SETTLEMENT AGREEMENT

BETWEEN

THE UNITED STATES OF AMERICA,

AND

DOCTOR'S ASSOCIATES INC. AND SUBWAY REAL ESTATE CORP.

DJ 204-32-44


Settlement | Department of Justice Press Releases

    This matter arose initially out of complaints filed with the Department of Justice ("Department") by various individuals, and a subsequent investigation and compliance review by the United States of America ("the United States") into allegations that certain Subway® sandwich shops ("Shops") operated under franchises issued by Doctor's Associates Inc. ("DAI"), leased by Subway Real Estate Corp. ("SREC") or its affiliates, and subleased to Franchisees, were not accessible to individuals with disabilities in violation of Title I11 of the Americans with Disabilities Act, 42 U.S.C. §§ 12181 -89 ("the ADA" or "the Act"), and the Title III implementing regulations, 28 C.F.R. Part 36.

    DAI and SREC deny that they have violated the ADA, and nothing in this Agreement shall be construed as an admission of liability by DAI or SREC. DAI and SREC maintain that they are fully committed to compliance with the ADA.

    This Agreement: (1) provides a modified system whereby future Shops will be designed, constructed, and altered in a manner that complies with the ADA, including the ADA Standards for Accessible Design, 28 C.F.R. Part 36, App. A ("the ADA Standards"), so that, where feasible, the Shops are readily accessible to and usable by individuals with disabilities; and (2) provides a system for surveying and, where readily achievable, modifying the architectural barriers to access in existing Shops so that individuals with disabilities, including individuals who have mobility impairments, are not denied the opportunity to participate in or benefit from the goods, services and accommodations provided at the Shops. 42 U.S.C. §§ 12182(b)(l)(A)(i); 28 C.F.R. § 36.202(a).

    In order to avoid unnecessary and costly litigation, the Parties have jointly agreed to the disposition of this action by consent to the following terms:

Parties

  1. The United States, by and through the Department, represents the public interest and the Department is the federal agency responsible for enforcing Title III of the ADA.
  2. DAI is the franchisor of approximately 20,000 independently owned Shops operating under the trade name and using the mark Subway® throughout the United States. DAI does business under the Subway® trade marks.
  3. SREC and its various predecessors and affiliates, including Subway Restaurants, Inc., Subway Sandwich Shops, Inc., and Franchise Real Estate Leasing Corporation, among others, lease Shop premises and enter into subleases on behalf of DAI with Subway® Franchisees.
  4. The Shops are retail establishments devoted to the preparation and sale of sandwiches, salads and other food items. Restaurants or other establishments serving food or drink are places of public accommodation pursuant to 42 U.S.C. § 12181 (7) (B) and 28 C.F.R. § 36.104. Thus, the Shops are places of public accommodation. The Shops are also commercial facilities pursuant to 42 U.S.C. § 12181(2) and 28 C.F.R. § 36.104 because they are intended for nonresidential use and their operations affect commerce.

Contentions of the Parties

  1. The United States contends that DAI and SREC are public accommodations within the meaning of 42 U.S.C. § 12182(a) and 28 C.F.R. § 36.201(a). DAI and SREC deny this contention.
  2. The United States contends that DAI also participates in the design and construction of the Shops within the meaning of 42 U.S.C. § 12183(a)(l) and 28 C.F.R. § 36,401, and makes alterations at franchise locations within the meaning of 42 U.S.C. § 12183(a)(2) and 28 C.F.R. § 36.402. DAI admits that it participates in the initial design of the Shops, and contends that its designs have been ADA-compliant since at least 1993. DAI denies that it participates in the final design of the Shops, that it participates in the construction of the Shops within the meaning of 42 U.S.C. § 12183(a)(l) and 28 C.F.R. § 36.401, or that it makes alterations at franchise locations within the meaning of 42 U.S.C. § 12183(a)(2) and 28 C.F.R. § 36.402. DAI contends that the Shops are designed and constructed by the owner or Franchisee operator, or by the architect and contractor retained by the owner or operator.
  3. The United States contends that DAI and SREC are subject to the enforcement and relief provisions of 42 U.S .C. § 12188. Because DAI and SREC contend that they are not parties that may be held liable under 42 U.S.C. §§ 12182 or 12183 for violation of the ADA, they further contend that they are not subject to the enforcement provisions in 42 U.S.C. § 12188 and, in particular, that 42 U.S.C. § 12188(b)(2)(C)(ii) does not provide an appropriate remedy in the event of a violation of this Agreement.
  4. The Department contends that it has received complaints from individuals with disabilities alleging that they have been denied the opportunity to participate in or benefit from the goods, services and accommodations provided at certain Shops, because certain Shops contained architectural barriers to access. The Department contends that an investigation and compliance review by the Department pursuant to 42 U.S.C. 8 12 188(b)(l)(A)(i) and 28 C.F.R. § 36,502(a) found architectural barriers to access in certain Shops in violation of the ADA. DAI and SREC lack information or knowledge to admit or deny these contentions,
  5. As a result of the Department's investigation and compliance review of certain Shops, the Department contends that it has reasonable cause to believe that a pattern or practice of discrimination under the ADA has occurred within the meaning of 42 U.S.C. § 12188(b)(l )(B)(i) and 28 C.F.R. § 36.503(a). DAI and SPEC deny this contention.
  6. The Department contends that the discrimination alleged raises an issue of general pub1 ic importance within the meaning of 42 U.S.C. § 12 188(b)(l)(B)(ii) and 28 C.F.R. § 36.503(b). DAI and SREC deny this contention.
  7. The Department alleges that DAI has failed to design and construct Shops that are readily accessible to and usable by individuals with disabilities, in violation of 42 U.S.C. § 12183 (a) (1) and 28 C.F.R. § 36.401. DAI denies this contention. As noted above, DAI and SREC deny that they design or construct Shops within the meaning of 42 U.S.C. § 12183(a)(l) and 28 C.F.R. § 36.401, and contend that all designs proposed to Franchisees by DAI have been ADA-compliant since at least 1 993.
  8. The Department alleges that DAI and SREC have failed to make alterations in such a manner that, to the maximum extent feasible, the altered portions of the facilities and the paths of travel to the altered portions of the facilities, are readily accessible to and usable by individuals with disabilities, in violation of 42 U.S.C. §12183(a)(2) and 28 C.F.R. §§ 36.402 and 36.403. DAI and SREC deny that they are either required to or have the authority to make alterations at franchise locations within the meaning of 42 U.S.C. § 12183(a)(2) and 28 C.F.R. § 36.402 and 36.403,
  9. The Department alleges that DAI and SREC have failed to remove architectural barriers to access.in Shops that were in operation using the Subway® mark prior to January 26, 1 992 where such removal is readily achievable, in violation of 42 U.S.C. § 12182(b)(2)(A)(iv) and 28 C.F.R. § 36.304. DAI and SREC deny that they either required to or have the authority to make modifications at franchise locations within the meaning of 42 U.S.C. § 12183(b)(2)(A)(iv) and 28 C.F.R. § 36.304.

