How does the B Bops Development Agreement affect the terms of individual franchise agreements?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
Under the Development Agreement, you will be granted the exclusive right to establish Franchises in a defined trade area at sites to be approved by the Company. The exact size and boundaries of the trade area will be negotiated between the parties prior to execution of the Development Agreement, with the agreed upon definition of such trade area to be attached as an appendix thereto. The Company contemplates that the trade area will be defined by reference to various streets and highways forming the boundaries of the area and may consist of a portion of a city or county or may include one or more counties or cities. In exchange for the grant of the exclusive development rights, you are required to establish a specified number of Franchises in accordance with a development schedule negotiated between the parties and set forth as an appendix to the Development Agreement. So long as you comply with the development schedule and the Development Agreement otherwise remains in effect, the Company and its affiliates are prohibited from establishing any company-owned B-Bop's Restaurant in the trade area or from granting any third party the right to establish a Franchise in such trade area. Upon termination of the Development Agreement, however, your exclusive development rights are rescinded and, except as noted below with respect to any exclusive territory granted for individual Franchises already established, the Company is thereafter entitled to develop the trade area itself or to grant such right to third parties. The development schedule will supersede the terms of any franchise agreement with respect to the allowable period of time for construction
and opening of any Franchise developed pursuant to the Development Agreement.
Upon the Company's approval of a proposed site in the trade area (and assuming you are in compliance with the Development Agreement and all franchise agreements), the parties will enter into the then current form of franchise agreement, granting you the right to own and operate a Franchise at the specified site. Any franchise agreement executed pursuant to the Development Agreement will survive the termination or expiration of the Development Agreement and continue to govern the rights of the parties with respect to that particular Franchise for the remainder of its term. Under the provisions of each franchise agreement, you will be granted an exclusive territory providing certain territorial rights for the particular Franchise being established. In the event of termination or expiration of the Development Agreement, the exclusive territorial rights granted under the surviving franchise agreement will remain in effect for the remainder of the term of the Franchise, during which time the Company and its affiliates will be precluded from establishing any company-owned B-Bop's Restaurant in the exclusive territory or granting a Franchise to any third party to be located in the exclusive territory. The territorial rights granted under the current Franchise Agreement are discussed above.
The Developer is required by the Development Agreement to submit its financial statements to the Company for review and to consult with the Company regarding its proposals for financing development of the Franchises, all at the request of the Company from time to time.
The continuation of your exclusive rights in the trade area are not dependent on achieving a particular sales volume or market penetration at any Franchise or on any other contingency. As noted above, however, the continuation of such rights is dependent upon your compliance with the development schedule.
13. TRADEMARKS
Use of Marks. You will be licensed under the Franchise Agreement to use and display the Licensed Marks (including the "B-Bop's" mark and logo) in connection with operation of your Franchise. You will be required to comply at all times with the policies set forth in the Operations Manual regarding use and display of the Licensed Marks. You are prohibited from: (i) using any other trademark or trade name in connection with the Franchise, unless such use is first approved in writing by the Company; or (ii) displaying or otherwise using the Licensed Marks at any location other than the Franchise premises or in connection with any business or activity other than operation of the Franchise.
Source: Item 12 — TERRITORY (FDD pages 33–35)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, the Development Agreement significantly impacts the terms of individual franchise agreements, particularly concerning territory and development schedules. Under a Development Agreement, a franchisee is granted the exclusive right to establish B Bops franchises within a defined trade area, the specifics of which are negotiated and attached to the agreement. This agreement mandates the franchisee to adhere to a development schedule, also negotiated and included as an appendix. A key impact is that this development schedule supersedes any conflicting terms in individual franchise agreements regarding the timeframe for construction and opening of a franchise. So, the Development Agreement sets the pace and geographic scope for expansion, overriding standard franchise terms in these areas.
Once B Bops approves a site within the designated trade area, and provided the franchisee is compliant with both the Development Agreement and all franchise agreements, a franchise agreement is executed. This agreement grants the franchisee the right to operate a B Bops franchise at that specific location. Importantly, the franchise agreement survives the termination or expiration of the Development Agreement, remaining in effect for its full term. This ensures that the franchisee's rights to that particular location are protected even if the broader Development Agreement concludes. Each franchise agreement also includes an exclusive territory for the specific franchise.
Upon termination or expiration of the Development Agreement, the exclusive territorial rights granted under the surviving franchise agreement remain valid for the remainder of the franchise term. During this period, B Bops and its affiliates are restricted from establishing company-owned restaurants or granting franchises to third parties within that exclusive territory. This provides a layer of security for individual franchise locations even after the overarching development agreement concludes. The continuation of exclusive rights in the trade area depends on compliance with the development schedule, not on sales volume or market penetration.
Furthermore, the Development Agreement requires the franchisee to submit financial statements to B Bops for review and to consult with the company regarding financing proposals for franchise development, at B Bops's request. This highlights the ongoing oversight and involvement of B Bops in the financial aspects of the franchisee's development plans. This contrasts with a single-unit franchise agreement, where the franchisee is granted an exclusive territory consisting of the area within a two-mile radius of the franchise premises.