What is the 'Development Schedule' and how does it affect a Bang Cookies franchisee?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
see's first Development Shop. Franchisee's second Development Shop and all Development Shops thereafter, respectively, are to be developed and operated by Franchisee pursuant to the terms and conditions of Franchisor's then current Franchise Agreement which Franchisee must sign, on or before the earlier of: (a) The date Franchisee (subject to Franchisor's approval of the Shop Location) executes a lease for the Shop Location for each respective Development Shop; (b) The date Franchisee (subject to Franchisor's approval of the Shop Location) enters into a purchase agreement for the real estate for the Shop Location for each respective Development Shop; or (c) six months prior to the date that each respective Development Shop must be open and in operation pursuant to the Development Schedule.
4.4 DEVELOPMENT SCHEDULE
Franchisee agrees that to induce Franchisor to enter into this Agreement, Franchisee agrees to develop, establish and operate Development Shops in strict accordance with the requirements of a development schedule (the "Development Schedule"). The Development Schedule, among other things, sets forth and defines each respective measurement period / measurement periods (each, respectively, a "Development Period") and the number of Development Shops that Franchisee must establish and open (a "Newly Opened Development Shop(s)") within the respective Development Period and, the minimum number of cumulative Development Shops (the "Cumulative Development Shops") that must be open and in operation as of the last day of each applicable Development Period.
The Development Schedule is set forth in the Development Information Sheet.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the Development Schedule is a critical component of the Multi-Unit Development Agreement. It outlines the specific timeline and requirements for a franchisee to develop, open, and operate multiple Bang Cookies shops within a defined Development Area. This schedule sets forth the 'Development Period,' which is the measurement period, and specifies the number of 'Newly Opened Development Shops' that must be established within each period, as well as the 'Cumulative Development Shops' that must be open and operating by the end of each period. The specifics of the Development Schedule, including the Development Period, number of new shops, and cumulative shops, are detailed in the Development Information Sheet, which is attached as Schedule A to the agreement.
For a Bang Cookies franchisee, adhering to the Development Schedule is essential. The franchisee agrees to open and commence operations of each new Development Shop according to the schedule. They must also maintain the minimum cumulative number of operating shops as per the schedule for each Development Period. The agreement emphasizes that 'time is of the essence' regarding these development obligations. Failure to comply with the Development Schedule can lead to immediate termination of the agreement and the loss of any future development rights.
Moreover, the franchisee acknowledges the reasonableness and viability of the Development Schedule, confirming they have independently investigated the prospects for establishing Bang Cookies shops within their Development Area. This acknowledgment underscores the franchisee's responsibility to meet the agreed-upon targets. While the franchisee is in compliance with the Development Schedule, Bang Cookies agrees not to open, operate, or license any third party to open or operate shops within the Development Area, providing a level of exclusivity. However, the operating territories for each Development Shop may be smaller than the overall Development Area, as determined by the individual Franchise Agreement for each shop.
In practical terms, a prospective Bang Cookies franchisee needs to carefully review and understand the Development Schedule before signing the Multi-Unit Development Agreement. They should assess whether the required pace of development is feasible given their resources, market conditions, and operational capabilities. Failure to meet the schedule is considered a material breach of the agreement, with significant consequences, including termination. Therefore, a thorough due diligence process is crucial to ensure the franchisee can fulfill these obligations.