What is the relationship between the Franchise Agreement and the Development Agreement for Bang Cookies?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
ing, without limitation, the grant of a collateral assignment; (c) a merger, consolidation, exchange of shares or other ownership interests, issuance of additional ownership interests or securities representing or potentially representing ownership interests, or redemption of ownership interests; (d) a sale or exchange of voting interests or securities convertible to voting interests, or an agreement granting the right to exercise or control the exercise of the voting rights of any holder of ownership interests or to
control the operations or affairs of Franchisee; and/or (e) the legal and/or equitable transfer and/or sale of an Owners interests and/or voting rights in Franchisee.
SECTION 2 DEVELOPMENT RIGHTS
2.1 DEVELOPMENT GRANT AND DEVELOPMENT OBLIGATIONS
Franchisor grants to Franchisee the right, and Franchisee accepts the right and undertakes the obligation to develop Bang Cookies Shops, each to be developed, opened and operated by Franchisee within the Development Area (each, a "Development Shop"), provided that Franchisee develops, opens and operates such Development Shops in strict accordance with the Development Schedule, and, in accordance with the terms and provisions of each respective Franchise Agreement.
The aggregate number of Development Shops (including the First Development Shop) (collectively, referred to as the "Total Development Shops") that are authorized by this Agreement and required for development, subject to the terms of this Agreement and each respective Franchise Agreement, is set forth and defined in the Development Information Sheet.
The Development Area is and shall constitute the geographic area set forth and identified in the Development Information Sheet.
The Development Information Sheet is attached as Schedule A to this Agreement and is incorporated into and made a part of this Agreement. To be effective the Development Information Sheet must be completed and signed by Franchisor.
Franchisee agrees that Franchisee must: (a) open and commence the operations of each new Development Shop in accordance with the Development Schedule for each respective Development Period, as set forth in this Agreement; and (b) maintain in operation the minimum cumulative number of Development Shops in accordance with the Development Schedule for each respective Development Period. Franchisee agrees that "time is of the essence" with respect to Franchisee's development obligations under this Agreement, and that Franchisee's failure to comply with the Development Schedule is grounds for immediate termination of this Agreement and, any future development rights granted under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the Franchise Agreement and the Development Agreement are related in several key ways, particularly for multi-unit developers. The Development Agreement grants the franchisee the right and obligation to develop multiple Bang Cookies shops within a specific area, according to a set schedule. For each shop opened under the Development Agreement, the franchisee must also execute Bang Cookies's standard Franchise Agreement.
The Development Agreement modifies the initial franchise fee typically associated with the Franchise Agreement. However, the franchisee's obligations to pay royalties and other fees as outlined in each individual Franchise Agreement for each location remain in full effect. The Development Agreement does not reduce or mitigate these obligations. Bang Cookies retains the right to modify the Franchise Agreement over time, and these modifications will not affect the franchisee's obligations under the Development Agreement.
Amendments to the Franchise Agreement, particularly those related to state-specific franchise laws (such as in Illinois, Maryland, and New York), also apply to the Development Agreement if both agreements are signed. This ensures that multi-unit developers receive the same legal protections and are subject to the same jurisdictional requirements as single-unit franchisees. The Development Agreement ensures that franchisees open and operate Bang Cookies shops according to a development schedule, and failure to comply can result in termination of the Development Agreement and loss of future development rights.