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by Michael Paul (Mr. Paul).
Mr. Paul has a certain level of expertise in developing
restaurants. Because of Mr. Paul's expertise, Domino's Pizza
Inc. (Domino's) entered into an agreement (the Area Agreement)
with Pizza Park on August 1, 1980, giving Pizza Park the
exclusive right to develop (including marketing, advertising, and
public relations) Domino's franchises3 within San Diego County,
California. Pizza Park agreed to develop a minimum of 35
restaurants within 10 years or risk losing its territorial
protection.
The Area Agreement provided Pizza Park with compensation for
the development of the Domino's restaurants. During the period
of its territorial protection, Pizza Park was entitled to receive
50 percent of the royalty fees (the Compensation) that Domino's
received from each restaurant, excluding the restaurant with the
highest volume of royalty sales. Domino's was not obligated to
pay the Compensation under certain circumstances, including if
Pizza Park violated the Area Agreement in any way. Further, upon
termination of the Area Agreement for any reason, Pizza Park
would no longer be entitled to the Compensation for sales after
the effective termination date of the agreement.
3 We may interchangeably refer to a franchise as a
restaurant or a store.
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Last modified: May 25, 2011