Definitions

  1. "Agreement" shall mean and refer to this Settlement Agreement.
  2. "DA" shall mean and refer to a Development Agent who acts as an agent for DAI, and the Development Agent's staff, including its Field Consultants.
  3. "DAI" shall mean and refer to Doctor's Associates Inc. and its assignees andlor successors-in-interest.
  4. "Department" shall mean and refer to the United States Department of Justice and, because the Department has designated enforcement authority for Title III of the ADA, 'Department" is used interchangeably with "United States."
  5. "Effective Date" shall mean and refer to the date that this Agreement is executed by the Parties.
  6. "Existing Shop" shall mean a shop that was operating at the Effective Date of this Agreement.
  7. "Evaluation Report" shall mean and refer to a report as described in Paragraphs 4 1-46 of this Agreement.
  8. "Franchise Agreement" shall mean and refer to any agreement between an owner of a Shop and DAI (or its predecessors) that authorizes the owner of the Shop to use any of the Subway® marks or participate in the Subway® System,
  9. "Franchisee" shall mean and refer to any persons and entities that have entered into a Franchise Agreement or license with DAI (or its predecessors) with respect to a Shop that has used, uses, or intends to use any of the Subway® marks or participate in the Subway® System.
  10. "Funds Availability Period" shall mean and refer to the time period that loan funds will be made available for Subway® Franchisees to make modifications to their Shops pursuant to the terms of this Agreement.
  11. "Future Shop" shall mean and refer to all Shops that will be authorized by DAI to open for business and operate using the mark Subway® at any time after the Effective Date of this Agreement,
  12. "Operations Manual" shalt mean and refer to the manual that describes the rules and procedures to be followed by Subway® Shops.
  13. "Party" shall mean and refer to DAI, SREC or the Department.
  14. "Remediation Loan Fund" shall mean and refer to the loan fund that DAI shall make available to Franchisees to finance Remediations pursuant to the terms of this Agreement.
  15. "Remediations" shall mean and refer to the architectural and other changes that must be made to the facility and path of travel within a Shop in order to bring that facility into compliance with the requirements of this Agreement, as defined in Section V of this Agreement.
  16. "Remodeling Program" shall mean and refer to the DAI program requiring Franchisees to implement certain specified modifications to decor on a set schedule, set forth in the Subway® Operations Manual.
  17. "SREC" shall mean and refer to Subway Real Estate Corporation and its various predecessors and affiliates, including Subway Restaurants, Inc., Subway Sandwich Shops, Inc., and Franchise Real Estate Leasing Corporation, among others, that lease Shop premises and enter into subleases on behalf of DAI with Subway® Franchisees.
  18. "Standards" shall refer to the ADA accessibility guidelines codified at 28 C.F.R. Pt . 36, App, A, Nothing in this Agreement is intended to subject DAI, SREC, DAs or Subway Franchisees to any more stringent accessibility standards than those set forth in the Standards and/or 42 U.S.C. §§ 12 181 -89 and 28 C.F.R. Part 36.

