	 	18	 
	 

	 	 	14.5	 	 	Mark Infringement
	 	 	18	 
	 

	 	 	14.6	 	 	Franchisee’s Business Name and Domain Name
	 	 	18	 
	 

	 	 	14.7	 	 	Change of Marks
	 	 	19	 
	 

	 	 	14.8	 	 	Creative Ownership
	 	 	19	 
	 

	 	 	14.9	 	 	Non-Disparagement
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	15.	 	 	REPORTS, RECORDS AND FINANCIAL STATEMENTS	 	 	19	 
	 

	 	 	15.1	 	 	Franchisee Reports
	 	 	19	 
	 

	 	 	15.2	 	 	Annual Financial Statements
	 	 	20	 
	 

	 	 	15.3	 	 	Verification
	 	 	20	 
	 

	 	 	15.4	 	 	Books and Records
	 	 	20	 
	 

	 	 	15.5	 	 	Audit of Books and Records
	 	 	20	 
	 

	 	 	15.6	 	 	Failure to Comply with Reporting Requirements
	 	 	20	 
	 

	 	 	15.7	 	 	Shopping Service
	 	 	21	 
	 
	 	 	 	 	 	 	 	 	 	 
	16.	 	 	TRANSFER	 	 	21	 
	 

	 	 	16.1	 	 	Transfer by Franchisee
	 	 	21	 
	 

	 	 	16.2	 	 	Pre-Conditions to Franchisee’s Transfer
	 	 	21	 
	 

	 	 	16.3	 	 	Franchisor’s Approval of Transfer
	 	 	22	 
	 

	 	 	16.4	 	 	Right of First Refusal
	 	 	22	 
	 

	 	 	16.5	 	 	Types of Transfers
	 	 	23	 
	 

	 	 	16.6	 	 	Transfer by the Franchisor
	 	 	23	 
	 

	 	 	16.7	 	 	Franchisee’s Death or Disability
	 	 	23	 
	 
	 	 	 	 	 	 	 	 	 	 
	17.	 	 	TERM AND EXPIRATION	 	 	23	 
	 

	 	 	17.1	 	 	Term
	 	 	23	 
	 

	 	 	17.2	 	 	Continuation
	 	 	23	 
	 

	 	 	17.3	 	 	Rights Upon Expiration
	 	 	24	 

franchise
agreement - ii

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	17.4	 	 	Exercise of Option for Successor Franchise
	 	 	24	 
	 

	 	 	17.5	 	 	Conditions of Refusal
	 	 	24	 
	 
	 	 	 	 	 	 	 	 	 	 
	18.	 	 	DEFAULT AND TERMINATION	 	 	25	 
	 

	 	 	18.1	 	 	Termination by Franchisor — Effective Upon Notice
	 	 	25	 
	 

	 	 	18.2	 	 	Termination by Franchisor — Thirty Days Notice
	 	 	26	 
	 

	 	 	18.3	 	 	Franchisor’s Remedies.
	 	 	27	 
	 

	 	 	18.4	 	 	Right to Purchase
	 	 	27	 
	 

	 	 	18.5	 	 	Obligations of Franchisee Upon Termination or Expiration
	 	 	28	 
	 

	 	 	18.6	 	 	State and Federal Law
	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	19.	 	 	BUSINESS RELATIONSHIP	 	 	29	 
	 

	 	 	19.1	 	 	Independent Businesspersons
	 	 	29	 
	 

	 	 	19.2	 	 	Payment of Third Party Obligations
	 	 	29	 
	 

	 	 	19.3	 	 	Indemnification
	 	 	30	 
	 
	 	 	 	 	 	 	 	 	 	 
	20.	 	 	RESTRICTIVE COVENANTS	 	 	30	 
	 

	 	 	20.1	 	 	Non-Competition During Term
	 	 	30	 
	 

	 	 	20.2	 	 	Post-Termination Covenant Not to Compete
	 	 	31	 
	 

	 	 	20.3	 	 	Confidentiality of Proprietary Information
	 	 	31	 
	 

	 	 	20.4	 	 	Confidentiality Agreement
	 	 	31	 
	 
	 	 	 	 	 	 	 	 	 	 
	21.	 	 	INSURANCE	 	 	31	 
	 

	 	 	21.1	 	 	Insurance Coverage
	 	 	31	 
	 

	 	 	21.2	 	 	Proof of Insurance Coverage
	 	 	32	 
	 
	 	 	 	 	 	 	 	 	 	 
	22.	 	 	MISCELLANEOUS PROVISIONS	 	 	32	 
	 

	 	 	22.1	 	 	Governing Law/Consent to Venue and Jurisdiction
	 	 	32	 
	 

	 	 	22.2	 	 	Cumulative Rights
	 	 	32	 
	 

	 	 	22.3	 	 	Modification
	 	 	32	 
	 

	 	 	22.4	 	 	Entire Agreement
	 	 	32	 
	 

	 	 	22.5	 	 	Delegation by the Franchisor
	 	 	33	 
	 

	 	 	22.6	 	 	Effective Date
	 	 	33	 
	 

	 	 	22.7	 	 	Review of Agreement
	 	 	33	 
	 

	 	 	22.8	 	 	Attorneys’ Fees
	 	 	33	 
	 

	 	 	22.9	 	 	Injunctive Relief
	 	 	33	 
	 

	 	 	22.10	 	 	No Waiver
	 	 	33	 
	 

	 	 	22.11	 	 	No Right to Set Off
	 	 	33	 
	 

	 	 	22.12	 	 	Invalidity
	 	 	33	 
	 

	 	 	22.13	 	 	Notices
	 	 	34	 
	 

	 	 	22.14	 	 	Payment of Taxes
	 	 	34	 
	 

	 	 	22.15	 	 	Acknowledgement
	 	 	34	 

          EXHIBITS

	I.	 	Addendum to Franchise Agreement — Location Approval
	 
	II.	 	Personal Guaranty
	 
	III.	 	Statement of Ownership
	 
	IV.	 	Authorization Agreement for Electronic Funds Transfers
	 
	V.	 	Permit, License and Construction Certificate
	 
	VI.	 	Confidentiality and Noncompetition Agreement

franchise
agreement - iii

 

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

FRANCHISE AGREEMENT

     THIS
AGREEMENT (the “Agreement”) is made this ___ day of _________, 20___, by and
between ROCKY MOUNTAIN CHOCOLATE FACTORY, INC., a Colorado corporation, located at 265 Turner
Drive, Durango, Colorado 81303 (the “Franchisor”) and ____________, located at __________________ (the
“Franchisee”), who, on the basis of the following understandings and agreements, agree as follows:

1. PURPOSE

1.1 The Franchisor has developed methods for establishing, operating and promoting retail stores
selling gourmet chocolates and other premium confectionery products (“ROCKY MOUNTAIN CHOCOLATE
FACTORY Stores” or “Stores”) using the service mark “ROCKY MOUNTAIN CHOCOLATE FACTORY” and related
trade names and trademarks (“Marks”) and the Franchisor’s proprietary methods of doing business
(the “Licensed Methods”).

1.2 The Franchisor grants the right to others to develop and operate ROCKY MOUNTAIN CHOCOLATE
FACTORY Stores, under the Marks and pursuant to the Licensed Methods.

1.3 The Franchisee desires to establish a ROCKY MOUNTAIN CHOCOLATE FACTORY Store at a location
identified herein or to be later identified, and the Franchisor desires to grant the Franchisee the
right to operate a ROCKY MOUNTAIN CHOCOLATE FACTORY Store at such location under the terms and
conditions which are contained in this Agreement.

2. GRANT OF FRANCHISE

2.1 Grant of Franchise. The Franchisor grants to the Franchisee, and the Franchisee
accepts from the Franchisor, the right to use the Marks and Licensed Methods in connection with the
establishment and operation of a ROCKY MOUNTAIN CHOCOLATE FACTORY Store, at the location described
in Article 3 of this Agreement. The Franchisee agrees to use the Marks and Licensed
Methods, as they may be changed, improved, and further developed by the Franchisor from time to
time, only in accordance with the terms and conditions of this Agreement.

2.2 Scope of Franchise Operations. The Franchisee agrees at all times to faithfully,
honestly and diligently perform the Franchisee’s obligations hereunder, and to continuously exert
best efforts to promote the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee agrees to
utilize the Marks and Licensed Methods to operate all aspects of the business franchised hereunder
in accordance with the methods and systems developed and prescribed from time to time by the
Franchisor, all of which are a part of the Licensed Methods. The Franchisee’s ROCKY MOUNTAIN
CHOCOLATE FACTORY Store shall offer such products and services as the Franchisor shall designate
and shall be restricted from manufacturing, offering or selling any products or services not
previously approved by the Franchisor in writing. The Franchisee is required to devote a minimum
of 50% of all retail display space to ROCKY MOUNTAIN CHOCOLATE FACTORY brand assorted bulk
chocolates and boxed and packaged candies. The Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store
must feature ROCKY MOUNTAIN CHOCOLATE FACTORY brand candy manufactured by the Franchisor or its
designees and sold by the Franchisor (“Factory Candy”) and related nonconfectionery items (“Items”)
approved by the Franchisor in writing. Depending on the retail environment and the

 

 

configuration of the Store, the Franchisee may also be permitted to make, offer and sell
confections made in the Store, including caramel-covered apples and candy-covered apples (“Store
Candy”) prepared in accordance with recipes and processes set forth in the Operations Manual, as
that term is defined in Section 8.1. Some Stores do not offer Store Candy.

3. FRANCHISED LOCATION AND DESIGNATED AREA

3.1 Franchised Location. The Franchisee is granted the right and franchise to own and
operate one ROCKY MOUNTAIN CHOCOLATE FACTORY Store at the address and location which shall be set
forth in Exhibit I, attached hereto (“Franchised Location”). The type of Store
configuration shall also be set forth in Exhibit I, attached hereto. Smaller Stores,
regardless of their configuration, are referred to as “Kiosks” or “Kiosk Stores” in this Agreement
and all references to “Stores” shall be deemed to include Kiosk Stores.

3.2 Limitation on Franchise Rights; Relocation. The rights that are hereby granted to the
Franchisee are for the specific Franchised Location and cannot be transferred to an alternative
Franchised Location, or any other location, without the prior written approval of the Franchisor.
If the Franchisee has operated a ROCKY MOUNTAIN CHOCOLATE FACTORY Store for not less than 12 months
and desires to relocate it to an alternative site, the Franchisee must set forth its reasons for
requesting the relocation in writing to the Franchisor, along with a proposed new location. The
Franchisor will have 30 days from receipt of the Franchisee’s written request to respond. If the
Franchisor approves the relocation and the proposed new location, and if the ownership of the
Franchisor determines that the Franchisee does not change in any respect from the ownership of the
Franchisee before the relocation, then the Franchisee may move its Store to the new approved
location, provided that the Franchisee signs the Franchisor’s then current form of Franchise
Agreement and opens the Store at the new location within 12 months after the Store closes at its
former Franchised Location. In addition, the Franchisee will be required to pay a nonrefundable
design fee of $2,500 to the Franchisor for the Franchisor’s Store designers to design the layout of
the Franchisee’s new Store location. A similar design fee will also apply if the Franchisor
determines that the Franchisee requires design assistance in remodeling its Store at any time
during the term of this Agreement. See Section 5.2 below. The Marks and Licensed Methods
are licensed to the Franchisee for the operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store only
at the Franchised Location; therefore, the Franchisee may not operate food carts, participate in
food festivals or offer any other type of off-site food services using the Marks and Licensed
Methods without the prior written consent of the Franchisor, in which case the Franchisor and the
Franchisee shall execute an addendum to this Agreement relating to the operation of “Satellite
Stores” (if this Agreement governs the operation of a traditional Store, any Satellite Store(s)
shall be governed by separate Franchise Agreements) or “Temporary Stores.”

3.3 Franchisor’s Reservation of Rights. The Franchisee acknowledges that the franchise
granted hereunder is non-exclusive and that the Franchisor retains the rights, among others: (1)
to use, and to license others to use, the Marks and Licensed Methods for the operation of ROCKY
MOUNTAIN CHOCOLATE FACTORY Stores, Kiosk Stores, Satellite Stores and Temporary Stores, at any
location other than at the Franchised Location; (2) to use the Marks and Licensed Methods to
identify services and products, promotional and marketing efforts or related items, and to identify
products and services similar to or the same as those which the Franchisee will sell, but made
available through alternative channels of distribution other than through traditional ROCKY
MOUNTAIN CHOCOLATE FACTORY Stores, at any location other than at the Franchised Location,
including, but not limited to, through Satellite Stores, Temporary Stores, Kiosk Stores, co-branded
Stores, by way of mail order, (including electronic mail order), the Internet and Electronic
Advertising, defined in Section 12.6, which includes blogs, and social media such as
Facebook and Twitter, catalog, telemarketing, other direct marketing methods, television,

franchise agreement - 2

 

retail store display or through the wholesale sale of its products to unrelated retail outlets or
to candy distributors or outlets located in stadiums, arenas, airports, turnpike rest stops or
supermarkets; and (3) to use and license the use of other proprietary marks or methods in
connection with the sale of products and services similar to those which the Franchisee will sell
or in connection with the operation of retail stores selling gourmet chocolates or other premium
confectionery products, at any location other than at the Franchised Location, which stores are the
same as, or similar to, or different from a traditional ROCKY MOUNTAIN CHOCOLATE FACTORY Store or a
Satellite Store, a Temporary Store or a Kiosk Store, on any terms and conditions as the Franchisor
deems advisable, and without granting the Franchisee any rights therein.

4. INITIAL FEES

4.1 Initial Franchise Fee. In consideration for the right to develop and operate one ROCKY
MOUNTAIN CHOCOLATE FACTORY Store, the Franchisee agrees to pay to the Franchisor an initial
franchise fee in the amount set forth in Exhibit I attached hereto, all of which is due and
payable on the date the Franchisee signs this Agreement. The Franchisee acknowledges and agrees
that the initial franchise fee represents payment for the initial grant of the rights to use the
Marks and Licensed Methods, that the Franchisor has earned the initial franchise fee upon receipt
thereof and that the fee is under no circumstances refundable to the Franchisee after it is paid,
except as set forth in Section 5.8 of this Agreement. If a transfer occurs, no initial
franchise fee shall be due at the time that the Franchisee transfers the Store to another party,
but a transfer fee will apply as set forth in Section 16.2 of this Agreement.

5. DEVELOPMENT OF FRANCHISED LOCATION

5.1 Approval of Lease. The Franchisee shall obtain the Franchisor’s prior written approval
before executing any lease or purchase agreement for the Franchised Location. Any lease for the
Franchised Location shall, at the option of the Franchisor, contain provisions including: (1)
allowing for assignment of the lease to the Franchisor in the event that this Agreement is
terminated or not renewed for any reason; (2) giving the Franchisor notice and the right to cure
any default by the Franchisee under such lease; (3) allowing the Franchisor to enter the premises
to cure defaults under the Franchise Agreement if the Franchisee fails to cure within a specified
cure period or to protect the Marks and the Licensed Methods; and (4) providing the Franchisor with
the right, exercisable upon and as a condition of the approval of the Franchised Location, to
execute the lease agreement or other document providing entitlement to the use of the Franchised
Location in its own name or jointly with the Franchisee as lessee and, upon the exercise of such
option, the Franchisor shall provide the Franchisee with the right to use the premises as its
sublessee, assignee, or other similar capacity upon the same terms and conditions as obtained by
the Franchisor. The Franchisee shall deliver a copy of the signed lease for the Franchised
Location to the Franchisor within 15 days of its execution. The Franchisee acknowledges that
approval of a lease for the Franchised Location by the Franchisor does not constitute a
recommendation, endorsement or guarantee by the Franchisor of the suitability of the location or
the lease and the Franchisee should take all steps necessary to ascertain whether such location and
lease are acceptable to the Franchisee.

