ITEM 1
THE FRANCHISOR AND ANY PARENTS. PREDECESSORS. AND
AFFILIATES The Franchisor
Daily Grind Unwind, Inc. ("us",
"our" or "we") is the franchisor. We maintain our principal
place of business at 307 South Loudoun Street, Winchester, Virginia 22601 (540.450.2701). We do not maintain sales offices at any other location.
We are a Virginia corporation, and were originally
incorporated on November 16, 1999 under the name "Daily Grind of
Winchester, Inc." We changed our corporate name to "Daily Grind
Unwind, Inc." in March 2007. We conduct business under the names and marks
of "Daily Grind," "Daily Grind Unwind," and "Escape
the Daily Grind," and do not conduct business under any other name.
We franchise the right to operate a "Daily Grind
Unwind" restaurant (the "Restaurant"). We began to offer these
franchises in 2000. We do not offer any franchise other than as described in
this disclosure document, and do not engage in any business activity other than
the franchising and operation of restaurants using the "Daily Grind
Unwind" names and marks. As of December 31, 2007, 49 franchised
"Daily Grind Unwind" restaurants were in operation and we also
operated one company-owned "Daily Grind Unwind" restaurant in Virginia through an affiliate (discussed below). We have never offered franchises in any
other line of business.
Our agents for
service of process are listed in Exhibit F to this disclosure document.
Our Parent.
Predecessors and Affiliates
We do not have
any parents.
Daily Grind LLC was established as a Virginia limited
liability company on September 14, 1995. It operated several coffee houses in Winchester, Virginia, which were later sold. In 2000, the owners of Daily Grind LLC
transferred those operations into our company (Daily Grind Unwind, Inc.). As of
December 31, 2004, Daily Grind LLC ceased its existence. Daily Grind LLC never
offered franchises in any line of business.
Although we do not own any
company stores, Edward Chapman and Rick Rawlings, as our sole shareholders,
have an ownership interest in a company that operates one Restaurant, named
"Mocha Remm LLC" (a Virginia limited liability company, organized in
February 7, 2005, with its principal place of business at 460 Turner Street,
Blacksburg, Virginia 24060 ("Mocha Remm"), in which Mr. Chapman and
Mr. Rawlings together own 100% of the membership interests). Mocha Remm has
never offered franchises in any line of business.
Our subsidiary, Escape the Daily Grind LLC
("LLC"), purchased the mark ESCAPE THE DAILY GRIND, including all of
the goodwill associated with that mark, and the federal trademark registration
for that mark, from Boyd Coffee Company of Portland, Oregon in November 2005.
Escape the Daily Grind LLC has licensed the ESCAPE THE DAILY GRIND mark to us
for our use and for licensing to our franchisees. Escape the Daily Grind LLC, a
Virginia limited liability company, was organized on September 13, 2005, and
has the same principal place of business as ours. It has not offered franchises
in any line of business.
The Franchise Rights
Offered
A Restaurant will be operated in a building that bears
our trade dress (interior, exterior, or both). A Restaurant specializes in the
sale of Proprietary Items, including coffee beverage, and other additional
products as we may specify periodically, as well as non-proprietary Items such
as beverages, Danish, muffins, sandwiches, gelato, foodstuffs, and other food
and beverage items for on-premises and carry-out consumption (collectively, the
"Products").
Franchise Agreement
We offer to enter into franchise agreements ("Franchise
Agreements") with qualified corporations and persons ("you") that wish to establish and
operate Restaurants. (In this disclosure document, "you" means the
person or legal entity with whom we enter into an agreement. The term
"you" also refers to the direct and indirect owners of a corporation,
partnership, limited liability company, or limited liability partnership that signs
a Franchise Agreement as the "franchisee.")
Under a Franchise Agreement, we will grant you the
right (and you will accept the obligation) to operate a Restaurant at an
agreed-upon specified location (the "Approved Location").
Daily Grind Unwind Restaurants
Restaurants are characterized by our system (the "System"). A Restaurant offers a full
list of Products to customers, and has facility for on-premises consumption. A
full Restaurant is typically between 1,400 to 1,800 square feet in size. Some
of the features of our System are a specially-designed building or facility,
with specially developed equipment, equipment layouts, signage, distinctive
interior and exterior design and accessories, Products, procedures for
operations; quality and uniformity of products and services offered; procedures
for management and inventory control; training and assistance; and advertising,
marketing, and promotional programs. We may periodically change and improve
parts of the System.