I.  Site Selection and Leases for Future Shops

  1. Site Selection. This section addresses practices for site selection and leases for shops after this Agreement is executed. When a site for a Future Shop has been selected by a prospective Franchisee and is being considered by DAI, SREC, or a DA, the site shall be assessed for compliance with the Standards, which shall include evaluation of, at a minimum,(1) the exterior site and facilities, including parking and accessible routes to and through the entrance, and(2) the interior portions of the building or facility to be opened for business as a Shop, including entrances, service counters and eating areas, accessible routes, and toilet rooms (if any). Such assessment shall include a determination of the feasibility for the Franchisee and/or the landlord of physical changes that would otherwise be required to bring the site, building, facility, or part thereof, into compliance with the Standards. DAI and SREC acknowledge that some existing shops are currently sited in locations that cannot readily be made accessible. DAI and SREC will make a good faith effort to lease sites that are accessible to and usable by individuals with disabilities or that, with reasonable modifications, can be made accessible to and usable by individuals with disabilities,
  2. Leases. When negotiating with a landlord regarding a Lease covering a Shop, including negotiations regarding a renewed or existing Lease, SREC or any other DAI-affiliated entity signing as the tenant of a Lease shall make good faith efforts to include term(s) that require that a site, building, premises or facility, or part thereof, be modified by the landlord, at the landlord's expense, sufficient to achieve compliance with the Standards for the areas, specifically including areas over which the landlord has exclusive authority and control, including, but not limited to, the entrance, parking, exterior and interior routes, and rest rooms (if any). If the tenant has authority and control over the entrance, parking, exterior and interior routes and restrooms (if any), SREC or any other DAI-affiliated entity signing as the tenant of a Lease shall make good faith efforts to provide that the Lease provides that SREC or any subtenant may make modifications to the premises necessary to comply with the Standards if the landlord fails to do so, and that for any structural changes, the landlord will not withhold consent unreasonably. Neither DAI nor SREC shall be liable for any failure by the landlord to comply with any of its obligations under the ADA, notwithstanding such good faith efforts.

II. Design of Future Shops and Shops Being Altered

  1. Before giving its approval to any floor plans and design documents that are submitted for approval by DAs and/or Franchisees of newly licensed and remodeled Shops, DA1 or SREC will verify that such floor plans and design documents submitted to DAI comply with the Standards, except with respect to such modifications that have been deemed to be unfeasible. At a minimum, said floor plans and design documents shall include specific reference to the requirements contained in the Standards, as appropriate, to assist Franchisees in the construction process,

III. Certification Program For New and Altered Shops

  1. Within 90 days after the Effective Date or as soon thereafter as is reasonably practicable, a Certification Program shall be established to provide that DAI receives Certifications of ADA Compliance for all Future Shops and Shops that are altered, as defined in the Standards. DAI will prepare the Certification of ADA Compliance form in consultation with the Department.
  2. Franchisees shall be required to design, construct or alter Shops in compliance with the Standards, To assist in this goal DAI shall offer, free of charge to its Franchisees, reasonable ADA consultant services during the design, construction or alterations phase of a Future Shop to answer Franchisee questions about the requirements of the Standards. These consultant services may be provided by a DAI employee or consultant trained in ADA compliance, and may be provided by telephone, electronic mail or other form of remote communication.
  3. DAI shall also require a DA to visit each Future Shop during its construction or alteration phase to assist the Franchisee in ensuring that the facility is built according to the Standards, Before giving its approval for a Franchisee to open for business and operate using the mark Subway®, DAI shall require that a DA complete a final inspection of the Shop with respect to compliance with the Standards. Said inspection shall include photographs of all applicable portions of the Shop.
  4. DAI shall require a Future Shop's Franchisee, with the assistance of the DA, to complete and submit to it a Certification of ADA Compliance, certifying that the Shop was constructed in accordance with the Standards or altered in accordance with the Standards to the maximum extent feasible. This Certification form, and any other forms provided for in this Agreement, may be modified as necessary in consultation with the Department. DAs shall also submit to DAI copies of the final inspection photographs. DAI shall retain the completed Certifications of ADA Compliance and photographs (or electronic versions of such documents) for the term of this Agreement.
  5. The completed Certificates of ADA Compliance shall be treated as set forth in Paragraphs 65 and 66 herein.

IV. Incorporating Accessible Features Into The Remodeling Program

  1. At the time this Agreement was executed, DAI and its Franchisees were undergoing a Remodeling Program for Existing Shops, The Remodeling Program shall provide that at each remodeled Shop, in accordance with 28 C.F.R. §§ 36.304 and 36,305, (1) there is at least one path of travel from the entrance to the food counter, and from the food counter to the seating area, that is at least 36" wide and free from obstructions; (2) the counter at the cash register can be no higher than 36"; (3) if the Shop provides tables, at least 1 table or 5% of the available tables must be useable by a customer in a wheelchair in accordance with the Standards; (4) drink dispensers and condiment areas shall comply with the Standards, 28 C.F.R. Pt. 36, App. A, § 4.2.5 and 4.2.6; and (5) any alterations to a rest room will comply with the relevant Standards, as set forth in 28 C.F.R. Pt. 36, App. A, §§4.17,4.18,4.19,4.22,4.24, and 4.26. The Franchisee or DA will certify that these elements are in compliance with the Standards. If, for any reason, DAI abandons the Remodeling Program, or where a Shop has completed its remodeling as of the Effective Date of this Agreement, the elements discussed in this section will be evaluated and remediated in conjunction with the Evaluation and Remediation Program described in Section V of this Agreement.