5.2 Conversion and Design. The Franchisee acknowledges that the layout, design, decoration
and color scheme of ROCKY MOUNTAIN CHOCOLATE FACTORY Stores are an integral part of the
Franchisor’s proprietary Licensed Methods and accordingly, the Franchisee shall convert, design and
decorate the Franchised Location in accordance with the Franchisor’s plans and specifications which
are contained in a Design and Construction Manual that is considered, for the purposes of this
Agreement, to be a part of the Operations Manual, defined in Section 8.1. The Franchisee
shall hire an approved or designated architect/designer to prepare written plans for the Store’s
layout and construction, which plans

franchise agreement - 3

 

shall be submitted to the Franchisor for its prior written approval. Throughout the term of this
Agreement, the Franchisee shall also obtain the Franchisor’s written consent to any remodeling or
decoration of the premises before remodeling or decorating begins, recognizing that such
remodeling, decoration and any related costs are the Franchisee’s sole responsibility. If the
Franchisee remodels its Store or if the Franchisee relocates its Store at any time during the term
of this Agreement, the Franchisee shall pay the Franchisor $2,500 for the Franchisor’s review and
approval of the new Store design.

5.3 Signs. The Franchisee shall purchase or otherwise obtain for use at the Franchised
Location and in connection with the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, signs which comply with
the standards and specifications of the Franchisor as set forth in the Operations Manual, as that
term is defined in Section 8.1. It is the Franchisee’s sole responsibility to insure that
any signs comply with applicable local ordinances, building codes and zoning regulations. Any
modifications to the Franchisor’s standards and specifications for signs that must be made due to
local ordinances, codes or regulations shall be submitted to the Franchisor for prior written
approval. The Franchisee acknowledges the Marks, or any other name, symbol or identifying marks on
any signs shall only be used in accordance with the Franchisor’s standards and specifications and
only with the prior written approval of the Franchisor.

5.4 Equipment. The Franchisee shall purchase or otherwise obtain for use at the Franchised
Location and in connection with the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, equipment of a type and
in an amount which complies with the standards and specifications of the Franchisor in effect
during the term of this Agreement. The Franchisee acknowledges that the type, quality,
configuration, capability and/or performance of the equipment are all standards and specifications
which are a part of the Licensed Methods and therefore such equipment must be purchased, leased, or
otherwise obtained in accordance with the Franchisor’s standards and specifications and only from
suppliers or other sources designated or approved by the Franchisor. The Franchisee must purchase
a facsimile machine and connect it to a phone line that is separate from the main phone number for
the Store or maintain an electronic fax number that is connected to the Franchisee’s electronic
mail address provided by the Franchisor. The Franchisee shall equip the Store with an integrated
store information system (“ISIS System”), computer hardware and software, printers and other
designated equipment consistent with the standards and specifications of the Franchisor. The
Franchisor reserves the right to require the Franchisee to purchase new and upgraded computer
hardware components and software upon 30 days prior written notice. The Franchisor requires that
it be given reasonable access to information and data regarding the Franchisee’s ROCKY MOUNTAIN
CHOCOLATE FACTORY Store by electronic transmission using hardware and software that meet the
Franchisor’s standards and specifications. The Franchisee must purchase and maintain throughout
the term of this Agreement a maintenance and support agreement for the ISIS System with the
Franchisor’s designated or approved supplier. The Franchisee shall be responsible for all
maintenance costs associated with the computer hardware, the ISIS System and the computer software.
The Franchisor also requires the Franchisee to obtain and maintain an account with an Internet
service provider that meets the Franchisor’s standards and specifications to facilitate electronic
communication between the Franchisor and the Franchisee and among all ROCKY MOUNTAIN CHOCOLATE
FACTORY franchisees, and to facilitate the Franchisor’s access to Store operating information.

5.5 Electronic Communications. The Franchisee shall obtain and maintain computer hardware,
software and an Internet connection meeting the Franchisor’s standards and specifications as they
may exist from time to time. The Franchisee agrees that the Franchisor may assign an electronic
mail address to the Franchisee and the Franchisee agrees to use such address to access messages and
information posted by the Franchisor and other ROCKY MOUNTAIN CHOCOLATE FACTORY franchise owners.
The Franchisor may post information about the Franchisee’s Store on the Franchisor’s intranet
system for

franchise agreement - 4

 

comparative analysis purposes. The Franchisee agrees to participate in the Franchisor’s electronic
intranet system and to abide by the terms of use governing it. Information on the Franchisor’s
intranet system and the terms of use governing the Franchisor’s intranet system are deemed to be
incorporated into the terms of the Operations Manual and any violations of the terms of use will be
treated as a violation of the rules governing the Operations Manual.

5.6 Permits and Licenses. The Franchisee agrees to obtain all such permits and
certifications as may be required for the lawful construction and operation of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store together with all certifications from government authorities having
jurisdiction over the site, that all requirements for construction and operation have been met,
including without limitation, zoning, access, sign, health, safety requirements, building and other
required construction permits, licenses to do business and fictitious name registrations, sales tax
permits, health and sanitation permits and ratings and fire clearances. The Franchisee agrees to
obtain all customary contractors’ sworn statements and partial and final lien waivers for
construction, remodeling, decorating and installation of equipment at the Franchised Location. The
Franchisee shall sign and deliver to the Franchisor the Permit, License and Construction
Certificate set forth as Exhibit V to this Agreement, to confirm Franchisee’s compliance
with the Americans with Disabilities Act and other provisions of this Section 5.6 not later
than 30 days prior to the date the Store begins operating. Copies of all inspection reports,
warnings, certificates and ratings issued by any governmental entity during the term of this
Agreement in connection with the conduct of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store which
indicates the Franchisee’s failure to meet or maintain the highest governmental standards, or less
than full compliance by the Franchisee with any applicable law, rule or regulation, shall be
forwarded to the Franchisor within five days of the Franchisee’s receipt thereof.

5.7 Anti-Terrorism Representation. The Franchisee represents to the Franchisor that it and
all persons or entities holding any legal or beneficial interest whatsoever in the Franchisee are
not included in, owned by, controlled by, acting for or on behalf of, providing assistance,
support, sponsorship, or services of any kind to, or otherwise associated with any of the persons
or entities referred to or described in Executive Order 13224-Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, as amended.

5.8 Commencement of Operations. Unless otherwise agreed in writing by the Franchisor and
the Franchisee, the Franchisee has 180 days from the date of this Agreement within which to
complete the initial training program, described in Section 6.1 of this Agreement, develop
the Franchised Location and commence operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store.
Failure to commence operations within this time frame shall constitute grounds for termination
under Article 18 of this Agreement. If this Agreement is terminated by the Franchisor for
failure to commence operation of the Store within applicable time limits, $5,000 of the initial
franchise fee will be refunded to the Franchisee. The Franchisor will extend the time in which the
Franchisee has to commence operations for a reasonable period of time in the event factors beyond
the Franchisee’s reasonable control prevent the Franchisee from meeting this development schedule,
so long as the Franchisee has made reasonable and continuing efforts to comply with such
development obligations and the Franchisee requests, in writing, an extension of time in which to
have its ROCKY MOUNTAIN CHOCOLATE FACTORY Store established before such development period lapses.
However, notwithstanding the Franchisor’s written agreement to extend the Franchisee’s development
period, if more than 270 days elapse between the date of this Agreement and the commencement of
operation of the Store, the Franchisor reserves the right, in its sole discretion, to require the
Franchisee to execute the Franchisor’s then current form of Franchise Agreement or an amendment to
this Agreement to conform this Agreement with the terms of the then current Franchise Agreement.

franchise agreement - 5

 

6. TRAINING

6.1 Initial Training Program. After the Franchisee executes a lease for the Franchised
Location, the Franchisee or, if the Franchisee is not an individual, the person designated by the
Franchisee to assume primary responsibility for the management of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store, (“General Manager”) is required to attend and successfully complete the initial
training program which is offered by the Franchisor at one of the Franchisor’s designated training
facilities. Up to three individuals are eligible to participate in the Franchisor’s initial
training program without charge of a tuition or fee. The Franchisee shall be responsible for any
and all traveling and living expenses incurred in connection with attendance at the training
program. At least one individual must successfully complete the initial training program prior to
the Franchisee’s commencement of operation of its ROCKY MOUNTAIN CHOCOLATE FACTORY Store.

6.2 Length of Training. The initial training program shall consist of 7 days of
instruction at a location designated by the Franchisor; provided, however, that the Franchisor
reserves the right to waive a portion of the training program or alter the training schedule, if in
the Franchisor’s sole discretion, the Franchisee or General Manager has sufficient prior experience
or training.

6.3 Additional Training. From time to time, the Franchisor may present seminars,
conventions or continuing development programs or conduct meetings or webinars for the benefit of
the Franchisee. The Franchisee or its General Manager shall be required to attend any ongoing
mandatory seminars, webinars, conventions, programs or meetings as may be offered by the
Franchisor. The Franchisor shall give the Franchisee at least 30 days prior written notice of any
ongoing seminar, convention or program that is deemed mandatory. The Franchisor shall not require
that the Franchisee attend any ongoing training in person more often than once a year. All
mandatory training will be offered without charge of a tuition or fee; provided, however, the
Franchisee will be responsible for all traveling and living expenses which are associated with
attendance at the same.

7. DEVELOPMENT ASSISTANCE

7.1 Franchisor’s Development Assistance. The Franchisor shall provide the Franchisee with
assistance in the initial establishment of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store as follows:

     a. Provision of the initial training program to be conducted at the Franchisor’s
designated training facilities or at another location designated by the Franchisor, as
described in Article 6 above.

     b. Provision of written guidelines for a Franchised Location that shall include,
without limitation, specifications for space requirements and build out. The Franchisee
acknowledges that the Franchisor shall have no other obligation to provide assistance in the
selection and approval of a Franchised Location other than the provision of such written
specifications and approval or disapproval of a proposed Franchised Location, which approval
or disapproval shall be based on information submitted to the Franchisor in a form
sufficient to assess the proposed location as may be required by the Franchisor, in the
Franchisor’s sole discretion, and on information gathered by the Franchisor.

     c. Direction regarding the required conversion, design and decoration of the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store premises, plus specifications concerning signs, seasonal
graphics, music, decor and equipment.

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     d. Direction regarding the selection of suppliers of equipment, seasonal graphics,
music, items and materials used and inventory offered for sale in connection with the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store. The Franchisor will determine the Franchisee’s initial
inventory of Factory Candy that the Franchisee will purchase, depending on the size and
configuration of the Store. After execution of this Agreement, the Franchisor will provide
the Franchisee with a list of approved suppliers, if any, of such equipment, items, seasonal
graphics, music, materials and inventory and, if available, a description of any national or
central purchase and supply agreements offered by such approved suppliers for the benefit of
ROCKY MOUNTAIN CHOCOLATE FACTORY franchisees.

     e. Provision of an Operations Manual in accordance with Section 8.1 below.

     f. As the Franchisor may reasonably schedule, and depending on availability of
personnel, the Franchisor will make available to the Franchisee at or close to the opening
of the Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store, a representative (“Site
Representative”) who will be present for up to five days beginning approximately three days
prior to the opening of the Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store. If the
Franchisee’s Store opens on or near a holiday, however, the Site Representative shall not
begin the in-Store assistance until three days after the holiday. Holidays shall include,
but not be limited to, New Years Day, Valentines Day, Easter, Memorial Day, Fourth of July,
Labor Day, Thanksgiving, Hanukkah and Christmas. There will be no charge to the Franchisee
for this service provided by the Franchisor. The Site Representative will assist the
Franchisee’s employees in opening the Store, unless in the Franchisor’s determination, the
Franchisee or the General Manager have sufficient prior training or experience.

8. OPERATIONS MANUAL

8.1 Operations Manual. The Franchisor agrees to loan to the Franchisee one or more
manuals, technical bulletins, cookbooks and recipes and other written materials (collectively
referred to as “Operations Manual”) covering Factory Candy ordering, Store Candy manufacturing,
processing and stocking and other operating and in-store marketing techniques for the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee agrees that it shall comply with the Operations
Manual as an essential aspect of its obligations under this Agreement, that the Operations Manual
shall be deemed to be incorporated herein by reference and failure by the Franchisee to
substantially comply with the Operations Manual may be considered by the Franchisor to be a breach
of this Agreement. Upon the expiration, transfer or termination of this Agreement for any reason,
the Franchisee shall return to the Franchisor, or transfer to an approved transferee, if
applicable, all volumes of the manuals which together comprise the Operations Manual. Failure to
return or transfer, as applicable, all volumes of the Operations Manual in good condition,
reasonable wear and tear excepted, shall cost the Franchisee $150 per volume, payable to the
Franchisor upon demand.

8.2 Confidentiality of Operations Manual Contents. The Franchisee agrees to use the Marks
and Licensed Methods only as specified in the Operations Manual. The Operations Manual is the sole
property of the Franchisor and shall be used by the Franchisee only during the term of this
Agreement and in strict accordance with the terms and conditions hereof. The Franchisee shall not
duplicate the Operations Manual nor disclose its contents to persons other than its employees or
officers who have signed the form of Confidentiality and Noncompetition Agreement attached hereto
as Exhibit VI and incorporated herein by reference. The Franchisee shall return the
Operations Manual to the Franchisor upon the expiration, termination or transfer of this Agreement.

franchise agreement - 7

 

8.3 Changes to Operations Manual. The Franchisor reserves the right to revise the
Operations Manual from time to time as it deems necessary to update or change operating and
marketing techniques, standards and specifications for all components of the Licensed Methods and
approved Factory Candy, Items and Store Candy offered by Stores. The Franchisee, within 30 days of
receiving any updated information, shall in turn update its copy of the Operations Manual as
instructed by the Franchisor and shall conform its operations with the updated provisions within a
reasonable time after receipt of such updated information. The Franchisee acknowledges that a
master copy of the Operations Manual maintained by the Franchisor at its principal office shall be
controlling in the event of a dispute relative to the content of any Operations Manual.

9. OPERATING ASSISTANCE

9.1 Franchisor’s Services. The Franchisor agrees that, during the Franchisee’s operation
of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, the Franchisor shall make available to the
Franchisee the following services:

     a. Upon the reasonable request of the Franchisee, consultation by telephone and
electronic mail regarding the continued operation and management of a ROCKY MOUNTAIN
CHOCOLATE FACTORY Store and advice regarding the retail services, product quality control,
inventory issues, customer relations issues and similar advice.

     b. Access to advertising and promotional materials as may be developed by the
Franchisor, the cost of which may be passed on to the Franchisee at the Franchisor’s option.

     c. On-going updates of information and programs regarding the candy industry, the ROCKY
MOUNTAIN CHOCOLATE FACTORY concept and related Licensed Methods, including, without
limitation, information about special or new products which may be developed and made
available to ROCKY MOUNTAIN CHOCOLATE FACTORY franchisees.

     d. Depending on availability, allow replacement or additional General Managers to
attend the initial training program. The Franchisor reserves the right to charge a tuition
or fee in an amount payable in advance, commensurate with the Franchisor’s then current
published prices for such training. The Franchisee shall be responsible for all travel and
living expenses incurred by its personnel during the training program. Further, the
availability of the training program shall be subject to space considerations and prior
commitments to new ROCKY MOUNTAIN CHOCOLATE FACTORY franchisees.

9.2 Additional Franchisor Services. Although not obligated to do so, upon the reasonable
request of the Franchisee, the Franchisor may make its employees or designated agents available to
the Franchisee for on-site advice and assistance in connection with the on-going operation of the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store governed by this Agreement. In the event that the
Franchisee requests such additional assistance and the Franchisor agrees to provide the same, the
Franchisor reserves the right to charge the Franchisee for all travel, lodging, living expenses,
telephone charges and other identifiable expenses associated with such assistance, plus a fee based
on the time spent by each employee on behalf of the Franchisee, which fee will be charged in
accordance with the then current daily or hourly rates being charged by the Franchisor for
assistance.

