What constitutes a material breach of the Bang Cookies franchise agreement regarding the Development Schedule?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees and represents that it has conducted its own independent investigation and analysis of the prospects for the establishment of Bang Cookies Shops within the Development Area, that Franchisee approves of the Development Schedule as being reasonable and viable, and that Franchisee recognizes that failure to achieve the results described in the Development Schedule will constitute a material breach of this Agreement with time being of the essence.
Franchisor possesses the right, at Franchisor's option, to terminate this Agreement and all rights granted to Franchisee hereunder, without affording Franchisee with any opportunity to cure such default, effective upon written notice to Franchisee, or automatically upon the occurrence of any of the following events: (a) if Franchisee Abandons Franchisee's obligations under this Agreement; (b) if Franchisee for four consecutive months, or any shorter period that indicates an intent by Franchisee to discontinue Franchisee's development of Shops within the Development Area; (c) if Franchisee becomes insolvent or is adjudicated bankrupt, or if any action is taken by Franchisee, or by others against the Franchisee, under any insolvency, bankruptcy or reorganization act, or if Franchisee makes an assignment for the benefit or creditors or a receiver is appointed by the Franchisee; (d) if Franchisee fails to meet its development obligations under the Development Schedule for any single Development Period including, but not limited to, Franchisee's failure to establish, open and/or maintain the cumulative number of Bang Cookies Shops in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Development Shop and/or any other Franchise Agreement between Franchisor and Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, failure to achieve the results described in the Development Schedule constitutes a material breach of the agreement. The franchisee acknowledges that they have independently investigated the prospects for establishing Bang Cookies shops within the Development Area and find the Development Schedule reasonable and viable.
The Development Schedule outlines the requirements for developing, establishing, and operating Development Shops. This includes the measurement periods (Development Periods) and the number of Development Shops that must be established and opened (Newly Opened Development Shops) within each Development Period. It also specifies the minimum number of cumulative Development Shops that must be open and in operation by the end of each Development Period.
Bang Cookies requires the franchisee to meet the Development Schedule requirements, including the number of shops developed, established, opened, and operated within the Development Area for each Development Period. The agreement emphasizes that "time is of the essence" regarding the franchisee's development obligations. Failure to comply with the Development Schedule can lead to immediate termination of the agreement and any future development rights.
Specifically, the franchisor can terminate the agreement without allowing the franchisee an opportunity to cure the default if the franchisee fails to meet its development obligations under the Development Schedule for any single Development Period. This includes failing to establish, open, and/or maintain the cumulative number of Bang Cookies Shops as per the Development Schedule.