V. Creating and Implementing an Evaluation and Remediation Program

  1. DAI shall institute an ADA Evaluation and Remediation Program, whereby it will (1) require its Franchisees and DAs to evaluate the (a) accessibility of the approach and entryway to Shops; (b) accessibility of the route to the rest rooms; (c) accessibility of the rest rooms; and (d) where the remodeling has been completed as of the Effective Date of this Agreement, the elements described in paragraph 40, and (2) require Franchisees to make remediations that will make these areas compliant with the Standards, as provided in Paragraph 5 1 or 52, as applicable.
  2. DAI, in conjunction with the Department, shall prepare an Evaluation Report form and instructions for use by Franchisees and DAs, within thirty (30) days of the Effective Date or as soon as is practicable thereafter. Within a reasonable time thereafter, but before January 1,2008, DAI shall provide training to the DAs on the evaluation process, including an overview of the ADA Standards. DAI shall also retain an independent architect or similarly qualified consultant, in consultation with the Department, to provide advice and assistance in connection with the evaluation and remediation program. DAI shall consult with the Department with regard to the materials to be used in training and in connection with the evaluation and remediation program. From time to time, in consultation with the Department, DAI may select, retain, and train other or additional individuals to perform the evaluations.
  3. DAI shall require the DAs and Franchisees to complete fully the Evaluation Report for each Shop to determine whether architectural barriers to access or violations of the Standards exist. DAI shall be responsible for the costs of developing and implementing the Evaluation Program.
  4. DAI will designate one or more contact persons knowledgeable about the Evaluation Program and Report who, along with the independent architect or consultant, shall be made available on a reasonable basis to Franchisees and DAs to answer questions about the Evaluation Program and Reports. The independent architect or consultant and the contact person(s) shall also be made available on a reasonable basis (via telephone or electronic mail) to provide guidance regarding the ADA and the Standards to Franchisees and DAs, Any guidelines developed in conjunction with this education process shall be developed in consultation with the Department, and shall describe the applicable accessibility requirements in a manner readily understandable by a Franchisee.
  5. The DA shall conduct the ADA evaluation coincident with the time frame established for the remainder of the Remodeling Program. DAI shall establish a separate schedule for the ADA evaluation for those Shops where the remodeling has been completed as of the Effective Date of this Agreement. All ADA evaluations will be completed within five years of the Effective Date of this Agreement. The DA shall complete the Evaluation Report and promptly deliver such Report to DAI along with other submissions related to the Remodeling Program. The Department shall have the right to conduct reviews of completed Reports, and obtain copies thereof from DAI. The Evaluation Reports shall be treated as set forth in Paragraphs 65 and 66 herein.
  6. As part of the Evaluation and Remediation Program, DAI will inform Franchisees that they are required to remediate barriers to access consistent with the Standards as identified in the Evaluation Report, as described below. All steps taken pursuant to the Remediation Program shall conform to the requirements of the Standards. Accordingly, in conjunction with the Remodeling Program, DAI will stagger the required dates for Franchisees to complete remediations within five years of the Effective Date of this Agreement.
  7. As soon after the Effective Date as is reasonably practicable, DAI will modify Section 14 of the Operations Manual to (1) include "ADA Evaluation and Remediation Program" as an area of compliance; (2) provide that failure to participate in the ADA evaluation and remediation program will cause Franchisees to be subjected to the procedures and penalties described in Section 14 pertaining to non-compliance; and (3) reflect that a judicial, arbitral or administrative determination of non-compliance in this area will cause Franchisees to be subjected to the termination procedures.
  8. DAI will provide guidance to the Franchisee and DA regarding the Standards; the need to apply to local public authorities for permits or zoning variances, if applicable, for remediations that implicate public concerns such as ramps on public sidewalks if under Franchisee control, unisex bathrooms and other matters of general concern. DAI shall also provide the Franchisee and DA the contact information for individuals at DAI who can reasonably assist them in the remediation program.