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10. FRANCHISEE’S OPERATIONAL COVENANTS

10.1 Store Operations. The Franchisee acknowledges that it is solely responsible for the
successful operation of its ROCKY MOUNTAIN CHOCOLATE FACTORY Store and that the continued
successful operation thereof is, in part, dependent upon the Franchisee’s compliance with this
Agreement and the Operations Manual. In addition to all other obligations contained in this
Agreement and in the Operations Manual, the Franchisee covenants that:

     a. The Franchisee shall maintain clean, efficient and high quality ROCKY MOUNTAIN
CHOCOLATE FACTORY Store operations and shall operate the business in accordance with the
Operations Manual and in such a manner as not to detract from or adversely reflect upon the
name and reputation of the Franchisor and the goodwill associated with the ROCKY MOUNTAIN
CHOCOLATE FACTORY name and Marks.

     b. The Franchisee will operate its ROCKY MOUNTAIN CHOCOLATE FACTORY Store in compliance
with all applicable laws, health department regulations and other ordinances. In connection
therewith, the Franchisee will be solely and fully responsible for obtaining any and all
licenses to operate the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee shall
promptly forward to the Franchisor copies of all health department, fire department,
building department and other similar reports of inspections as and when they become
available.

     c. The Franchisee and all persons who work behind the counter at the Store in any
capacity, whether or not they are employees of the Franchisee (“Personnel”), shall conduct
themselves in such a manner so as to promote a good image to the public and to the business
community. At no time shall any of the Personnel engage in unreasonable or disrespectful
behavior toward anyone, including using offensive or rude language or gestures. The
Franchisee shall at all times require its Personnel to follow the Code of Conduct as set
forth in the Operations Manual.

     d. The Franchisee acknowledges that proper management of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store is important and shall insure that the Franchisee or a designated General
Manager who has completed the Franchisor’s initial training program be responsible for the
management of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store after commencement of Store
operations and be present at the Franchised Location during operation of the Store.

     e. The Franchisee shall offer only authorized products and services as are more fully
described in the vendor lists which are a part of the Operations Manual, which may include,
without limitation, Factory Candy, Store Candy, Items and other authorized confectionery
food and beverage products. Further, the Franchisee shall operate the Store using only
those supplies, equipment, ingredients, signs, décor, music and methods which are described
in the Operations Manual. The Franchisee shall offer only the types of products and
services as from time to time may be prescribed by the Franchisor and shall refrain from
offering any other types of products or services, from or through the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, including, without limitation, filling “Wholesale Orders,” defined
below, selling Factory Candy, Store Candy, Items or other authorized products through the
Internet, or catering or other off-premises sales, without the prior written consent of the
Franchisor. “Wholesale Orders” are defined as those orders or sales where the principal
purpose of the purchase is for resale, not consumption, or any sale other than those sold
over the counter at a price other than that price charged to the

franchise agreement - 9

 

general public; provided, however, that volume discounted sales made on the premises at
the Franchised Location to a single purchaser, not for resale, and discounted sales made on
the premises at the Franchised Location to charitable organizations for fund-raising
purposes shall be permitted. Factory Candy, Store Candy and Items shall never be sold in
containers or bags other than those approved and supplied by the Franchisor or other
supplier approved by the Franchisor.

     f. The Franchisee shall promptly pay when due all taxes and other obligations owed to
third parties in the operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, including
without limitation, unemployment and sales taxes, and any and all accounts or other
indebtedness of every kind incurred by the Franchisee in the conduct of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store. In the event of a bona fide dispute as to the liability for taxes
assessed or other indebtedness, the Franchisee may contest the validity or the amount of the
tax or indebtedness in accordance with procedures of the taxing authority or applicable law;
however, in no event shall the Franchisee permit a tax sale or seizure by levy or execution
or similar writ or warrant, or attachment by a creditor to occur against the premises of the
Franchised Location, or any improvement thereon.

     g. The Franchisee agrees to notify the Franchisor within 15 days of receipt of claims
or service of process that the Franchisee has been named in a lawsuit or arbitration or that
claims have been made against it that in any way involve, relate to or affect the franchise,
the Store or the assets of the Store. Notice will include a copy of the complaint or claims
and the Franchisee’s proposed response.

     h. The Franchisee shall subscribe for and maintain not fewer than two or three separate
telephone numbers for its ROCKY MOUNTAIN CHOCOLATE FACTORY Store at the Franchised Location,
depending on the size and configuration of the Store or Kiosk. One number shall be used
exclusively for voice communication, the second shall be used exclusively for the modem that
is included in the ISIS System. If a third telephone number is required, it shall be used
exclusively for a facsimile machine. The telephone number and, if applicable, the facsimile
machine number, shall be listed and identified exclusively with the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store in all official telephone directories and in all advertising in which such
numbers appear and shall be separate and distinct from all other telephone numbers
subscribed for by the Franchisee.

     i. The Franchisee shall comply with all agreements with third parties related to the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store including, in particular, all provisions of any lease
for the Franchised Location.

     j. The Franchisee and all employees of the Franchisee shall adhere to strict grooming
and dress code guidelines, as described in the Code of Conduct set forth in the Operations
Manual, while on duty at the Franchised Location. The Franchisee is required, at the
Franchisee’s expense, to purchase specified apparel from suppliers approved by the
Franchisor. All General Managers, employees of the Franchisee, the Franchisee and its
owners shall wear the specified apparel at all times while working at the Franchised
Location. The Franchisor has the right, in its sole and absolute discretion, to change or
modify such grooming and dress code guidelines in the Operations Manual.

     k. The Franchisee agrees to renovate, refurbish, remodel or replace, at its own
expense, the personal property and equipment used in the operation of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, when reasonably required by the Franchisor in order to comply

franchise agreement - 10

 

with the image, standards of operation and performance capability established by the
Franchisor from time to time. If the Franchisor changes its image or standards of
operation, it shall give the Franchisee a reasonable period of time within which to comply
with such changes.

     l. The Franchisee shall be responsible for training all of its Personnel who work in
any capacity in the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee must conduct its
Personnel training in the manner and according to the standards as prescribed in the
Operations Manual. All Personnel who do not satisfactorily complete the training shall not
work in any capacity in the Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store.

     m. The Franchisee shall at all times during the term of this Agreement own and control
the ROCKY MOUNTAIN CHOCOLATE FACTORY Store authorized hereunder. The Franchisee shall not
operate any other business or profession from or through the Store. If the Franchisee is an
entity, the entity shall only operate the ROCKY MOUNTAIN CHOCOLATE FACTORY Store governed by
this Agreement and no other business, unless the Franchisee receives the Franchisor’s prior
written approval. Upon request of the Franchisor, the Franchisee shall promptly provide
satisfactory proof of such ownership to the Franchisor. The Franchisee represents that the
Statement of Ownership, attached hereto as Exhibit III and by this reference
incorporated herein, is true, complete, accurate and not misleading, and, in accordance with
the information contained in the Statement of Ownership, the controlling ownership of the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store is held by the Franchisee. The Franchisee shall
promptly provide the Franchisor with a written notification if the information contained in
the Statement of Ownership changes at any time during the term of this Agreement and shall
comply with the applicable transfer provisions contained in Article 16 herein. In
addition, if the Franchisee is an entity, all of the owners of the Franchisee shall sign the
Personal Guaranty attached hereto as Exhibit II.

     n. The Franchisee shall at all times during the term of this Agreement keep its ROCKY
MOUNTAIN CHOCOLATE FACTORY Store open during the business hours designated by the Franchisor
from time to time in the Operations Manual.

10.2 Factory Candy Purchases. The Franchisee shall, during the term of this Agreement,
maintain a sufficient inventory of Factory Candy and related products, to allow it to meet customer
demands for the products offered by a ROCKY MOUNTAIN CHOCOLATE FACTORY Store and in compliance with
the Franchisor’s standards and specifications as may be described in the Operations Manual from
time to time. The Franchisee agrees to purchase exclusively from the Franchisor or from its
designated or approved suppliers, all of the Factory Candy and ingredients for making Store Candy
and all related products required for the Franchisee’s operation of the Store, as may be offered
for sale by the Franchisor or its designated or approved suppliers from time to time.

10.3 Payment for Factory Candy. Unless notified in writing otherwise by the Franchisor,
all Factory Candy and related products shall be sold and shipped to the Franchisee on a net 30-day
basis, or according to the then current payment terms set by the Franchisor or its designated
suppliers. The Franchisor reserves the right to charge interest at the rate of 1.5% per month if
the Franchisee fails to pay for its orders on time and the Franchisor reserves the right to
discontinue shipment of Factory Candy and related products to the Franchisee if the Franchisee is
repeatedly delinquent in paying for its Factory Candy and related products, in the Franchisor’s
sole discretion. The Franchisee may be required to “prepay” Factory Candy orders, notwithstanding
the payment policy set forth above, in the event of poor payment performance. The Franchisor
reserves the right to change payment terms and policies at any

franchise agreement - 11

 

time. The Franchisor also reserves the right to change the prices for Factory Candy and related
products from time to time as may be set forth in the most recent price bulletin sent to all
franchisees or the then current Operations Manual.

10.4 Limitations on Supply Obligations. The delivery of Factory Candy and related products
by the Franchisor or its designated suppliers is subject to and conditioned upon availability.
Nothing in this Agreement shall be construed by the Franchisee to be a promise or guarantee by the
Franchisor as to the continued existence of any particular Factory Candy or related product, nor
shall any provision herein imply or establish an obligation on the part of the Franchisor and its
designated suppliers to sell Factory Candy and related products to the Franchisee if the Franchisee
is in arrears on any payment to the Franchisor and its designated suppliers or otherwise in default
under this Agreement.

10.5 Changes in Products. The Franchisee understands that the Franchisor and its designated
suppliers shall have the right, at any time and without notice, to add items to, or withdraw items
from, the list of Factory Candy and related products; to add to or delete from the list of
designated suppliers of Factory Candy and related products; to change the formulation of any
particular Factory Candy or product; and to change the prices, discounts or terms of sale of any
Factory Candy or product; provided, however, no such changes in prices, discounts or terms shall
affect accepted orders pending with the Franchisor and its designated suppliers at the time of
change. No such changes will give the Franchisee the right to recover damages against, or be
reimbursed by, the Franchisor and its designated suppliers for any losses suffered by the
Franchisee.

11. ROYALTIES

11.1 Monthly Royalty. The Franchisee agrees to pay to the Franchisor a monthly royalty
(“Royalty”) equal to 5% of its Gross Retail Sales generated from or through its ROCKY MOUNTAIN
CHOCOLATE FACTORY Store. The Franchisee also agrees to pay a quarterly Royalty based on Adjusted
Gross Retail Sales during each calendar quarter. The amount of monthly Royalty paid during each
quarter shall be credited toward the amount of quarterly Royalty owed. Within 15 days following
the end of each calendar quarter, the Franchisor shall calculate the amount of the Franchisee’s
Adjusted Gross Retail Sales during the previous quarter and the Franchisee shall owe the Franchisor
a quarterly Royalty equal to 10% of its Adjusted Gross Retail Sales. “Adjusted Gross Retail Sales”
shall be calculated as the amount of “Gross Retail Sales,” defined in Section 11.2 below,
minus a fixed dollar amount for each pound of Factory Candy purchased from the Franchisor and minus
a multiple of the wholesale price, as specified by the Franchisor, on certain Store Candy
ingredients, packaging and other products and supplies purchased from the Franchisor during the
previous calendar quarter. The Franchisor reserves the right to change the fixed dollar amount per
pound of Factory Candy and the multiple of the wholesale price from time to time, in the
Franchisor’s sole discretion. The Franchisee shall be notified of any credits from or amounts
owing to the Franchisor for the quarterly Royalty based on Adjusted Gross Retail Sales. Any
credits or amounts owed will be added to or deducted from the following month’s monthly Royalty
payment. If the Franchisee owns other ROCKY MOUNTAIN CHOCOLATE FACTORY Stores governed by other
franchise agreements that calculate Royalties differently than described above, the Franchisor
reserves the right to adjust the calculation of Adjusted Gross Retail Sales based on variances in
other Stores’ past and current purchases.

11.2 Gross Retail Sales. “Gross Retail Sales” shall be defined as receipts and income of
any kind from all products or services sold from or through the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store, including any such sale of products or services made for cash or upon credit, or partly for
cash and partly for credit, regardless of collection of charges for which credit is given, less
returns for which refunds are made, provided that the refund shall not exceed the sales price and
exclusive of discounts,

franchise agreement - 12

 

sales taxes and other taxes, amounts received in settlement of a loss of merchandise, shipping
expenses paid by the customer and certain discount sales to corporations or to charities for
fund-raising purposes. “Gross Retail Sales” shall also include the fair market value of any
services or products received by the Franchisee in barter or in exchange for its services and
products.

11.3 Royalty Payments. The Franchisee agrees that Royalty payments shall be paid monthly
and paid by electronic funds transfer initiated by the Franchisor on the 15th day of
each month based on Gross Retail Sales for the immediately preceding month. Franchisee agrees to
send monthly reports to the Franchisor, as more fully described in Article 15 hereof, and
standard transmittal forms containing information regarding the Franchisee’s Gross Retail Sales and
such additional information as may be requested by the Franchisor. The Franchisor reserves the
right to require Royalty payments be made on a weekly or bi-weekly basis if the Franchisee does not
timely or fully submit the required payments or reports. The Franchisor shall have the right to
verify such Royalty payments from time to time as it deems necessary, in any reasonable manner. In
the event that the Franchisee fails to pay any Royalties within 14 days after they are due, the
Franchisee shall, in addition to such Royalties, pay a late charge equivalent to 18% of the late
Royalty payment; provided, however, in no event shall the Franchisee be required to pay a late
payment at a rate greater than the maximum interest rate permitted by applicable law.

11.4 Authorization for Electronic Funds Transfers. The Franchisor requires that Royalty
payments, applicable late charges, the Marketing and Promotion Fee and applicable late charges (as
set forth in Section 12.3 below) be made by means of electronic funds transfer and the
Franchisee agrees to provide the information necessary to implement such transfer payments by
completing and signing the Authorization Agreement for Electronic Funds Transfers (“Authorization
Agreement”) attached as Exhibit IV to this Agreement. The Franchisee authorizes the
Franchisor to initiate debit entries and/or credit correction entries to the Franchisee’s checking
or savings account set forth on the Authorization Agreement, and authorizes the depository named on
the Authorization Agreement (“Depository”) to debit such account pursuant to the Franchisor’s
instructions. The Authorization Agreement is to remain in full force and effect until Depository
has received joint written notification from the Franchisor and the Franchisee of the Franchisee’s
termination of such authority in such time and in such manner as to afford Depository a reasonable
opportunity to act on it. Notwithstanding the foregoing, Depository shall provide the Franchisor
and the Franchisee with 30 days’ prior written notice of the termination of this authority. If an
erroneous debit entry is initiated to the Franchisee’s account, the Franchisee shall have the right
to have the amount of such entry credited to such account by Depository, if (a) within 15 calendar
days following the date on which Depository sent to the Franchisee a statement of account or a
written notice pertaining to such entry or (b) 45 days after posting, whichever occurs first, the
Franchisee shall have sent to Depository a written notice identifying such entry, stating that such
entry was in error and requesting Depository to credit the amount thereof to such account. These
rights are in addition to any rights the Franchisee may have under federal and state banking laws.

12. ADVERTISING

12.1 Approval of Advertising. The Franchisee shall obtain the Franchisor’s prior written
approval of all advertising or other marketing or promotional programs published by any method,
including print, broadcast and electronic media, regarding the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store, including, without limitation, “Yellow Pages” advertising, newspaper ads, flyers, brochures,
coupons, direct mail pieces, specialty and novelty items, radio, television, Internet, including
social media such as Facebook and Twitter, and World Wide Web advertising. The Franchisee
acknowledges and agrees that the Franchisor may disapprove of any advertising, marketing or
promotional programs submitted to the Franchisor, for any reason, in the Franchisor’s sole
discretion. The Franchisee shall also obtain the

franchise agreement - 13

 

Franchisor’s prior written approval of all promotional materials provided by vendors. The proposed
written advertising or a description of the marketing or promotional program shall be submitted to
the Franchisor at least 10 days prior to publication, broadcast or use. The Franchisee
acknowledges that advertising and promoting the ROCKY MOUNTAIN CHOCOLATE FACTORY Store in
accordance with the Franchisor’s standards and specifications is an essential aspect of the
Licensed Methods, and the Franchisee agrees to comply with all advertising standards and
specifications. The Franchisee shall display all required promotional materials, signs, point of
purchase displays and other marketing materials in its ROCKY MOUNTAIN CHOCOLATE FACTORY Store in
the manner prescribed by the Franchisor. The Franchisee shall not, under any circumstances, use
handwritten signs in the operation of its Store. The Franchisee agrees to participate in any
mandatory gift card or customer loyalty card programs implemented by the Franchisor in accordance
with all of the Franchisor’s standards and specifications. The Franchisee acknowledges and agrees
that participation in a gift card or customer loyalty card program, whether voluntary or required,
may require the Franchisee to pay fees, enter into agreements or purchase equipment or other
products or services from the Franchisor or from a designated third-party supplier.