You must operate your Restaurant in accordance with
our standards and procedures, as set out in our Confidential Operating Manual
(the "Manual").
We will
allow you access to the Manual for the duration of the Franchise Agreement. In
addition, we will grant you the right to use our marks, including the marks
"Daily Grind," "Daily Grind Unwind," "Escape the Daily
Grind," and any other trade names and marks that we designate in writing
for use with the System (the "Proprietary Marks").
Three-Pack Developers
We also offer to certain qualified individuals the
opportunity to sign "3-pack" agreements. Currently we only offer
these agreements for the development of three Restaurants ("3-Pack
Agreements"). If you sign a 3-Pack Agreement, you will not have to
pay a separate development fee. But when you sign the 3-Pack Agreement, you
will also sign all three Franchise Agreements, and we will reduce by $5,000 the
initial franchise fee for each of the three Restaurants (your reduced total
initial franchise fee for all three Restaurants will be $75,000, payable when
you sign the 3-Pack Agreement).
Area Developers ("Area Representatives")
We also offer to certain qualified individuals a
Development Agreement ("Development Agreement"). If we enter into a Development
Agreement with you, then you will solicit, screen, evaluate, and service
prospective franchisees to operate franchised Restaurants under the System in
the territory designated in the Development Agreement (the "Development
Territory"), and for which you will receive compensation from us in consideration of
your services. You will identify these prospective franchisees for us and we
will have the right to consider and sign agreements with those that we deem
qualified to become franchisees. You will not be asked to enter into any
agreement with a prospective franchisee or a franchisee (and you may not do so
in any case). Once a prospective franchisee is approved, we will enter an
agreement with that prospect. You are not required to own or operate any
Restaurants in the Development Territory. We will be solely responsible for the
preparation and costs of franchise disclosure documents, agreements, and state
franchise registrations that may be required. In states where registration of a
franchise offering is required, you will not be able to speak with prospective
franchisees until we have notified you that our registration in that state has
taken effect, been renewed, or amended, as may be the case. Upon our request,
you must provide us with information about yourself and your operations so that
we can prepare and update our franchise disclosure documents and registrations
(and, in some cases, broker registration filings as well). Although the rights
conveyed under a Development Agreement are not "franchise" rights, we
include information about this agreement in this disclosure document so that
you will have additional information about us, the System, and the Franchise
Agreements that we offer.
Industry-Specific
Regulations
You must comply with all local, state, and federal
laws that apply to your Restaurant operations, including for example health,
sanitation, no-smoking, EEOC, OSHA, discrimination, employment, and sexual
harassment laws. The Americans with Disability Act of 1990 requires readily
accessible accommodation for disabled persons and therefore may affect your
building construction, site elements, entrance ramps, doors, seating,
bathrooms, drinking facilities, etc. For example, you must obtain real estate
permits (e.g., zoning), real estate licenses, and operational licenses. There
are also regulations that pertain to sanitation, labeling, food preparation,
food handling, and food service. If you ask and we grant our approval to you
for serving beer and wine, you will also need to obtain permits and approvals
if that is required in your locality. If you sign a Development Agreement, you
will also have to comply with any state and federal franchise laws and
regulations that may apply to your activities. You must also comply with all
applicable federal, state, and local laws and regulations during the operation
of your Restaurant. You should consult with your attorney concerning those and
other local laws and ordinances that may affect your Restaurant''s operation.
Competition
You can expect to compete in your market with
locally-owned businesses, as well as with national and regional chains, that
offer coffee, other food and beverage items, and related products, which may
compete with the products offered at a Restaurant. The market for these items is
well-established and very highly competitive. Coffee houses compete on the
basis of many factors, such as price, service, store location, product quality,
and store promotions and marketing programs. These businesses are often
affected by other factors as well, such as changes in consumer taste, economic
conditions, seasonal population fluctuation, and travel patterns. To the extent
that customers may be able to buy "Daily Grind Unwind" brand products
from other sources (for example, from our website and supermarkets, should our
products ever be offered in those venues) you may appear to, or actually,
compete with other sellers of these branded products.