  9. For purposes of making the remediations, Franchisees may each borrow up to §3000 from the Remediation Loan Fund, described in Paragraph 56 and Appendix B, infra. DAI will require the Franchisee to obtain estimates for the work required to achieve compliance with the Standards, as reflected in the Evaluation Report, and provide the estimates and work plan to DAI for the purposes of receiving a loan.
  10. DAI will inform Franchisees that they have an on-going obligation to remove barriers and comply with the ADA. Barriers that cannot be removed during the Evaluation and Remediation Program, due to insufficient funds, should be removed in succeeding years. None of the DA, DAI or SREC shall be liable for any delay by a Franchisee in removing said barriers.
  11. DAI will inform Franchisees that they are required to make remediations in the following order of priority, all as required by 28 C.F.R. § 36.304: (a) remediations described in paragraph 40, herein, if they have not been completed; (b) remediations necessary to provide access into the building, including modifications to the approach to the entrance door, where said approach is within the control of the Franchisee, and the entrance door itself, that will allow access to an individual using a wheelchair; and (c) remediations to a restroom that will enable an individual using a wheelchair to get into and use a restroom, including but not limited lo an accessible route to the restroom; entrance to the restroom; and installation of fixtures.
  12. If the DA and the Franchisee believe that providing accessibility would not be readily achievable, given factors relevant to the particular Shop, the Franchisee shall file with DAI an explanation of the reasons for this conclusion, including a detailed description of the physical conditions, cost estimates, and other relevant factors. DAI shall retain copies of these explanations (or electronic versions thereof) and provide them to the Department, upon the Department's request. These documents shall be treated as set forth in Paragraphs 65 and 66 herein.
  13. DAs shall review the remediations made under the Remediation Program within a reasonable period after their completion, in consultation with the independent architect or consultant retained by DAI. Upon completion, DAI shall also require that a DA complete a final inspection of the Shop with respect to compliance with the Standards. Said inspection shall include photographs of all applicable portions of the Shop. DAI shall require each Franchisee, with the assistance of the DA, to complete and submit to it a certification that the Shop was altered in accordance with the work plans and the applicable portion(s) of the Standards, except as set forth in the explanation of noncompliance. DAs shall also submit to DAI copies of the final inspection photographs. DAI shall retain the completed Certifications of ADA Compliance and photographs (or electronic versions thereof) for the term of this Agreement. These Certifications of ADA Compliance and photographs shall be provided to the Department upon the Department's request, and shall be treated as set forth in Paragraphs 65 and 66 herein.
  14. For remediations that are outside the authority and control of DAI, SREC and/or the Franchisee, such as parking, exterior routes, and restrooms owned or controlled by another entity or used in common with a Shop, the Franchisee shall make a good faith effort to have the other entity make the remediations as listed on the Evaluation Report, as provided above.
  15. DAI shall create a Remediation Loan Fund that will provide interest-free financing of remediations for any eligible Franchisee participating in the Remediation Loan Program. The Remediation Loan Program shall comply with the conditions set forth in Appendix B hereto.
  16. If, for any reason, DAI terminates or delays the Remodeling Program, the Evaluation Program and Remediation Program described herein will continue using the remodeling schedule in place at the time this Agreement was signed, or other schedule established for the Shops that were remodeled prior to the Effective Date of this Agreement.
  17. The Department conducted investigations of the Subway® Shops identified in Appendix A to this Agreement. For each Shop, the Department contends that the survey revealed barriers to access as indicated in Appendix A. To the extent that these alleged barriers exist, DA1 and/or SREC shall undertake to remove those barriers in accordance with the standards set forth in 28 C.F.R. §§ 36,304; 36.305; and 36.402-405.