12.2 Local Advertising. The Franchisor reserves the right to require the Franchisee to
spend up to 1% of monthly Gross Retail Sales on local advertising to create public awareness of the
Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee will submit to the Franchisor
an accounting of the amounts spent on advertising within 30 days following the end of each calendar
quarter. If the Franchisor requires its franchisees to advertise locally as described above, all
Franchisor-owned Stores will be required to spend money for local advertising on an equal
percentage basis with all franchised Stores. If the Franchisee’s lease requires it to advertise
locally, the Franchisor may, in its sole discretion, count such expenditures toward the
Franchisee’s local advertising expenditure required by this Section 12.2. The Franchisee
shall obtain the Franchisor’s prior written approval of all written advertising and promotional
materials before publication, in accordance with Section 12.1 above.

12.3 Marketing and Promotion Fee. The Franchisee shall contribute to a marketing fund
established by the Franchisor (“Marketing Fund”), a fee of up to 2% of the total amount of the
Franchisee’s Gross Retail Sales (“Marketing and Promotion Fee”). The Franchisor may change the
amount of the Marketing and Promotion Fee upon 30 days notice, but the amount will not exceed 2% of
Gross Retail Sales. The Marketing and Promotion Fee shall be in addition to and not in lieu of the
Franchisee’s expenditures for local advertising, as described in Section 12.2 above. The
following terms and conditions will apply:

     a. The Marketing and Promotion Fee shall be payable concurrently with the payment of
the Royalties, and transmitted to the Franchisor in accordance with Sections 11.3
and 11.4 above, for all Marketing and Promotion Fees for the immediately preceding
month.

     b. The Marketing and Promotion Fees will be subject to the same late charges as the
Royalties, in an amount and manner set forth in Sections 11.3 and 11.4
above.

     c. Upon written request by the Franchisee, the Franchisor will make available to the
Franchisee, no later than 120 days after the end of each fiscal year, an annual financial
statement which indicates how the money in the Marketing Fund has been spent.

     d. The Marketing Fund will be administered by the Franchisor, in its sole discretion,
and may be used for production and placement of point of purchase advertising, in-store
signage, in-store promotions, media advertising, direct mailings, brochures, collateral
material advertising, Electronic Advertising, such as websites, blogs and social media,
including Facebook and

franchise agreement - 14

 

Twitter, communication by electronic mail, implementing and administering gift card,
stored value card and customer loyalty programs, surveys of advertising effectiveness,
packaging development, logo, design or other advertising or public relations expenditures
relating to advertising the Franchisee’s products and services.

     e. The Franchisor may reimburse itself for independent audits, reasonable accounting,
bookkeeping, reporting and legal expenses, taxes and other reasonable direct and indirect
expenses as may be incurred by the Franchisor or its authorized representatives in
connection with the programs funded by the Marketing Fund. The Franchisor will not be
liable for any act or omission with respect to the Marketing Fund that is consistent with
this Agreement and is done in good faith. The Franchisor reserves the right to terminate
the Marketing Fund upon 30 days’ prior written notice to all franchisees and any remaining
monies will be distributed pro rata based on all Stores’ contributions within the preceding
12 months

12.4 Regional Advertising Programs. Although not obligated to do so, the Franchisor
reserves the right to allocate up to 50% of the Marketing and Promotion Fees charged in accordance
with Section 12.3 above, toward a regional advertising program for the benefit of ROCKY
MOUNTAIN CHOCOLATE FACTORY franchisees located within a particular region. The Franchisor has the
right, in its sole discretion, to determine the composition of all geographic territories and
market areas for the implementation of such regional advertising and promotion campaigns and to
require that the Franchisee participate in such regional advertising programs as and when they may
be established by the Franchisor. If a regional advertising program is implemented on behalf of a
particular region by the Franchisor, the Franchisor, to the extent reasonably calculable, will only
use contributions from ROCKY MOUNTAIN CHOCOLATE FACTORY franchisees within such region for the
particular regional advertising program. The Franchisor also reserves the right to establish a
co-operative for a particular region to enable the co-operative to self-administer the regional
advertising program. If a regional advertising co-operative is established by the Franchisor, the
Franchisee agrees that it will participate in it. If the Franchisor creates a regional advertising
program, either as a co-operative or otherwise, the Franchisor has the right to charge the program
for the actual costs of forming and administering the program.

12.5 Marketing Services. The Franchisor may, in its sole discretion, offer marketing and
merchandising services to the Franchisee at rates that are competitive with those charged by third
parties offering similar services. The Franchisee may utilize such services, if they are offered,
at the Franchisee’s option. Services offered by the Franchisor may include marketing consulting,
graphic design, copywriting, advertising, public relations and merchandising consultations.

12.6 Electronic Advertising. The Franchisee shall not develop, create, contribute to,
distribute, disseminate or use any electronic or Internet communication, including blogs, instant
message services such as Twitter, social media sites such as Facebook, other electronic
communications, or any multimedia, telecommunications, mass electronic mail messages, facsimile or
audio/visual advertising, promotional or marketing materials (“Electronic Advertising”), directly
or indirectly related to the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, the Marks, the Licensed
Methods, other franchisees, other ROCKY MOUNTAIN CHOCOLATE FACTORY Stores, the Franchisor, its
employees and affiliates, without the Franchisor’s prior written consent which may be withheld in
the Franchisor’s sole discretion. The Franchisee acknowledges and agrees that it will not post a
blog, create or contribute to a website, engage in any type of social networking or conduct any
type of Internet communication that refers to the Marks, the Licensed Methods, the Franchisor, its
affiliates and employees, any ROCKY MOUNTAIN CHOCOLATE FACTORY Stores or other franchisees without
the Franchisor’s prior written permission. The Franchisor shall retain the exclusive right to
develop, publish and control the content of all Electronic Advertising for ROCKY MOUNTAIN CHOCOLATE

franchise agreement - 15

 

FACTORY Stores. The Franchisor reserves the right, upon 30 days’ prior written notice, to require
the Franchisee to participate in any Electronic Advertising of ROCKY MOUNTAIN CHOCOLATE FACTORY
Stores sponsored by the Franchisor. If the Franchisor permits the Franchisee to develop any
Electronic Advertising, the Franchisee shall do so in strict compliance with the Franchisor’s
policies and rules regarding the creation, maintenance, use, publication and content of such
Electronic Advertising as set forth in this Agreement or the Operations Manual. The Franchisee
shall not publish or communicate any of the Franchisor’s confidential information using the
Internet, and the Franchisee shall not publish or communicate any of the Franchisor’s copyrighted
material or information containing the Marks or any of the Licensed Methods using the Internet
without the Franchisor’s prior written permission; nor shall the Franchisee assist any other party
in doing so. Any amounts that the Franchisee spends to participate in Electronic Advertising shall
be credited toward the Franchisee’s local advertising obligations if the Franchisee is required to
advertise locally.

13. QUALITY CONTROL

13.1 Compliance with Operations Manual. The Franchisee agrees to maintain and operate the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store in compliance with this Agreement and the standards and
specifications contained in the Operations Manual, as the same may be modified from time to time by
the Franchisor.

13.2 Standards and Specifications. The Franchisor will make available to the Franchisee
standards and specifications for products and services offered at or through the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store and specifically, for the recipes for Store Candy, display cases, uniforms,
materials, forms, menu boards, items and supplies used in connection with the Store. The
Franchisor reserves the right to change standards and specifications for services and products
offered at or through the ROCKY MOUNTAIN CHOCOLATE FACTORY Store and for the recipes for Store
Candy, display cases, uniforms, materials, forms, items and supplies used in connection with the
Store upon 30 days prior written notice to the Franchisee. The Franchisee shall strictly adhere to
all of the Franchisor’s current standards and specifications for the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store as prescribed from time to time. The Franchisee agrees that the Franchisor may offer
optional or mandatory programs (“Programs”) from time to time that allow the Franchisee to offer
additional products and services in the Store, subject to terms and conditions which may change in
the Franchisor’s sole discretion. All terms and conditions related to a Program shall be deemed to
be a part of the Operations Manual and Franchisee shall adhere to them accordingly. The Franchisor
reserves the right to modify any Program or discontinue a Program, in the Franchisor’s sole
discretion.

13.3 Inspections. The Franchisor shall have the right to examine the Franchised Location,
including the inventory, products, equipment, materials and supplies, to ensure compliance with all
standards and specifications set by the Franchisor. The Franchisor shall conduct such inspections
during regular business hours and the Franchisee may be present at such inspections. The
Franchisor, however, reserves the right to conduct the inspections without prior notice to the
Franchisee.

13.4 Restrictions on Services and Products. The Franchisee will be required to purchase
all of its Factory Candy for its ROCKY MOUNTAIN CHOCOLATE FACTORY Store from the Franchisor or its
designee. Factory Candy shall consist of any and all varieties from time to time made available to
the Franchisor’s franchisees by the Franchisor and its designated suppliers. The parties hereby
acknowledge the uniqueness and importance of Factory Candy being prepared by the Franchisor or its
designee in order to maintain the uniformity, quality and uniqueness of Factory Candy, and
therefore the Franchisor and its designees are hereby appointed the Franchisee’s exclusive source
of Factory Candy. The Franchisee is prohibited from offering or selling any products or services
not authorized by Franchisor, including,

franchise agreement - 16

 

without limitation, operating a catering or wholesale business or offering Factory Candy, Items,
Store Candy or other authorized products for sale on the Internet, as part of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store. However, if the Franchisee proposes to offer, conduct or utilize any
products, services, materials, forms, items or supplies for use in connection with or sale through
the ROCKY MOUNTAIN CHOCOLATE FACTORY Store which are not previously approved by the Franchisor as
meeting its specifications, the Franchisee shall first notify the Franchisor in writing requesting
approval. The Franchisor may, in its sole discretion, for any reason whatsoever, elect to withhold
such approval. In order to make such determination, the Franchisor may require submission of
specifications, information, or samples of such products, services, materials, forms, items or
supplies. The Franchisor will advise the Franchisee within a reasonable time whether such
products, services, materials, forms, items or supplies meet its specifications.

13.5 Approved Suppliers. The Franchisee shall purchase all products, services, supplies
and materials required for the operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store licensed
herein, from manufacturers, suppliers or distributors designated by the Franchisor or, if there is
no designated supplier for a particular product, service, supply or material, from such other
suppliers who meet all of the Franchisor’s specifications and standards as to quality, composition,
finish, appearance and service, and who shall adequately demonstrate their capacity and facilities
to supply the Franchisee’s needs in the quantities, at the times, and with the reliability
requisite to an efficient operation.

13.6 Request to Change Supplier. In the event the Franchisee desires to purchase products,
services, supplies or materials from manufacturers, suppliers or distributors other than those
previously approved by the Franchisor, the Franchisee shall, prior to purchasing any such products,
services, supplies or materials, give the Franchisor a written request by certified mail, return
receipt requested, to change supplier. In the event the Franchisor rejects the Franchisee’s
requested new manufacturer, supplier or distributor, the Franchisor must, within 60 days of the
receipt of the Franchisee’s request to change supplier, notify the Franchisee of its rejection.
Failure to notify the Franchisee within such time period shall not constitute approval or a waiver
of objections. The Franchisor may continue from time to time to inspect any manufacturer’s,
supplier’s, or distributor’s facilities and products to assure proper production, processing,
storing and transportation of products, services, supplies or materials to be purchased from the
manufacturer, supplier or distributor by the Franchisee. Permission for such inspection shall be a
condition of the continued approval of such manufacturer, supplier or distributor.

13.7 Approval of Intended Supplier. The Franchisor may at its sole discretion, for any
reason whatsoever, elect to withhold approval of the manufacturer, supplier or distributor;
however, in order to make such determination, the Franchisor may require that samples from a
proposed new supplier be delivered to the Franchisor for testing prior to approval and use. A
charge not to exceed the actual cost of the test may be made by the Franchisor and shall be paid by
the Franchisee. The Franchisor may revoke its approval of a manufacturer, supplier or distributor
if the product, service or the manufacturer, supplier or distributor fail to meet the Franchisor’s
standards and specifications as set forth in the Operations Manual as it may be revised from time
to time.

14. TRADEMARKS, TRADE NAMES AND PROPRIETARY INTERESTS

14.1 Marks. The Franchisee hereby acknowledges that the Franchisor has the sole right to
license and control the Franchisee’s use of the ROCKY MOUNTAIN CHOCOLATE FACTORY service mark and
other of the Marks, and that such Marks shall remain under the sole and exclusive ownership and
control of the Franchisor. The Franchisee acknowledges that it has not acquired any right, title
or interest in such Marks except for the right to use such Marks in the operation of its ROCKY
MOUNTAIN CHOCOLATE FACTORY Store as it is governed by this Agreement. Except as permitted in the
Operations Manual, the

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Franchisee agrees not to use any of the Marks as part of an electronic mail address, or on any
sites on the Internet or World Wide Web and the Franchisee agrees not to use or register any of the
Marks as a domain name on the Internet.

14.2 No Use of Other Marks. The Franchisee further agrees that no service mark other than
“ROCKY MOUNTAIN CHOCOLATE FACTORY” or such other Marks as may be specified by the Franchisor shall
be used in the marketing, promotion or operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store.

14.3 Licensed Methods. The Franchisee hereby acknowledges that the Franchisor owns and
controls the distinctive plan for the establishment, operation and promotion of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store and all related licensed methods of doing business, previously defined as
the “Licensed Methods”, which include, but are not limited to, gourmet chocolate specialty recipes
and cooking methods, confectionery ordering, processing, manufacturing, stocking and inventory
control, technical equipment standards, order fulfillment methods and customer relations, marketing
techniques, written promotional materials, advertising, and accounting systems, all of which
constitute trade secrets of the Franchisor, and the Franchisee acknowledges that the Franchisor has
valuable rights in and to such trade secrets. The Franchisee further acknowledges that it has not
acquired any right, title or interest in the Licensed Methods except for the right to use the
Licensed Methods in the operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store as it is governed
by this Agreement.

14.4 Effect of Termination. In the event this Agreement is terminated for any reason, the
Franchisee shall immediately cease using any of the Licensed Methods and Marks, trade names, trade
dress, trade secrets, copyrights or any other symbols used to identify the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store, and all rights the Franchisee had to the same shall automatically terminate. The
Franchisee agrees to execute any documents of assignment as may be necessary to transfer any rights
the Franchisee may possess in and to the Marks.

14.5 Mark Infringement. The Franchisee agrees to notify the Franchisor in writing of any
possible infringement or illegal use by others of a trademark the same as or confusingly similar to
the Marks which may come to its attention. The Franchisee acknowledges that the Franchisor shall
have the right, in its sole discretion, to determine whether any action will be taken on account of
any possible infringement or illegal use. The Franchisor may commence or prosecute such action in
the Franchisor’s own name and may join the Franchisee as a party thereto if the Franchisor
determines it to be reasonably necessary for the continued protection and quality control of the
Marks and Licensed Methods. The Franchisor shall bear the reasonable cost of any such action,
including attorneys’ fees. The Franchisee agrees to fully cooperate with the Franchisor in any
such litigation.

