What happens to the franchise agreement executed pursuant to the B Bops Development Agreement upon termination or expiration of the Development Agreement?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 12 — TERRITORY (FDD pages 33–35)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, a franchise agreement executed under a Development Agreement remains in effect even if the Development Agreement is terminated or expires. Specifically, the franchise agreement will continue to govern the rights of both parties for the remainder of its term. This means that if a franchisee has opened a B Bops restaurant under a Development Agreement, the terms of that individual franchise will continue to be honored, regardless of what happens to the overarching Development Agreement.
Furthermore, the exclusive territorial rights granted under the surviving franchise agreement will also remain in effect for the duration of the franchise term. During this time, B Bops and its affiliates are restricted from establishing company-owned restaurants or granting franchises to third parties within the franchisee's exclusive territory. This protection ensures that the franchisee's investment and market area are safeguarded, even if the broader Development Agreement is no longer active.
However, upon termination of the Development Agreement, the franchisee's exclusive development rights for the broader trade area are rescinded. This means that while the existing B Bops franchise maintains its exclusive territory, the franchisee loses the right to develop additional franchises within the larger trade area. B Bops then has the right to develop the area themselves or grant those rights to other parties. This distinction is important for multi-unit developers to understand, as their expansion plans could be affected by the termination of the Development Agreement.