VI. Training

  1. DAI shall provide training materials and/or instruction by an individual selected in consultation with the Department for all DAs on the Site Selection, Certification of ADA Compliance, Evaluation Program, and Remediation Program requirements described in this Agreement. The training materials and /or instruction shall explain the Standards, including requirements for exterior and interior routes, entrances, service counters, self-service dispensers, dining areas, and restrooms. Receipt of such training materials andlor instruction shall be mandatory for every incumbent DA and newly-appointed DA,

VII. Modifications of Policies and Procedures

  1. As soon after the Effective Date as is reasonably practicable, DAI shall amend the Remodeling Program guidelines, as set forth in the Operations Manual and other documents, to reflect the modifications to the Remodeling Program and the Evaluation and Remediation Programs described herein.
  2. As soon after the Effective Date as is reasonably practicable, DAI shall otherwise amend its Offering Circular for Prospective Franchisees as Required by the Federal Trade Commission; Operations Manual and future Franchise Agreements made between DAI and its Franchisees as relevant to reflect its obligations under the foregoing paragraphs. DAI and SREC shall, as soon after the Effective Date as is reasonably practicable, adopt policies and procedures for requiring the Franchisees to maintain the accessible features in existence as of the date of the entry of this Agreement and those remediations required by this Agreement in good and usable condition in compliance with 28 C.F.R. § 36.211, as long as the Shops operate under the Subway® trademark. VIII. Reporting and Notification
  3. For the duration of this Agreement, and beginning as soon after the Effective Date as is reasonably practicable, DAI and SREC shall maintain electronic databases that shall include summaries of the Evaluation Reports, the amount of loan requested by each Franchisee, the amount of money loaned to each Franchisee, and the Certificates of ADA Compliance. A copy of the databases will be provided free of charge to the Department upon reasonable request, but the Department shall not make such request more frequently than at six-month intervals. DAI and SREC shall also maintain any other accounts and records necessary to reflect the performance of their obligations under this Agreement. Such accounts and records shall be maintained in sufficient detail to permit the Department to verify that all acts required of DAI and SREC by this Agreement are actually performed. The accounts and records shall be made available to the Department at its request, and shall be treated confidentially as set forth in Paragraphs 65 and 66 herein.
  4. DAI shall also produce for the Department a record of work performed by DAI in furtherance of the requirements of this Agreement, Said record shall include: copies of changes made under this Agreement to the Operations Manual, Offering Circulars, and Franchise Agreement; a copy of the forms to be used for the loan agreement and promissory note in the Remediation Loan Programs; a description of the Remediation Loan Program, together with form letters to Franchisees and DAs regarding same; and the ADA training schedule, subject matter covered, and attendance rosters. Upon the Department's reasonable request, said record may also include copies in DAI's custody and control of any Evaluation Report, description of remediation work plans, and post-remediation Shop photographs and certifications for the architectural elements of any given Shop that is subject to remediation. Each of these records and documents, and each and every other document that DAI, SREC, DAs or Franchisees are required to create or maintain as a result of this Agreement shall be treated as set forth in Paragraphs 65 and 66 herein.
  5. During the term of this Agreement, DAI will not object to the Department, at any time, inspecting any Shop premises and reviewing DAI's compliance with the Agreement. As a part of such review, the Department may require DAI to permit the Department to photograph and survey any Shop for purposes determining if DAl is complying with the provisions of this Agreement. DAI will also produce for the purpose of photocopying such other records in its possession or control related to implementation of this Agreement as are reasonably requested by the Department.
  6. During the term of this Agreement, DAI shall notify the Department if any individual brings any lawsuit, or administrative complaint that cannot be addressed through internal DAI complaint resolution mechanisms, alleging discrimination on the basis of disability by DAI, SREC, or any of the Shops. Such notification shall be provided, in the case of a lawsuit, in writing within thirty (30) days of when DAI has received notice of the allegation; and in the case of an administrative complaint, within thirty (30) days of when DAI has determined that it cannot be addressed through internal DAI complaint resolution mechanisms. The notification shall include, at a minimum, information describing the nature of the allegation and the name, address and telephone number of the individual bringing the allegation.
  7. All parties to this Agreement acknowledge that information and documents produced by DAI or SREC to the Department during its investigation of the matters discussed herein and information and documents related to this Agreement, including, but not limited to, the Site Selection Reports, Evaluation Reports, Certification of ADA Compliance Forms, the accounts and databases described herein, and other DAI materials not generally available to the public, were and are so produced for the sole purpose of developing and monitoring DAI's compliance with this Agreement. All such records, reports and documents produced by DAI or SREC pursuant to the terms of this Agreement, including any copies of such materials, shall be kept confidential and used andlor disclosed solely for purposes related to the Agreement, The Department shall not disclose such information to any entity or individual except (1) with the express consent of DAI, or (2) with reasonable prior notice to DAI, (a) where such disclosure is reasonably necessary to monitor, administer or enforce this Agreement, or (b) as required under applicable laws. Upon expiration of this Agreement, the Department shall return to DAI all information and documents produced by DAI or SREC during the term of this Agreement, as permitted under the Federal Records Act, Further, other than in connection with the enforcement of this Agreement, the Department shall not use any documents prepared as part of DAI's compliance with this Agreement, or any other information collected from Franchisees or DAs in connection with this Agreement, as the basis for instituting, or as evidence in, a civil action against DAI or SREC.
  8. Unless DA1 has materially failed in good faith to comply with its obligations under Sections IV-VI of this Agreement, neither DAI nor SREC shall have any liability as a result of the inaccuracy of information contained in reports or certifications provided by Franchisees as required herein.
  9. All notices and reports required by this Agreement shall be sent to the Parties at the following addresses or at such other address as the Parties may designate in writing in the future: For notices to the Department: John L. Wodatch Chief Disability Rights Section-NYA Civil Rights Division U.S. Department of Justice 950 Pennsylvania Avenue, N. W. Washington, D.C. 20530 For notices to DAI and SREC; David A. Cousins Dispute Resolutions Group Doctor's Associates Inc., 325 Bic Drive Milford. CT 06460

IX. Payment

  1. As for a civil penalty, DAI or SREC shall, within thirty (30) days of the Effective Date of this Agreement, pay to the United States the amount of TWENTY-FIVE THOUSAND DOLLARS ($25,000). This payment shall be made by check payable to the United States Treasury and mailed to the Department official listed in paragraph 67 of this Agreement.