14.6 Franchisee’s Business Name and Domain Name. The Franchisee acknowledges that the
Franchisor has a prior and superior claim to the ROCKY MOUNTAIN CHOCOLATE FACTORY trade name. The
Franchisee shall not use the phrase or two or more of the words “ROCKY MOUNTAIN CHOCOLATE FACTORY”
or abbreviations thereof in the legal name of its corporation, limited liability company or any
other business entity used in conducting the business provided for in this Agreement. The
Franchisee also agrees not to register or attempt to register an Internet domain name or a trade
name with a state using the phrase or two or more of the words “ROCKY MOUNTAIN CHOCOLATE FACTORY”
or abbreviations thereof, without the prior written consent of the Franchisor. When this Agreement
expires or terminates, the Franchisee shall execute any assignment or other document the Franchisor
requires to transfer to the Franchisor any rights the Franchisee may possess in a trade name or an
Internet domain name utilizing any or all of the words “ROCKY MOUNTAIN CHOCOLATE FACTORY,” any
abbreviations thereof or any other Mark owned by the Franchisor. The Franchisee

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further agrees that it will not identify itself as being “Rocky Mountain Chocolate Factory, Inc.”
or as being associated with the Franchisor in any manner other than as a franchisee or licensee.
The Franchisee further agrees that in all advertising and promotion and promotional materials it
will display its business name only in obvious conjunction with the phrase “ROCKY MOUNTAIN
CHOCOLATE FACTORY Licensee” or “ROCKY MOUNTAIN CHOCOLATE FACTORY Franchisee” or with such other
words and in such other phrases as may from time to time be prescribed in the Operations Manual, in
the Franchisor’s sole discretion.

14.7 Change of Marks. In the event that the Franchisor, in its sole discretion, shall
determine it necessary to modify or discontinue use of any proprietary Marks, or to develop
additional or substitute marks, the Franchisee shall, within a reasonable time after receipt of
written notice of such a modification or discontinuation from the Franchisor, take such action, at
the Franchisee’s sole expense, as may be necessary to comply with such modification,
discontinuation, addition or substitution.

14.8 Creative Ownership. All copyrightable works created by the Franchisee or any of its
owners, officers or employees in connection with the Store shall be the sole property of the
Franchisor. The Franchisee assigns all proprietary rights, including copyrights, in these works to
the Franchisor without additional consideration. The Franchisee hereby assigns and will execute
such additional assignments or documentation to effectuate the assignment of all intellectual
property, inventions, copyrights and trade secrets developed in part or in whole in relation to the
Store, during the term of this Agreement, as the Franchisor may deem necessary in order to enable
it, at its expense, to apply for, prosecute and obtain copyrights, patents or other proprietary
rights in the United States and in foreign countries or in order to transfer to the Franchisor all
right, title, and interest in said property. The Franchisee shall promptly disclose to the
Franchisor all inventions, discoveries, improvements, recipes, creations, patents, copyrights,
trademarks and confidential information relating to the Store which it or any of its owners,
officers or employees has made or may make solely, jointly or commonly with others and shall
promptly create a written record of the same. In addition to the foregoing, the Franchisee
acknowledges and agrees that any improvements or modifications, whether or not copyrightable,
directly or indirectly related to the Store, shall be deemed to be a part of the Licensed Methods
and shall inure to the benefit of the Franchisor.

14.9 Non-Disparagement. The Franchisee agrees that it shall not take any action or make
any statements to any third parties that would constitute a criticism, denigration or disparagement
of the Franchisor or its Licensed Methods or would tend to be injurious to the reputation or
goodwill of the Franchisor or its Marks, or which in any manner may interfere with the business
affairs or business relations of the Franchisor.

15. REPORTS, RECORDS AND FINANCIAL STATEMENTS

15.1 Franchisee Reports. The Franchisee shall establish and maintain at its own expense a
bookkeeping and accounting system which conforms to the specifications which the Franchisor may
prescribe from time to time, including the Franchisor’s current “Standard Code of Accounts” as
described in the Operations Manual. The Franchisee shall supply to the Franchisor such reports in
a manner and form as the Franchisor may from time to time reasonably require, including:

     a. Monthly summary reports, in a form as may be prescribed by the Franchisor, mailed to
the Franchisor postmarked no later than the 15th day of the month and containing information
relative to the previous month’s operations; and

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     b. Quarterly financial statements, prepared in accordance with generally accepted
accounting principles (“GAAP”), and consisting of a profit and loss statement and balance
sheet for the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, mailed to the Franchisor postmarked no
later than the 15th day following the end of the calendar quarter, based on operating
results of the prior quarter, which shall be submitted in a form approved by the Franchisor
and shall be certified by the Franchisee to be correct.

The Franchisor reserves the right to disclose data derived from such reports, without identifying
the Franchisee, except to the extent identification of the Franchisee is required by law.

15.2 Annual Financial Statements. The Franchisee shall, within 90 days after the end of
its fiscal year, provide to the Franchisor annual unaudited financial statements, compiled or
reviewed by an independent certified public accountant acceptable to and approved by the Franchisor
and prepared in accordance with GAAP, and state and federal income tax returns prepared by a
certified public accountant. If these financial statements or tax returns show an underpayment of
any amounts owed to the Franchisor, these amounts shall be paid to the Franchisor concurrently with
the submission of the statements or returns.

15.3 Verification. Each report and financial statement to be submitted to the Franchisor
hereunder shall be signed and verified by the Franchisee.

15.4 Books and Records. The Franchisee shall maintain all books and records for its ROCKY
MOUNTAIN CHOCOLATE FACTORY Store in accordance with GAAP, consistently applied, and preserve these
records for at least five years after the fiscal year to which they relate.

15.5 Audit of Books and Records. The Franchisee shall permit the Franchisor to inspect and
audit the books and records of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store at any reasonable time,
at the Franchisor’s expense. If any audit discloses a deficiency in amounts for payments owed to
the Franchisor pursuant to this Agreement, then such amounts shall become immediately payable to
the Franchisor by the Franchisee, with interest from the date such payments were due at the lesser
of 11/2% per month or the maximum rate allowed by law. If the Franchisee (1) fails to furnish
required reports or supporting records on a timely basis for two or more consecutive reporting
periods; (2) fails to have sufficient funds available to pay Royalties and Marketing and Promotion
Fees for two or more consecutive reporting periods; (3) fails to have books and records available
for an audit after receiving reasonable advance notice from the Franchisor, or otherwise fails to
cooperate with the Franchisor’s requested inspection and audit; or (4) understates its Gross Retail
Sales for the period of any audit by greater than 5%, then the Franchisee will reimburse the
Franchisor for the cost of the audit and inspection, including, without limitation, attorneys’
fees, independent accountants’ fees, and the travel expenses, room and board and compensation of
the Franchisor’s employees who conducted the audit and inspection.

15.6 Failure to Comply with Reporting Requirements. If the Franchisee fails to prepare and
submit any statement or report as required under this Article 15, then the Franchisor shall
have the right to treat the Franchisee’s failure as good cause for termination of this Agreement.
In addition to all other remedies available to the Franchisor, in the event that the Franchisee
fails to prepare and submit any statement or report required under this Article 15 for two
consecutive reporting periods, the Franchisor shall be entitled to make an audit, at the expense of
the Franchisee, of the Franchisee’s books, records and accounts, including the Franchisee’s bank
accounts, which in any way pertain to the Gross Retail Sales or the Adjusted Gross Retail Sales of
the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The statements or reports not previously submitted
shall be prepared by or under the direction and supervision of an independent certified public
accountant selected by the Franchisor.

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15.7 Shopping Service. The Franchisor reserves the right to use third party shopping
services from time to time to evaluate the conduct of the Franchisee’s ROCKY MOUNTAIN CHOCOLATE
FACTORY Store, including such things as customer service, cleanliness, merchandising and proper use
of registers. The Franchisor may use such shopping services to inspect the Franchisee’s ROCKY
MOUNTAIN CHOCOLATE FACTORY Store at any time at the Franchisor’s expense, without prior
notification to the Franchisee. The Franchisor may make the results of any such service evaluation
available to the Franchisee, in the Franchisor’s sole discretion.

16. TRANSFER

16.1 Transfer by Franchisee. The franchise granted herein is personal to the Franchisee
and, except as stated below, the Franchisor shall not allow or permit any transfer, assignment,
subfranchise or conveyance of this Agreement or any interest hereunder nor purport to do so without
the Franchisor’s prior written consent which may be withheld in the Franchisor’s reasonable
discretion. The Franchisee acknowledges that prior to approving any transfer, the Franchisor may
impose reasonable conditions on the Franchisee and its purported transferee including but not
limited to those conditions listed in Section 16.2. As used in this Agreement, the term
“transfer” includes the Franchisee’s voluntary, involuntary, direct or indirect assignment, sale,
gift or other disposition of any interest in: (1) this Agreement; (2) the ownership of the
Franchisee entity; (3) the Store governed by this Agreement; or (4) all or a substantial portion of
the assets of the Store. The term “transfer” shall include an assignment, sale, gift or other
disposition, including those transfers described in Sections 16.5 and 16.7 and
those resulting from a divorce, insolvency, corporate or partnership dissolution proceeding,
merger, change of control, operation of law or, in the event of the death of the Franchisee, or an
owner of the Franchisee by will, declaration of or transfer in trust or under the laws of intestate
succession. For the purposes of this Article 16, “change of control” of a Franchisee that
is an entity shall mean a transfer, new issuance or assignment of 25% or more of the Franchisee’s
beneficial equity ownership interests.

16.2 Pre-Conditions to Franchisee’s Transfer. The Franchisee shall not engage in a
transfer unless the Franchisee obtains the Franchisor’s written consent and the Franchisee and the
proposed transferee comply with the following requirements:

     a. All amounts due and owing pursuant to this Agreement by the Franchisee to the
Franchisor or its affiliates or to third parties whose debts or obligations the Franchisor
has guaranteed on behalf of the Franchisee, if any, are paid in full;

     b. The proposed transferee agrees to operate the Store as a ROCKY MOUNTAIN CHOCOLATE
FACTORY Store and agrees to satisfactorily complete the initial training program described
in this Agreement, which training must be completed to the Franchisor’s satisfaction prior
to the effectiveness of the transfer;

     c. The proposed transferee agrees to execute the then current form of Franchise
Agreement which shall supersede this Agreement in all respects. The proposed transferee
also agrees to execute all addenda to the Franchise Agreement. If a new Franchise Agreement
is signed, the terms thereof may differ from the terms of this Agreement; provided, however,
the transferee will not be required to pay any initial franchise fee;

     d. The Franchisee provides written notice to the Franchisor 30 days’ prior to the
proposed effective date of the transfer, and includes information reasonably detailed to
enable the Franchisor to evaluate the terms and conditions of the proposed transfer and
which at a minimum includes a written offer from the proposed transferee;

franchise agreement - 21

 

     e. The proposed transferee provides information to the Franchisor sufficient for the
Franchisor to assess the proposed transferee’s business experience, aptitude and financial
qualification, and the Franchisor approves the proposed transferee as a franchisee;

     f. The Franchisee executes a general release, in a form satisfactory to the Franchisor,
of any and all claims against the Franchisor, its affiliates and their respective officers,
directors, employees and agents;

     g. The Franchisee or the proposed transferee pay a nonrefundable transfer fee of $5,000
before the proposed transferee attends the initial training program; provided, however, that
no transfer fee will be charged for a transfer by the Franchisee to a corporation
wholly-owned by the Franchisee, between partners of a partnership Franchisee or to a spouse
of a Franchisee upon the death or disability of the Franchisee;

     h. The Franchisee or transferee remodels the Store and upgrades equipment, including
installing the Franchisor’s then current ISIS System, fixtures, furnishings and signage, and
paying a design fee, if a Store design is necessary in the Franchisor’s sole discretion; and

     i. The Franchisee agrees to abide by all post-termination covenants set forth herein,
including, without limitation, the covenant not to compete in Section 20.2 below.

16.3 Franchisor’s Approval of Transfer. The Franchisor has 30 days from the date of the
written notice to approve or disapprove in writing, of the Franchisee’s proposed transfer, which
approval shall not be unreasonably withheld, delayed or conditioned, other than as set forth in
this Agreement. The Franchisee acknowledges that the proposed transferee shall be evaluated for
approval by the Franchisor based on the same criteria as is currently being used to assess new
franchisees of the Franchisor and that the Franchisor shall provide such proposed transferee, if
appropriate, with such disclosures as may be required by state or federal law. If the Franchisee
and its proposed transferee comply with all conditions for transfer set forth herein and the
Franchisor has not given the Franchisee notice of its approval or disapproval within such period,
approval is deemed granted.

16.4 Right of First Refusal. In the event the Franchisee wishes to engage in a transfer,
the Franchisee agrees to grant to the Franchisor a 30-day right of first refusal to purchase such
rights, interest or assets on the same terms and conditions as are contained in the written notice
set forth in Section 16.2.d; provided, however, the following additional terms and
conditions shall apply:

     a. The 30 day right of first refusal period will run concurrently with the period in
which the Franchisor has to approve or disapprove the proposed transferee;

     b. The right of first refusal will be effective for each proposed transfer and any
material change in the terms or conditions of the proposed transfer shall be deemed a
separate offer on which the Franchisor shall have a new 30 day right of first refusal;

     c. If the consideration or manner of payment offered by a proposed transferee is such
that the Franchisor may not reasonably be required to furnish the same, then the Franchisor
may purchase the interest which is proposed to be sold for the reasonable cash equivalent.
If the parties cannot agree within a reasonable time on the cash consideration, each of the
Franchisor and the Franchisee shall designate an independent appraiser who, in turn, shall
designate a third independent appraiser. The third appraiser’s determination will be
binding upon the parties. All

franchise agreement - 22

 

expenses of the appraiser shall be paid for equally between the Franchisor and the
Franchisee; and

     d. If the Franchisor chooses not to exercise its right of first refusal, the Franchisee
shall be free to complete the transfer subject to compliance with Sections 16.2 and
16.3 above. Absence of a reply to the Franchisee’s notice of a proposed transfer
within the 30-day period may be deemed a waiver of such right of first refusal.

16.5 Types of Transfers. The Franchisee acknowledges that the Franchisor’s right to
approve or disapprove of a proposed transfer as provided for above, shall apply (1) if the
Franchisee is a partnership, corporation or other business association, (i) to the addition or
deletion of a partner, shareholder or members of the association or the transfer of any ownership
interest among existing partners, shareholders or members; (ii) to any proposed transfer of 25% or
more of the interest (whether stock, partnership interest or membership interest) to a third party,
whether such transfer occurs in a single transaction or several transactions; and (2) if the
Franchisee is an individual, to the transfer from such individual or individuals to a corporation
or other entity controlled by them, in which case the Franchisor’s approval will be conditioned
upon: (i) the continuing personal guarantee of the individual (or individuals) for the performance
of obligations under this Agreement; and (ii) a limitation on the corporation’s or other entity’s
business activity to that of operating the ROCKY MOUNTAIN CHOCOLATE FACTORY Store and related
activities provided that with respect to such transfer, the Franchisor’s right of first refusal to
purchase shall not apply and the Franchisor will not charge any transfer fee.

16.6 Transfer by the Franchisor. This Agreement is fully assignable by the Franchisor and
shall inure to the benefit of any assignee or other legal successor in interest, and the Franchisor
shall in such event be fully released from the same.

16.7 Franchisee’s Death or Disability. Upon the death or permanent disability of the
Franchisee (or individual owning 25% or more of, or controlling the Franchisee entity), the
personal representative of such person shall transfer the Franchisee’s interest in this Agreement
or such interest in the Franchisee entity to an approved third party. Such disposition of this
Agreement or such interest (including, without limitation, transfer by bequest or inheritance)
shall be completed within a reasonable time, not to exceed 120 days from the date of death or
permanent disability (unless extended by probate proceedings), and shall be subject to all terms
and conditions applicable to transfers contained in this Article 16. Provided, however,
that for purposes of this Section 16.7, there shall be no transfer fee charged by the
Franchisor. Failure to transfer the interest within said period of time shall constitute a breach
of this Agreement. For the purposes hereof, the term “permanent disability” shall mean a mental or
physical disability, impairment or condition that is reasonably expected to prevent or actually
does prevent the Franchisee (or the owner of 25% or more of, or controlling, the Franchisee entity)
from supervising the management and operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store for a
period of 120 days from the onset of such disability, impairment or condition.

17. TERM AND EXPIRATION

17.1 Term. The term of this Agreement begins on the date this Agreement is fully executed
and ends ten years later, unless sooner terminated as provided herein.

17.2 Continuation. If, for any reason, the Franchisee continues to operate the Store
beyond the term of this Agreement or any subsequent renewal period, it shall be deemed to be on a
month-to-month basis under the terms of this Agreement and subject to termination upon 30 days
notice or as required by law.

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If said holdover period exceeds 90 days, this Agreement is subject to immediate termination unless
applicable law requires a longer period. Upon termination after any holdover period, the
Franchisee and those in active concert with the Franchisee, including family members, officers,
directors, partners and managing agents, are subject to the terms of Articles 20 and
22 and Section 18.5 of this Agreement and all other applicable post-termination
obligations contained in this Agreement.

17.3 Rights Upon Expiration. At the end of the initial term hereof the Franchisee shall
have the option to renew its franchise rights for one additional ten year term, by acquiring
successor franchise rights, if the Franchisor does not exercise its right not to offer a successor
franchise in accordance with Section 17.5 below and if the Franchisee:

     a. At least 30 days prior to expiration of the term, executes the form of Franchise
Agreement then in use by the Franchisor;

     b. Has complied with all provisions of this Agreement during the current term,
including the payment on a timely basis of all Royalties and other fees due hereunder.
“Compliance” shall mean, at a minimum, that the Franchisee has not received any written
notification from the Franchisor of breach hereunder more than four times during the term
hereof;

     c. Upgrades and/or remodels the ROCKY MOUNTAIN CHOCOLATE FACTORY Store and its
operations at the Franchisee’s sole expense (the necessity of which shall be in the sole
discretion of the Franchisor) to conform with the then current Operations Manual;

     d. Executes a general release, in a form satisfactory to the Franchisor, of any and all
claims against the Franchisor and its affiliates, and their respective officers, directors,
employees and agents arising out of or relating to this Agreement; and

     e. Pays a successor franchise fee of (i) $2,500 if a new Franchise Agreement is
executed by the Franchisee within 30 days of receipt of the new Franchise Agreement, or (ii)
$5,000 if the new Franchise Agreement is signed more than 30 days after receipt of the new
Franchise Agreement.

17.4 Exercise of Option for Successor Franchise. The Franchisee may exercise its option
for a successor franchise by giving written notice of such exercise to the Franchisor not less than
90 days prior to the scheduled expiration of this Agreement. If the Franchisee fails to provide
such notice to the Franchisor within the time frame set forth in the preceding sentence, but
notifies the Franchisor of its desire to obtain a successor franchise prior to the expiration of
the then-current term of this Agreement, the Franchisee shall pay the Franchisor a penalty of
$1,000 for every 30-day period that the Franchisee was late, plus attorneys’ and administrative
fees and expenses attributable to such late renewal. The Franchisee’s successor franchise rights
shall become effective by signing the Franchise Agreement then currently being offered to new
franchisees of the Franchisor.

17.5 Conditions of Refusal. The Franchisor shall not be obligated to offer the Franchisee
a successor franchise upon the expiration of this Agreement if the Franchisee fails to comply with
any of the above conditions of renewal. In such event, except for failure to execute the then
current Franchise Agreement or pay the successor franchise fee, the Franchisor shall give notice of
expiration at least 180 days prior to the expiration of the term, and such notice shall set forth
the reasons for such refusal to offer successor franchise rights. Upon the expiration of this
Agreement, the Franchisee shall comply with the provisions of Section 18.5 below.

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18. DEFAULT AND TERMINATION

18.1 Termination by Franchisor — Effective Upon Notice. The Franchisor shall have the
right, at its option, to terminate this Agreement and all rights granted the Franchisee hereunder,
without affording the Franchisee any opportunity to cure any default (subject to any state laws to
the contrary, where state law shall prevail), effective when notice is sent to the Franchisee,
addressed as provided in Section 22.13, upon the occurrence of any of the following events:

     a. Abandonment. If the Franchisee ceases to operate the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store or otherwise abandons the ROCKY MOUNTAIN CHOCOLATE FACTORY Store for
a period of five consecutive days, or any shorter period that indicates an intent by the
Franchisee to discontinue operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, unless
and only to the extent that full operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store is
suspended or terminated due to fire, flood, earthquake or other similar causes beyond the
Franchisee’s control and not related to the availability of funds to the Franchisee;

     b. Insolvency; Assignments. If the Franchisee becomes insolvent or is
adjudicated a bankrupt; or any action is taken by the Franchisee, or by others against the
Franchisee under any insolvency, bankruptcy or reorganization act, (this provision may not
be enforceable under federal bankruptcy law, 11 U.S.C. §§ 101 et seq.), or if the Franchisee
makes an assignment for the benefit of creditors, or a receiver is appointed by the
Franchisee;

     c. Unsatisfied Judgments; Levy; Foreclosure. If any material judgment (or
several judgments which in the aggregate are material) is obtained against the Franchisee
and remains unsatisfied or of record for 30 days or longer (unless a supersedeas or other
appeal bond has been filed); or if execution is levied against the Franchisee’s business or
any of the property used in the operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store and
is not discharged within five days; or if the real or personal property of the Franchisee’s
business shall be sold after levy thereupon by any sheriff, marshal or constable;

     d. Criminal Conviction. If the Franchisee is convicted of a felony, a crime
involving moral turpitude, or any crime or offense that is reasonably likely, in the sole
opinion of the Franchisor, to materially and unfavorably affect the Licensed Methods, Marks,
goodwill or reputation thereof;

     e. Failure to Make Payments. If the Franchisee fails to pay any amounts due
the Franchisor or affiliates, including any amounts which may be due as a result of any
subleases or lease assignments between the Franchisee and the Franchisor, within 10 days
after receiving notice that such fees or amounts are overdue;

     f. Misuse of Marks. If the Franchisee misuses or fails to follow the
Franchisor’s directions and guidelines concerning use of the Franchisor’s Marks and fails to
correct the misuse or failure within ten days after notification from the Franchisor;

     g. Unauthorized Disclosure. If the Franchisee intentionally or negligently
discloses to any unauthorized person the contents of or any part of the Franchisor’s
Operations Manual or any other trade secrets or confidential information of the Franchisor;

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     h. Repeated Noncompliance. If the Franchisee has received two previous notices
of default from the Franchisor and is again in default of this Agreement at any time during
the term of this Agreement, regardless of whether the previous defaults were cured by the
Franchisee, provided, however, that following the Franchisee’s receipt of three notices of
default, the Franchisor reserves the right to assess a penalty in the amount of the then
current initial franchise fee payable within 10 days of receipt of notice related thereto,
and to require the Franchisee to sign the Franchisor’s then current form of Franchise
Agreement for the remainder of the term of the Franchisee’s previous Franchise Agreement in
lieu of immediately terminating the Franchise Agreement, on the condition that a fourth
notice of default may result in immediate termination of the Franchise Agreement; or

     i. Unauthorized Transfer. If the Franchisee sells, transfers or otherwise
assigns the Franchise, an interest in the Franchise or the Franchisee entity, this
Agreement, the ROCKY MOUNTAIN CHOCOLATE FACTORY Store or a substantial portion of the assets
of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store owned by the Franchisee without complying with
the provisions of Article 16 above.

18.2 Termination by Franchisor — Thirty Days Notice. The Franchisor shall have the right
to terminate this Agreement (subject to any state laws to the contrary, where state law shall
prevail), effective upon 30 days written notice to the Franchisee, if the Franchisee breaches any
other provision of this Agreement and fails to cure the default during such 30-day period. In that
event, this Agreement will terminate without further notice to the Franchisee, effective upon
expiration of the 30-day period. Defaults shall include, but not be limited to, the following:

     a. Failure to Maintain Standards. The Franchisee fails to maintain the
then-current operating procedures and adhere to the specifications and standards established
by the Franchisor as set forth herein or in the Operations Manual or otherwise communicated
to the Franchisee;

     b. Deceptive Practices. The Franchisee engages in any unauthorized business or
practice or sells any unauthorized product or service under the Franchisor’s Marks or under
a name or mark which is confusingly similar to the Franchisor’s Marks;

     c. Failure to Obtain Consent. The Franchisee fails, refuses or neglects to
obtain the Franchisor’s prior written approval or consent as required by this Agreement;

     d. Failure to Comply with Manual. The Franchisee fails or refuses to comply
with the then-current requirements of the Operations Manual; or

     e. Breach of Related Agreement. The Franchisee defaults under any term of the
lease, sublease or lease assignment for the Franchised Location, any equipment lease or any
other agreement material to the ROCKY MOUNTAIN CHOCOLATE FACTORY Store or any other
Franchise Agreement between the Franchisor and the Franchisee and such default is not cured
within the time specified in such lease, sublease, other agreement or other Franchise
Agreement. Provided, however, so long as financing from the United States Small Business
Administration remains outstanding, the Franchisee will be given the same opportunity to
cure defaults under any agreement between the Franchisor or its affiliates and the
Franchisee, as the Franchisee is given under this Agreement.

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Notwithstanding the foregoing, if the breach is curable, but is of a nature which cannot be
reasonably cured within such 30-day period and the Franchisee has commenced and is continuing to
make good faith efforts to cure the breach during such 30-day period, the Franchisee shall be given
an additional reasonable period of time to cure the same, and this Agreement shall not
automatically terminate without written notice from the Franchisor.

18.3 Franchisor’s Remedies.

     a. Failure to Pay. In addition to all other remedies that may be exercised by
the Franchisor upon a default by the Franchisee under the terms of this Agreement, the
Franchisor reserves the right to collect amounts due from the Franchisee to any third party
and to pay the third party directly. If the Franchisor collects any such amounts, the
Franchisor may, in its sole discretion, charge the Franchisee an administrative fee to
reimburse the Franchisor for its costs of collecting and paying such amounts. Any
administrative fee charged would not exceed 15% of the total amount of money collected.
Additionally, in the event this Agreement is terminated by the Franchisor prior to its
expiration as set forth in Sections 18.1 or 18.2 above, the Franchisee
acknowledges and agrees that in addition to all other available remedies, the Franchisor
shall have the right to recover lost future Royalties during any period in which the
Franchisee fails to pay such Royalties through and including the remainder of the then
current term of this Agreement.

     b. Liquidated Damages. Franchisee acknowledges that, if there is any act in
violation of Sections 18.1 or 18.2 of this Agreement, it will be impossible
to determine with specificity the damage to Franchisor. Therefore, for purposes of this
Agreement, as liquidated damages and not as a penalty, for each day that Franchisee is in
violation of Sections 18.1 or 18.2 of this Agreement, Franchisee shall pay
to Franchisor the sum of $500.

18.4 Right to Purchase. Upon termination or expiration of this Agreement for any reason,
the Franchisor shall have the option to purchase some or all of the assets of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, which may include, at the Franchisor’s option, all of the Franchisee’s
interest, if any, in and to the real estate upon which the ROCKY MOUNTAIN CHOCOLATE FACTORY Store
is located, and all buildings and other improvements thereon, including leasehold interests, at
fair market value, less any amount apportioned to the goodwill of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store which is attributable to the Franchisor’s Marks and Licensed Methods, and less any
amounts owed to the Franchisor by the Franchisee. The following additional terms shall apply to
the Franchisor’s exercise of this option:

     a. The Franchisor’s option hereunder shall be exercisable by providing the Franchisee
with written notice of its intention to exercise the option given to the Franchisee no later
than the effective date of termination, in the case of termination, or at least 90 days
prior to the expiration of the term of the franchise, in the case of non renewal. Such
notice shall include a description of the assets the Franchisor will purchase.

     b. In the event that the Franchisor and the Franchisee cannot agree to a fair market
value for the assets of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, then the fair market
value shall be determined by an independent third party appraisal. The Franchisor and the
Franchisee shall each select one independent, qualified appraiser, and the two so selected
shall select a third appraiser, all three to determine the fair market value of the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store. The purchase price shall be the median of the fair market
values as determined by the three appraisers.

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     c. The Franchisor and the Franchisee agree that the terms and conditions of this right
and option to purchase may be recorded, if deemed appropriate by the Franchisor, in the real
property records and the Franchisor and the Franchisee further agree to execute such
additional documentation as may be necessary and appropriate to effectuate such recording.

     The closing for the purchase of the assets of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store will
take place no later than 60 days after the termination or nonrenewal date. The Franchisor will pay
the purchase price in full at the closing, or, at its option, in five equal consecutive monthly
installments with interest at a rate of 10% per annum. The Franchisee must sign all documents of
assignment and transfer as are reasonably necessary for purchase of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store by the Franchisor.

     In the event that the Franchisor does not exercise the Franchisor’s right to purchase the
assets of the Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store as set forth above, the
Franchisee will be free to keep or to sell, after such termination or expiration, to any third
party, all of the assets of its ROCKY MOUNTAIN CHOCOLATE FACTORY Store; provided, however, that all
appearances of the Marks are first removed in a manner approved in writing by the Franchisor. The
Franchisor will only be obligated to purchase any assets of the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store in the event and to the extent it is required by applicable state or federal law.

18.5 Obligations of Franchisee Upon Termination or Expiration. The Franchisee is obligated
upon termination or expiration of this Agreement to immediately:

     a. Pay to the Franchisor all Royalties, other fees, and any and all amounts or accounts
payable then owed the Franchisor or its affiliates pursuant to this Agreement, or pursuant
to any other agreement, whether written or oral, including subleases and lease assignments,
between the parties;

     b. Cease to identify itself as a ROCKY MOUNTAIN CHOCOLATE FACTORY Franchisee or
publicly identify itself as a former Franchisee or use any of the Franchisor’s trade
secrets, signs, symbols, devices, trade names, trademarks, or other materials.

     c. Cease to identify the Franchised Location as being, or having been, associated with
the Franchisor, and, if deemed necessary by the Franchisor, paint or otherwise change the
interior and exterior of the Franchisee’s former Store to distinguish it from a ROCKY
MOUNTAIN CHOCOLATE FACTORY Store, and immediately cease using any proprietary mark of the
Franchisor or any mark in any way associated with the ROCKY MOUNTAIN CHOCOLATE FACTORY Marks
and Licensed Methods;

     d. Deliver to the Franchisor all Factory Candy, Store Candy and Items of inventory that
bear the ROCKY MOUNTAIN CHOCOLATE FACTORY trade name or logo, signs, sign-faces, advertising
materials, forms and other materials bearing any of the Marks or otherwise identified with
the Franchisor and obtained by and in connection with this Agreement;

     e. Deliver to the Franchisor the Operations Manual and all other information, documents
and copies thereof which are proprietary to the Franchisor;

     f. Promptly take such action as may be required to cancel all fictitious or assumed
names or equivalent registrations relating to the Franchisee’s use of any Marks which are
under

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the exclusive control of the Franchisor or, at the option of the Franchisor, assign the
same to the Franchisor;

     g. Notify the telephone company and all telephone directory publishers of the
termination or expiration of the Franchisee’s right to use any telephone number and any
regular, classified or other telephone directory listings associated with any Mark and to
authorize transfer thereof to the Franchisor or its designee. The Franchisee acknowledges
that, as between the Franchisee and the Franchisor, the Franchisor has the sole rights to
and interest in all telephone, telecopy or facsimile machine numbers and directory listings
associated with any Mark. The Franchisee authorizes the Franchisor, and hereby appoints the
Franchisor and any of its officers as the Franchisee’s attorney-in-fact, to direct the
telephone company and all telephone directory publishers to transfer any telephone, telecopy
or facsimile machine numbers and directory listings relating to the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store to the Franchisor or its designee, should the Franchisee fail or refuse to do
so, and the telephone company and all telephone directory publishers may accept such
direction or this Agreement as conclusive of the Franchisor’s exclusive rights in such
telephone numbers and directory listings and the Franchisor’s authority to direct their
transfer;

     h. Abide by all restrictive covenants set forth in Article 20 of this
Agreement;

     i. Sign a general release, in a form satisfactory to the Franchisor, of any and all
claims against the Franchisor, its affiliates and their respective officers, directors,
employees and agents; and

     j. If applicable, take such action as may be required to remove from the Internet all
sites referring to the Franchisee’s former ROCKY MOUNTAIN CHOCOLATE FACTORY Store or any of
the Marks and to cancel or assign to the Franchisor, in the Franchisor’s sole discretion,
all rights to any domain names for any sites on the Internet that refer to the Franchisee’s
former ROCKY MOUNTAIN CHOCOLATE FACTORY Store or any of the Marks.