X. Enforcement Provisions

  1. Failure by the Department to seek enforcement of this Agreement with regard to one provision shall not be construed as a waiver of its right to do so with regard to the same or other provisions of the Agreement. Should new disputes arise between the Parties involving other than the fulfillment of the terms of this Agreement those disputes are independent matters which must be presented to the appropriate administrative or judicial forum.
  2. This Agreement is entered into by the Parties for the purpose of compromising disputed claims and avoiding the expenses and risks of litigation, and nothing in this Agreement is intended to constitute an interpretation of the legal requirements of the ADA by the Department. Likewise, the entry of this Agreement shall not constitute admission of liability or fault on the part of DAI or SREC.
  3. The Department is authorized, pursuant to 42 U.S.C. § 12188(b)(l )(B), to bring a civil action under Title III enforcing the ADA in any situation where a pattern or practice of discrimination is believed to exist or a matter of general public importance is raised. In consideration of the terms of this Agreement, except as provided in Paragraphs 72-75 infra, the United States agrees to refrain from filing a civil lawsuit or pursuing any other civil remedies in this matter against DAI, SREC, or any DA relating to the facts addressed by this Agreement or to facts discovered by the Department in its investigation of any complaint or compliance review, whether received by the Department before or during the time period of this Agreement. The Department also agrees that DAI and SREC shall not be liable, and the Department will not attempt to hold DAI or SREC liable, for licensees' or franchisees' violations of the ADA or of any of the policies set forth in this Agreement for the duration of this Agreement, unless DAI has materially failed in good faith to comply with the terms of this Agreement.
  4. Nothing in this Agreement shall preclude the Department from investigating complaints received after the effective date of this Agreement against a Franchisee, or from filing a civil action against a Franchisee, for the Franchisee's violation of the ADA.
  5. If any Party notifies the other Parties in writing of a dispute over the performance of this Agreement, the Parties agree to negotiate in an effort to resolve the dispute between themselves. If they are unable to resolve the dispute directly within sixty (60) days of receipt of notification of a dispute, they agree to participate in non-binding mediation to take place in Washington, D.C., before a mutually agreed upon mediator, Unless otherwise agreed by the Parties, the mediation shall be completed within sixty (60) days of the mediator's confirmation of his or her appointment to resolve a dispute under this section of the Agreement. The Parties agree to share the costs of mediation equally. Neither Party shall bring a court action to enforce the Agreement without first complying with this paragraph.
  6. Should litigation be necessary to enforce the terms of this Agreement, all parties agree to the jurisdiction and venue of the U.S. District Court for the District of Connecticut. In a civil action to enforce this Agreement, either Party may seek any appropriate relief.
  7. In the event that DAI or SREC fails to comply in a timely fashion with this Agreement without obtaining advance written agreement from the Department, and if the failure to comply continues uncured for a period of thirty (30) days following receipt of a notice of intent to take enforcement action, all terms of the Agreement then remaining to be performed shall become immediately enforceable in United States District Court.
  8. This Agreement shall be binding on DAI and SREC, their agents and employees. In the event that either entity seeks to transfer or assign all or part of its interest affected by this Agreement, and the successor or assign intends on carrying on the same or similar activities, as a condition of sate, DAIISREC shall obtain the written accession of the successor assign to any obligations remaining under this Agreement for the remaining term of this Agreement.
  9. This Agreement constitutes the entire agreement between the Parties on the matters raised herein, and no other statement, promise, or agreement, either written or oral, made by any of the Parties or agents of any of the Parties that is not contained in this written Agreement shall be enforceable regarding the matters raised herein,
  10. This Agreement shall be in full force and effect for a period of five (5) years after the Effective Date of this Agreement, unless both parties agree in writing to extend or shorten it.
  11. DAI guarantees SREC's performance of this Agreement,
  12. If any term of this Agreement is determined by any court to be unenforceable, the other terms of this Agreement shall nonetheless remain in full force and effect.
  13. The Department, DAI, and SREC shall bear their own costs, including attorneys' fees, in connection with the negotiation and execution of this Agreement, except that all parties retain the right to seek costs for any matter that, in the future, may arise from this Agreement and require resolution by the Court.
  14. The Effective Date of this Agreement is the date of the last signature below. SIGNED this day of Agreed and Consented to:



    SIGNED this day of        July 31, 2007       
    Agreed and Consented to:
    For the United States of America

    ALBERTO R. GONZALES
    Attorney General of the United States

    Wan J. Kim
    Assistant Attorney General
    Civil Rights Division

    John L. Wodatch, Chief
    Philip L. Breen, Special Counsel
    Allison M. Nichol, Deputy Chief
    Disability Rights Section
    _________________________
    Laura Einstein
    Trial Attorney

    Disability Rights Section
    Civil Rights Division
    U.S. Department of Justice
    905 Pennsylvania Avenue N.W.
    Washington, D.C. 20530

    Dated:________________________

    For Doctor's Associates Inc. and Subway Real Estate Corp,:

    By:_____________________________
    William A. Darrin Jr.
    325 Bic Drive
    Milford, CT 06460

    Dated:        7/27/06          


  15.  