18.6 State and Federal Law. THE PARTIES ACKNOWLEDGE THAT IN THE EVENT THE TERMS OF THIS
AGREEMENT REGARDING TERMINATION OR EXPIRATION ARE INCONSISTENT WITH APPLICABLE STATE OR FEDERAL
LAW, SUCH LAW SHALL GOVERN THE FRANCHISEE’S RIGHTS REGARDING TERMINATION OR EXPIRATION OF THIS
AGREEMENT.

19. BUSINESS RELATIONSHIP

19.1 Independent Businesspersons. The parties agree that each of them are independent
businesspersons, that their only relationship is by virtue of this Agreement and that no fiduciary
relationship is created hereunder. Neither party is liable or responsible for the other’s debts or
obligations, nor shall either party be obligated for any damages to any person or property directly
or indirectly arising out of the operation of the other party’s business authorized by or conducted
pursuant to this Agreement. The Franchisor and the Franchisee agree that neither of them will hold
themselves out to be the agent, employer or partner of the other and that neither of them has the
authority to bind or incur liability on behalf of the other.

19.2 Payment of Third Party Obligations. The Franchisor shall have no liability for the
Franchisee’s obligations to pay any third parties, including without limitation, any product
vendors, or

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any sales, use, service, occupation, excise, gross receipts, income, property or other tax levied
upon the Franchisee, the Franchisee’s property, the ROCKY MOUNTAIN CHOCOLATE FACTORY Store or upon
the Franchisor in connection with the sales made or business conducted by the Franchisee (except
any taxes the Franchisor is required by law to collect from the Franchisee with respect to
purchases from the Franchisor).

19.3 Indemnification. The Franchisee agrees to indemnify, defend and hold harmless the
Franchisor, its subsidiaries and affiliates, and their respective shareholders, directors,
officers, employees, agents, successors and assignees, (the “Indemnified Parties”) against, and to
reimburse them for all claims, obligations and damages described in this Section 19.3, any
and all third party obligations described in Section 19.2 and any and all claims and
liabilities directly or indirectly arising out of the operation of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store or arising out of the use of the Marks and Licensed Methods in any manner not in
accordance with this Agreement. For purposes of this indemnification, claims shall mean and
include all obligations, actual and consequential damages and costs reasonably incurred in the
defense of any claim against the Indemnified Parties, including, without limitation, reasonable
accountants’, attorneys’ and expert witness fees, costs of investigation and proof of facts, court
costs, other litigation expenses and travel and living expenses. The Franchisor shall have the
right to defend any such claim against it. This indemnity shall continue in full force and effect
subsequent to and notwithstanding the expiration or termination of this Agreement.

20. RESTRICTIVE COVENANTS

20.1 Non-Competition During Term. The Franchisee acknowledges that, in addition to the
license of the Marks hereunder, the Franchisor has also licensed commercially valuable information
which comprises and is a part of the Licensed Methods, including without limitation, recipes,
operations, marketing, advertising and related information and materials and that the value of this
information derives not only from the time, effort and money which went into its compilation, but
from the usage of the same by all the franchisees of the Franchisor using the Marks and Licensed
Methods. The Franchisee therefore agrees that other than the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store licensed herein, neither the Franchisee nor any of the Franchisee’s officers, directors,
shareholders, members, managers or partners, nor any member of his or their immediate families,
shall during the term of this Agreement:

     a. have any direct or indirect controlling interest as a disclosed or beneficial owner
in a “Competitive Business” as defined below;

     b. perform services as a director, officer, manager, employee, consultant,
representative, agent or otherwise for a Competitive Business; or

     c. divert or attempt to divert any business related to, or any customer or account of
the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, the Franchisor’s business or any other ROCKY
MOUNTAIN CHOCOLATE FACTORY franchisee’s business, by direct inducement or otherwise, or
divert or attempt to divert the employment of any employee of the Franchisor or another
franchisee licensed by the Franchisor to use the Marks and Licensed Methods, to any
Competitive Business by any direct inducement or otherwise.

The term “Competitive Business” as used in this Agreement shall mean any business operating, or
granting franchises or licenses to others to operate, a retail, wholesale, distribution or
manufacturing business with either of the following attributes: (i) a business deriving a total of
10% or more of its gross receipts from the sale, processing or manufacturing of one or a
combination of any of the following: boxed chocolate candies; or products which are the same as or
substantially similar to Store Candy; or

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products made with recipes, or processes, included in the Operations Manual; or (ii) a
business devoting a total of 10% or more of its retail display space to one or a combination of the
following: boxed chocolate candies; or products which are the same as or substantially similar to
Store Candy; or products made with recipes, or processes, included in the Operations Manual;
provided, however, the Franchisee shall not be prohibited from owning securities in a Competitive
Business if such securities are listed on a stock exchange or traded on the over-the-counter market
and represent 5% or less of that class of securities issued and outstanding.

20.2 Post-Termination Covenant Not to Compete. Upon termination or expiration of this
Agreement for any reason, the Franchisee and its officers, directors, shareholders, members,
managers and/or partners agree that, for a period of two years commencing on the effective date of
termination or expiration, or the date on which the Franchisee ceases to conduct business,
whichever is later, neither Franchisee nor its officers, directors, shareholders, members,
managers, and/or partners shall have any direct or indirect interest (through a member of any
immediate family of the Franchisee or its Owners or otherwise) as a disclosed or beneficial owner,
investor, partner, director, officer, member, manager, employee, consultant, representative or
agent or in any other capacity in any Competitive Business, defined in Section 20.1 above,
located or operating within a 10-mile radius of the Franchised Location or within a 10-mile radius
of any other franchised or company-owned ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The restrictions
of this Section shall not be applicable to the ownership of shares of a class of securities listed
on a stock exchange or traded on the over-the-counter market that represent 5% or less of the
number of shares of that class of securities issued and outstanding. The Franchisee and its
officers, directors, shareholders, members, managers, and/or partners expressly acknowledge that
they possess skills and abilities of a general nature and have other opportunities for exploiting
such skills. Consequently, enforcement of the covenants made in this Section will not deprive them
of their personal goodwill or ability to earn a living.

20.3 Confidentiality of Proprietary Information. The Franchisee shall treat all
information it receives which comprises or is a part of the Licensed Methods licensed hereunder as
proprietary and confidential and will not use such information in an unauthorized manner or
disclose the same to any unauthorized person without first obtaining the Franchisor’s written
consent. The Franchisee acknowledges that the Marks and the Licensed Methods have valuable
goodwill attached to them, that the protection and maintenance thereof is essential to the
Franchisor and that any unauthorized use or disclosure of the Marks and Licensed Methods will
result in irreparable harm to the Franchisor.

20.4 Confidentiality Agreement. The Franchisor requires that the Franchisee cause each of
its officers, directors, partners, shareholders, members, managers, and General Manager, and, if
the Franchisee is an individual, immediate family members, to execute a confidentiality and
noncompetition agreement containing the above restrictions, in the form attached hereto as
Exhibit VI and incorporated herein by reference.

21. INSURANCE

21.1 Insurance Coverage. The Franchisee shall procure, maintain and provide evidence of
(i) comprehensive general liability insurance for the Franchised Location and its operations with a
limit of not less than $1,000,000 combined single limit, or such greater limit as may be required
as part of any lease agreement for the Franchised Location; (ii) automobile liability insurance
covering all employees of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store with authority to operate a
motor vehicle in an amount not less than $1,000,000 or, with the prior written consent of the
Franchisor, such lesser amount as may be available at a commercially reasonable rate, but in no
event less than any statutorily imposed minimum coverage; (iii) unemployment and worker’s
compensation insurance with a broad form

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all-states endorsement coverage sufficient to meet the requirements of the law; and (iv) all-risk
personal property insurance in an amount equal to at least 100% of the replacement costs of the
contents and tenant improvements located at the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. All of the
required policies of insurance shall name the Franchisor as an additional insured and shall provide
for a 30-day advance written notice to the Franchisor of termination, amendment or cancellation.

21.2 Proof of Insurance Coverage. The Franchisee will provide proof of insurance to the
Franchisor prior to commencement of operations at its ROCKY MOUNTAIN CHOCOLATE FACTORY Store. This
proof will show that the insurer has been authorized to inform the Franchisor in the event any
policies lapse or are cancelled. The Franchisor has the right to change the minimum amount of
insurance the Franchisee is required to maintain by giving the Franchisee prior reasonable notice,
giving due consideration to what is reasonable and customary in the similar business. The
Franchisee’s failure to comply with the insurance provisions set forth herein shall be deemed a
material breach of this Agreement. In the event of any lapse in insurance coverage, in addition to
all other remedies, the Franchisor shall have the right to demand that the Franchisee cease
operations of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store until coverage is reinstated, or, in the
alternative, pay any delinquencies in premium payments and charge the same back to the Franchisee.

22. MISCELLANEOUS PROVISIONS

22.1 Governing Law/Consent to Venue and Jurisdiction. Except to the extent governed by the
United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. §§1051 et seq.) or other federal law,
this Agreement shall be interpreted under the laws of the state of Colorado and any disputes
between the parties shall be governed by and determined in accordance with the substantive laws of
the state of Colorado, which laws shall prevail in the event of any conflict of law. The
Franchisee and the Franchisor have negotiated regarding a forum in which to resolve any disputes
that may arise between them and have agreed to select a forum in order to promote stability in
their relationship. Therefore, if a claim is asserted in a legal proceeding involving the
Franchisee, its officers, directors, partners or managers (collectively, “Franchisee Affiliates”)
and the Franchisor, its officers, directors or sales employees (collectively, “Franchisor
Affiliates”), all parties agree that the exclusive venue for disputes between them shall be in the
state courts in La Plata County, Colorado and federal courts located in Colorado and each waive any
objections they may have to the personal jurisdiction of or venue in the state courts in La Plata
County and federal courts located in Colorado. The Franchisor, the Franchisor Affiliates, the
Franchisee and the Franchisee Affiliates each waive their rights to a trial by jury.

22.2 Cumulative Rights. The rights and remedies of the Franchisor and the Franchisee
hereunder are cumulative and no exercise or enforcement by either of them of any right or remedy
hereunder shall preclude the exercise or enforcement by either of them of any other right or remedy
hereunder which they are entitled by law to enforce.

22.3 Modification. The Franchisor and/or the Franchisee may modify this Agreement only
upon execution of a written agreement between the two parties. The Franchisee acknowledges that
the Franchisor may modify its standards and specifications and operating and marketing techniques
set forth in the Operations Manual unilaterally under any conditions and to the extent in which the
Franchisor, in its sole discretion, deems necessary to protect, promote, or improve the Marks and
the quality of the Licensed Methods, but under no circumstances will such modifications be made
arbitrarily without such determination.

22.4 Entire Agreement. This Agreement, including all exhibits and addenda hereto, contains
the entire agreement between the parties and supersedes any and all prior agreements concerning the
subject

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matter hereof. The Franchisee agrees and understands that the Franchisor shall not be liable or
obligated for any oral representations or commitments made prior to the execution hereof or for
claims of negligent or fraudulent misrepresentation based on any such oral representations or
commitments and that no modifications of this Agreement shall be effective except those in writing
and signed by both parties. The Franchisor does not authorize and will not be bound by any
representation of any nature other than those expressed in this Agreement and in the most recent
franchise disclosure document provided by the Franchisor or its representatives. The Franchisee
further acknowledges and agrees that no representations have been made to it by the Franchisor
regarding projected sales volumes, market potential, revenues, profits of the Franchisee’s ROCKY
MOUNTAIN CHOCOLATE FACTORY Store, or operational assistance other than as stated in this Agreement
or in the most recent franchise disclosure document provided by the Franchisor or its
representatives.

22.5 Delegation by the Franchisor. From time to time, the Franchisor shall have the right
to delegate the performance of any portion or all of its obligations and duties hereunder to third
parties, whether the same are agents of the Franchisor or independent contractors which the
Franchisor has contracted with to provide such services. The Franchisee agrees in advance to any
such delegation by the Franchisor of any portion or all of its obligations and duties hereunder.
The Franchisee acknowledges and agrees that any delegation by the Franchisor of its duties or
obligations does not assign or confer any rights under this Agreement to third parties and that
there are no third-party beneficiaries of this Agreement.

22.6 Effective Date. This Agreement shall not be effective until accepted by the
Franchisor as evidenced by dating and signing by an officer of the Franchisor.

22.7 Review of Agreement. The Franchisee acknowledges that it had a copy of this Agreement
in its possession for a period of time not fewer than 10 full business days, or 14 calendar days,
whichever is applicable, during which time the Franchisee has had the opportunity to submit same
for professional review and advice of the Franchisee’s choosing prior to freely executing this
Agreement.

22.8 Attorneys’ Fees. In the event of any dispute between the parties to this Agreement,
including any dispute involving an officer, director, employee or managing agent of a party to this
Agreement, in addition to all other remedies, the non-prevailing party will pay the prevailing
party all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing
party in any legal action, arbitration or other proceeding as a result of such dispute.

22.9 Injunctive Relief. Nothing herein shall prevent the Franchisor or the Franchisee from
seeking injunctive relief to prevent irreparable harm, in addition to all other remedies. If the
Franchisor seeks an injunction, the Franchisor will not be required to post a bond in excess of
$500.

22.10 No Waiver. No waiver of any condition or covenant contained in this Agreement or
failure to exercise a right or remedy by the Franchisor or the Franchisee shall be considered to
imply or constitute a further waiver by the Franchisor or the Franchisee of the same or any other
condition, covenant, right, or remedy.

22.11 No Right to Set Off. The Franchisee shall not be allowed to set off amounts owed to
the Franchisor for Royalties, fees or other amounts due hereunder, against any monies owed to
Franchisee, nor shall the Franchisee in any event withhold such amounts due to any alleged
nonperformance by the Franchisor hereunder, which right of set off is hereby expressly waived by
the Franchisee.

22.12 Invalidity. If any provision of this Agreement is held invalid by any tribunal in a
final decision from which no appeal is or can be taken, such provision shall be deemed modified to
eliminate the invalid

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element and, as so modified, such provision shall be deemed a part of this Agreement as though
originally included. The remaining provisions of this Agreement shall not be affected by such
modification.

22.13 Notices. All notices required to be given under this Agreement shall be given in
writing, by certified mail, return receipt requested, or by an overnight delivery service providing
documentation of receipt, at the address set forth in the first paragraph of this Agreement or at
such other addresses as the Franchisor or the Franchisee may designate from time to time, and shall
be effectively given when deposited in the United States mail, postage prepaid, or when received
via overnight delivery, as may be applicable.

22.14 Payment of Taxes. The Franchisee shall reimburse the Franchisor, or its affiliates
and designees, promptly and when due, the amount of all sales taxes, use taxes, personal property
taxes and similar taxes imposed upon, required to be collected or paid by the Franchisor, or its
affiliates or designees, on account of services or goods furnished by the Franchisor, its
affiliates or designees, to the Franchisee through sale, lease or otherwise, or on account of
collection by the Franchisor, its affiliates or designees, of the initial franchise fee, Royalties,
Marketing and Promotion Fees or any other payments made by the Franchisee to the Franchisor
required under the terms of this Agreement.

22.15 Acknowledgement. BEFORE SIGNING THIS AGREEMENT, THE FRANCHISEE SHOULD READ IT
CAREFULLY WITH THE ASSISTANCE OF LEGAL COUNSEL. THE FRANCHISEE ACKNOWLEDGES THAT:

     (A) THE SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED HEREIN INVOLVES SUBSTANTIAL RISKS AND
DEPENDS UPON THE FRANCHISEE’S ABILITY AS AN INDEPENDENT BUSINESS PERSON AND ITS ACTIVE
PARTICIPATION IN THE DAILY AFFAIRS OF THE BUSINESS; AND

     (B) NO ASSURANCE OR WARRANTY, EXPRESS OR IMPLIED, HAS BEEN GIVEN AS TO THE POTENTIAL SUCCESS
OF SUCH BUSINESS VENTURE OR THE EARNINGS LIKELY TO BE ACHIEVED; AND

     (C) NO STATEMENT, REPRESENTATION OR OTHER ACT, EVENT OR COMMUNICATION, EXCEPT AS SET FORTH IN
THIS AGREEMENT, AND IN THE MOST RECENT FRANCHISE DISCLOSURE DOCUMENT SUPPLIED TO THE FRANCHISEE, IS
BINDING ON THE FRANCHISOR IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above set
forth.

	 	 	 	 	 	 	 	 
	 	 	 	ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

 	 
	Date: 	 	 	By:  	 	 
	 	 	 	 	Title: 	 	 
	 	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	 	FRANCHISEE:

 	 
	Date: 	 	 	
 	 
	 	 	 	Individually 	 
	 	 	 	 	 

	 	 	 	 	 	 	 	 
	 	 	 	AND:

(if a corporation or partnership)

 	 
	 	 	 	Company Name
 	 
	Date: 	 	 	By:  	 	 
	 	 	 	 	Title: 	 	 
	 	 	 	 	 	 	 
	 

franchise
agreement - 35

 

 

EXHIBIT I

TO FRANCHISE AGREEMENT

ADDENDUM TO ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

FRANCHISE AGREEMENT

     1. Franchised Location.
The Franchised Location, set forth in Section 3.1 of
the Agreement shall be:                
                
                    
         
 

and the Store configuration shall be:                
                
                 
                  
                       
      
                
                 
                                  .

     2. Initial Franchise Fee. The amount of the initial franchise fee, set forth in
Section 4.1 of the Agreement, shall be: $                                   .

     Fully executed this ___day of                     , 20___.

	 	 	 	 	 	 	 	 
	 	 	 	ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

 	 
	 	 	 	By:  	 	 
	 	 	 	 	Title: 	 	 
	 	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	 	FRANCHISEE:

 	 
	 	 	 	
 	 
	 	 	 	Individually 	 
	 	 	 	 	 

	 	 	 	 	 	 	 	 
	 	 	 	AND:

(if a corporation or partnership)

 	 
	 	 	 	Company Name

 	 
	 	 	 	By:  	 	 
	 	 	 	 	Title: 	 	 
	 	 	 	 	 	 	 
	 

 

 

	 	 	 	 	 

EXHIBIT II

TO FRANCHISE AGREEMENT

GUARANTY AND ASSUMPTION OF FRANCHISEE’S OBLIGATIONS

     In consideration of, and as an inducement to, the execution of the above Franchise Agreement
(the “Agreement”) by Rocky Mountain Chocolate Factory, Inc. (the “Franchisor”), each of the
undersigned hereby personally and unconditionally:

     Guarantees to the Franchisor and its successors and assigns, for the term of the Agreement,
including renewals thereof, that the franchisee, as that term is defined in the Agreement
(“Franchisee”), shall punctually pay and perform each and every undertaking, agreement and covenant
set forth in the Agreement; and

     Agrees to be personally bound by, and personally liable for the breach of, each and every
provision in the Agreement.

Each of the undersigned waives the following:

     1. Acceptance and notice of acceptance by the Franchisor of the foregoing undertaking;

     2. Notice of demand for payment of any indebtedness or nonperformance of any obligations
hereby guaranteed;

     3. Protest and notice of default to any party with respect to the indebtedness or
nonperformance of any obligations hereby guaranteed;

     4. Any right he or she may have to require that any action be brought against Franchisee or
any other person as a condition of liability; and

     5. Any and all other notices and legal or equitable defenses to which he or she may be
entitled.

Each of the undersigned consents and agrees that:

     1. His or her direct and immediate liability under this guaranty shall be joint and several;

     2. He or she shall render any payment or performance required under the Agreement upon demand
if Franchisee fails or refuses punctually to do so;

     3. Such liability shall not be contingent or conditioned upon pursuit by the Franchisor of any
remedies against Franchisee or any other person; and

     4. Such liability shall not be diminished, relieved or otherwise affected by any extension of
time, credit or other indulgence which the Franchisor may from time to time grant to Franchisee or
to any other person, including without limitation the acceptance of any partial payment or
performance, or the compromise or release of any claims, none of which shall in any way modify or
amend this guaranty, which shall be continuing and irrevocable during the term of the Agreement,
including renewals thereof.

franchise agreement

 

 

     5. His or her obligation and liability hereunder shall not be affected by any amendment or
modification of the Agreement and he or she has no right to approve or consent to any such
amendment or modification.

     6. Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15
U.S.C. §§1051 et seq.) or other federal law, this guaranty shall be interpreted under the laws of
the state of Colorado and any disputes between the Franchisor and any party hereto shall be
governed by and determined in accordance with the substantive laws of the state of Colorado, which
laws shall prevail in the event of any conflict of law. The Franchisor and all guarantors agree
that the exclusive venue for disputes between them shall be in the state courts in La Plata County,
Colorado and federal courts located in Colorado and each waive any objections they may have to the
personal jurisdiction of or venue in the state courts in La Plata County and federal courts located
in Colorado. The Franchisor and each guarantor waive their rights to a trial by jury.

     IN WITNESS WHEREOF, each of the undersigned has affixed his or her signature effective on the
same day and year as the Agreement was executed.

	 	 	 

	WITNESS

	 	GUARANTOR(S)
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

franchise agreement  2

 

 

EXHIBIT III

TO FRANCHISE AGREEMENT

STATEMENT OF OWNERSHIP

Franchisee:
              
               
               
               
               
               
               
             
                 
               
               
                
          

Trade Name (if different from above):      
                     
                     
                    
                    
                    
                    
                    
   

Form of Ownership

(Check One)

	 	 	 	 	 	 	 	 	 

	o Individual

	 	o Partnership
	 	o Corporation
	 	o
	 	Limited

Liability

Company

If a Partnership, provide name and address of each partner showing percentage owned, whether active
in management, and indicate the state in which the partnership was formed.

If a Limited Liability Company, provide name and address of each member and each manager showing
percentage owned and indicate the state in which the Limited Liability Company was formed.

If a Corporation, give the state and date of incorporation, the names and addresses of each officer
and director, and list the names and addresses of every shareholder showing what percentage of
stock is owned by each.

 

 

 

 

 

 

Franchisee acknowledges that this Statement of Ownership applies to the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store authorized under the Franchise Agreement.

Use additional sheets if necessary. Any and all changes to the above information must be reported
to the Franchisor in writing.

	 	 	 

	 
	 

	 	 
	Date

	 	Signature
	 
	 	 
	 
	 

	 	 
	 

	 	Print Name

franchise agreement

 

 

EXHIBIT IV

TO FRANCHISE AGREEMENT

ADDENDUM TO

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

FRANCHISE AGREEMENT

AUTHORIZATION AGREEMENT

FOR ELECTRONIC FUNDS TRANSFERS

The undersigned depositor (“Depositor”) hereby (1) authorizes Rocky Mountain Chocolate Factory,
Inc. (“Company”) to initiate debit entries and/or credit correction entries to the undersigned’s
checking and/or savings account indicated below and (2) authorizes the depository designated below
(“Depository”) to debit such account pursuant to Company’s instructions. Debit entries shall be
limited to past due amounts owed by Depositor to Company arising from or related to the Franchise
Agreement between Depositor and Company dated                     , 20___.

	 	 	 	 	 

	 
	 	 	 
	Depository

	 	Branch	 	 
	 
	 	 	 	 
	 	 	 
	City

	 	State
	 	Zip Code
	 
	 	 	 	 
	 
	Bank Transit/ABA Number

	 	 	 	Account Number

This authority is to remain in full force and effect until Depository has received joint written
notification from Company and Depositor of the Depositor’s termination of such authority in such
time and in such manner as to afford Depository a reasonable opportunity to act on it.
Notwithstanding the foregoing, Depository shall provide Company and Depositor with 30 days’ prior
written notice of the termination of this authority. If an erroneous debit entry is initiated to
Depositor’s account, Depositor shall have the right to have the amount of such entry credited to
such account by Depository, if (a) within 15 calendar days following the date on which Depository
sent to Depositor a statement of account or a written notice pertaining to such entry or (b) 45
days after posting, whichever occurs first, Depositor shall have sent to Depository a written
notice identifying such entry, stating that such entry was in error and requesting Depository to
credit the amount thereof to such account. These rights are in addition to any rights Depositor
may have under federal and state banking laws.

	 	 	 	 	 	 
	 
	DEPOSITOR (Print Name)

 	 	 
	By:  	 	 	 
	 	Its: 	 	 	 
	 	Date: 	 	 	 
	 

franchise agreement

 

 

EXHIBIT V

TO THE FRANCHISE AGREEMENT

PERMIT, LICENSE AND CONSTRUCTION CERTIFICATE

     Franchisor
and Franchisee are parties to a Franchise Agreement dated                     , 20___ for
the development and operation of ROCKY MOUNTAIN CHOCOLATE FACTORY Store located at
                   
              
                    
                 
                       
        (the “Franchised Location”). In accordance with Section 5.6
of the Franchise Agreement, Franchisee certifies to Franchisor that the Franchised Location
complies with all applicable federal, state and local laws, statutes, codes, rules, regulations and
standards including, but not limited to, the federal Americans with Disabilities Act and any
similar state or local laws. The Franchisee has obtained all such permits and certifications as
may be required for the lawful construction and operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store, together with all certifications from government authorities having jurisdiction over the
site that all requirements for construction and operation have been met, including without
limitation, zoning, access, sign, health, safety requirements, building and other required
construction permits, licenses to do business, sales tax permits, health and sanitation permits and
ratings and fire clearances. The Franchisee has obtained all customary contractors’ sworn
statements and partial and final lien waivers for construction, remodeling, decorating and
installation of equipment at the Franchised Location. The Franchisee acknowledges that it is an
independent contractor and that the requirement of this certification does not constitute
ownership, control, leasing or operation of the Store or the Franchised Location by the Franchisor,
but rather provides notice to Franchisor that the Franchisee has complied with all applicable laws.
The Franchisee asserts that Franchisor may justifiably rely on the information contained in this
certificate.

	 	 	 	 	 
	 	FRANCHISEE:

 	 
	 	
 	 
	 	Individually 	 

	 	 	 	 	 
	 	AND:

(if a corporation or partnership)

 	 
	 	
 	 
	 	Company Name 	 

	 	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Title: 	 	 
	 	 	 	 	 
	 

franchise agreement

 

 

EXHIBIT VI

TO FRANCHISE AGREEMENT

CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

     AGREEMENT, dated
            
        , 20___, by and between Rocky Mountain Chocolate Factory,
Inc. (“Franchisor”) and            
                 
                  
                         
                 
                  
              , a(n) [directors, officer, partner, principal,
employee, agent or stockholder] of                      (the “Franchisee”). All capitalized terms not
otherwise defined herein shall have the meanings set forth in the Franchise Agreement, defined
below.

     The Franchisor has granted to the Franchisee, pursuant to that certain Franchise Agreement
dated                     , 20___, (the “Franchise Agreement”), the right to operate a ROCKY MOUNTAIN
CHOCOLATE FACTORY Store. The undersigned, in consideration of the receipt and/or use of the
Operations Manual and other information proprietary to the Franchisor, including but not limited to
methods, strategies and techniques developed by the Franchisor relating to operations, marketing,
training, advertising, trade secrets, recipes and other confidential data (collectively referred to
as “Proprietary Information”), agrees with the Franchisor as follows:

     (1) The undersigned acknowledges that the Operations Manual and other Proprietary Information
now or hereafter provided to Franchisee by the Franchisor is proprietary to the Franchisor and must
be held in the utmost and strictest confidence.

     (2) The undersigned represents and agrees that the undersigned will not, without the prior
written consent of the Franchisor, either:

     (i) Duplicate or otherwise reproduce the Operations Manual or other Proprietary
Information;

     (ii) Deliver or make available the Operations Manual or other Proprietary Information
to any person other than an authorized representative of the Franchisor;

     (iii) Discuss or otherwise disclose the contents of the Operations Manual or other
Proprietary Information to any person other than an authorized representative of the
Franchisor; or

     (iv) Use the Operations Manual or other Proprietary Information to his, her or its
commercial advantage other than in connection with the operation of the franchise created
and granted by the Franchise Agreement.

     (3) While the Franchise Agreement is in effect, neither the undersigned, nor any member of his
or her immediate family, shall engage in, or participate as an owner, officer, partner, director,
agent, employee, shareholder, member, manager, or otherwise in any other Competitive Business
without having first obtained the Franchisor’s written consent. For the purposes of this
Agreement, “Competitive Business” shall mean any business operating, or granting franchises or
licenses to others to operate, a retail, wholesale, distribution or manufacturing business with
either of the following attributes: (i) a business deriving a total of 10% or more of its gross
receipts from the sale, processing or manufacturing of one or a combination of any of the
following: boxed chocolate candies; or products which are the same as or substantially similar to
Store Candy; or products made with recipes, or processes, included in the Operations Manual; or
(ii) a business devoting a total of 10% or more of its retail display space to one or a combination
of the following: boxed chocolate candies; or products which are the same as or

franchise agreement

 

 

substantially similar to Store Candy; or products made with recipes, or processes, included in
the Operations Manual.

     (4) The undersigned has acquired from the Franchisor confidential information regarding
Franchisor’s trade secrets and franchised methods which, in the event of a termination of the
Franchise Agreement, could be used to injure the Franchisor. As a result, neither the undersigned,
nor any member of his or her immediate family, shall, for a period of 2 years from the date of
termination, transfer or expiration of the Franchise Agreement, without having first obtained the
Franchisor’s written consent, engage in or participate as an owner, officer, partner, director,
agent, employee, shareholder, member, manager, or otherwise in any Competitive Business which is
located or operating, as of the date of such termination, transfer or expiration, within a 10-mile
radius of the Franchisee’s former Franchised Location as defined in the Franchise Agreement, or
within a 10-mile radius of any other franchised or company-owned ROCKY MOUNTAIN CHOCOLATE FACTORY
Store, unless such right is granted pursuant to a separate agreement with the Franchisor.

     (5) The undersigned agrees that during the term of the Franchise Agreement, and for a period
of 2 years thereafter, it shall in no way divert or attempt to divert the business of customers, or
interfere with the business relationship established with customers of the Franchisee’s ROCKY
MOUNTAIN CHOCOLATE FACTORY Store or of any Competitive Business.

     (6) The undersigned agrees that all copyrightable works created by the undersigned, the
Franchisee or any of its owners, officers or employees in connection with the Store shall be the
sole property of the Franchisor. The Franchisee has assigned all proprietary rights, including
copyrights, in these works to the Franchisor without additional consideration. The undersigned and
the Franchisee hereby assign and will execute such additional assignments or documentation to
effectuate the assignment of all intellectual property, inventions, copyrights and trade secrets
developed in part or in whole in relation to the Store, during the term of the Agreement, as the
Franchisor may deem necessary in order to enable it, at its expense, to apply for, prosecute and
obtain copyrights, patents or other proprietary rights in the United States and in foreign
countries or in order to transfer to the Franchisor all right, title and interest in said property.
The undersigned and the Franchisee shall promptly disclose to the Franchisor all inventions,
discoveries, improvements, recipes, creations, patents, copyrights, trademarks and confidential
information relating to the Store which it or any of its owners, officers or employees has made or
may make solely, jointly or commonly with others and shall promptly create a written record of the
same. In addition to the foregoing, the undersigned and the Franchisee acknowledge and agree that
any improvements or modifications, whether or not copyrightable, directly or indirectly related to
the Store, shall be deemed to be a part of the Licensed Methods and shall inure to the benefit of
the Franchisor.

     (7) The undersigned agrees that it shall not take any action or make any statements to any
third parties that would constitute a criticism, denigration or disparagement of the Franchisor or
its Licensed Methods or would tend to be injurious to the reputation or goodwill of the Franchisor
or its Marks, or which in any manner may interfere with the business affairs or business relations
of the Franchisor.

franchise
agreement - 2

 

 

     IN WITNESS WHEREOF, this Agreement has been executed by the undersigned as of the date set
forth above.

	 	 	 	 	 
	 	AGREED TO BY:

 	 
	 	
 	 
	 	
 	 
	 	Print Name 	 
	 	 	 

	 	 	 	 	 	 
	 	ROCKY MOUNTAIN CHOCOLATE

FACTORY, INC.

 	 
	 	By:  	 	 
	 	 	Title: 	 	 

	 	 	 	 	 
	 	Franchisee Name:  	
 	 
	 
	 	Store Location:  	 	 
	 	 	 	 
	 

franchise
agreement - 3

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