    Appendix A

    List of Stores
    Subway Shops Inspected by the Department of Justice:

     

    1. Morgantown,W.Va 400 High Street
    2. Westover, W.Va. 873 Fairmont
    3. Lexington, Ky. 409 Waller Avenue
    4. Lexington, Ky. 694A New Circle Road
    5. Wilmore, Ky. 100 East Main Street
    6. Tucker, GA 4010 Lawrenceville Hgwy
    7. Fairmont, W.Va. 919 Morgantown Avenue
    8. Bangor, ME 621 Hammond Street
    9. Bangor, ME 120 State Street
    10. Brewer, ME 428 Wilson Street
    11, Orono, ME 18 Mill Street
    12. Orono, ME 10 Still Avenue
    13. Waterville, ME 129 Main Street
    14. Waterville, ME 270 Kennedy Memorial Drive
    15. Newport, ME Outer Main Street
    16. Pittsfield, ME 6 Somerset Plaza
    17. Winslow, ME 5 Cushman Road
    18. Old Town, ME 33 North Main Street

     

    .

     

    Appendix B

    Terms of Remediation Loan Fund

    1. The funds that DAI makes available for use in the Remediation Loan Fund shall be used solely to finance the actual cost of Remediations by Franchisees.
    2. The Remediation Loan Fund shall be available to lend funds to any Franchisee of a Shop in good standing in accordance with the procedures set forth in this Agreement with no requirement for the Franchisee to prove or assert financial need.
    3. The amount of funds lent from the Remediation Fund to any individual Franchisee shall not exceed the lesser of §3,000 or the total of the actual costs of renovations to conform with the Standards at the Franchisee's Shop(s).
    4. The period of time that a Franchisee shall have to repay funds received from the Remediation Loan Fund shall be twenty-four (24) months, with repayments to be made on a weekly basis in equal installments through DAI's preauthorized electronic funds transfer program, until the principal is repaid. At the Franchisee's option, the repayment period may be shorter than twenty-four (24) months. A Franchisee's obligation to repay funds received from the Remediation Fund shall begin thirty (30) days after the date on which DAI first makes payment for any Remediations to the Franchisee from the Remediation Loan Fund. DAI shall have the right to accelerate repayment by the Franchisee if the Franchisee's Franchise Agreement to operate in the Subway® system is terminated consistent with the Franchise Agreement and applicable law for failure to pay any monetary obligation to DAI when due, and upon Franchisee's transfer of any interest in the Franchise Agreement.
    5. DAI is not required to lend monies from the Remediation Fund to any Franchisee whose Franchise Agreement or sublease is scheduled to expire before the standard two-year repayment period will have run, or Franchisee gives notice under the Franchise Agreement of a proposed transfer, except that DAI shall have the option of allowing the Franchisee to sign the then-current Franchise Agreement as a condition of receiving a loan from the Remediation Loan Fund.
    6. f. DAI is not obligated to permit participation in the Remediation Loan Program by any Franchisee who is in material default under a Franchise Agreement andlor a sublease except that an otherwise eligible Franchisee who cures any such default shall be permitted to participate in the Remediation Loan Program; and DAI shall have the ability to call, accelerate and collect any outstanding loan under the Remediation Loan Program in the event of termination of the Franchise Agreement or sublease.
    7. Franchisees shall receive loans from the Remediation Loan Fund without any obligation to pay interest on the funds. However, DAI may impose a late fee of not more than 10% per month on the balance due, and also collect any expenses due to collection efforts, if the payment is more than 30 days overdue. Any Franc hisee who is delinquent in repayment of funds due under the Remediation Loan Program shall be subject to the provisions in the Franchisee's Franchise Agreement relating to failure to pay money when due.
    8. DAI shall require each Franchisee to execute a loan agreement and promissory note as a condition of participation in the Remediation Loan Program but shall not require a Franchisee to pledge collateral as a condition for receiving a loan from the Remediation Loan Program. The forms used for the loan agreement and promissory note shall be subject to the Department's prior approval.
    9. Franchisee requests for loans from the Remediation Loan Program must be made no later than 120 days after completion of the Evaluation, and no fewer than 60 days before work begins on the required renovations. An Election to Participate in the Loan Program is made when a Franchisee provides written notice to DAI that the Franchisee is interested in participating in the Remediation Loan Program. For Franchisees who have already completed the renovations under the Renovation Program, or who are currently making the renovations, they must make an Election to Participate no later than six months following the completion of the Evaluation.
    10. At any time following its Election to Participate in the Remediation Loan Program but prior to the date when the Franchisee executes a loan agreement and promissory note for the use of funds from the Loan Program, a Franchisee has the right to opt out of the Remediation Loan Program.
    11. In addition to requiring a Franchisee to provide cost estimates and a work plan, DAI may institute procedures it deems necessary to verify that the loan is being used only for purposes of ADA compliance.
    12. DAI shall designate one or more contact persons knowledgeable about the Remediation Loan Program who shall be available to Franchisees by telephone to answer Franchisees' questions about the mechanics of the Loan Program.
    13. The amount of funding that will be made available for Franchisees in the Remediation Loan Fund pursuant to this Agreement is based on an estimate of the costs of Remediations at Shops covered under the Remodeling Program and, thus, may not cover the actual costs of performing all Remediations at all Shops. Upon expiration of the Funds Availability Period, DAI shall have no liability to Franchisees otherwise eligible to participate in the Remediation Loan Program.



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August 27, 2007