Under what circumstances can Bang Cookies terminate the Multi-Unit Development Agreement with cause?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Sections in Multi-Unit Development Agreement | Summary | |
|---|---|---|---|
| a. | Length of the franchise term | 3 | Varies depending on the number of Shops to be developed and the Development Area. The agreement commences on the effective date and the term automatically expires at the earlier of the opening of the final Shop required for development, or the last day of the calendar month in which the final Shop was required to be open under the Multi-Unit Development Agreement. |
| b. | Renewal or extension of the | Not | There is no renewal of the Multi-Unit Development |
| term | applicable | Agreement. | |
| c. | Requirements for franchisee to renew or extend | Not applicable | There is no renewal of the Multi-Unit Development Agreement. |
| d. | Termination by franchisee | Not applicable | There is no option for your termination of the Multi-Unit Development Agreement. |
| e. | Termination by franchisor | Not | We can terminate without cause only if you and we mutually |
| without cause | applicable | agree, in writing, to terminate. | |
| f. | Termination by franchisor with "cause" | 3.2 | We may terminate your Multi-Unit Development Agreement with cause. Your Multi-Unit Development Agreement can be terminated by us if: (a) you abandon your obligations under the Multi-Unit Development Agreement; (b) if you for four consecutive months, or any shorter period that indicates an intent by you to discontinue your development of Shops within the Development Area; (c) if you become insolvent or you are adjudicated bankrupt, or if any action is taken by you, or by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; (d) if you fail to meet your development obligations under the Development Schedule for any single Development Period including, but not limited to, your failure to establish, open and/or maintain the cumulative number of Shops in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Shop and/or any other Franchise Agreement |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–49)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the franchisor can terminate the Multi-Unit Development Agreement with cause under specific circumstances. These circumstances include if the franchisee abandons their obligations under the agreement, discontinues development of shops within the Development Area for four consecutive months (or a shorter period indicating intent to discontinue), becomes insolvent or bankrupt, makes an assignment for the benefit of creditors, or has a receiver appointed.
Additionally, Bang Cookies can terminate the agreement if the franchisee fails to meet their development obligations under the Development Schedule for any single Development Period. This includes failing to establish, open, and/or maintain the cumulative number of shops according to the Development Schedule.
Finally, the agreement can be terminated if any single Franchise Agreement is terminated respecting any shop and/or any other Franchise Agreement with Bang Cookies. This means that a problem with one franchise location can impact the entire multi-unit development agreement.
These termination conditions are fairly standard in multi-unit development agreements. It is important for a prospective Bang Cookies franchisee to carefully review the development schedule and ensure they have the resources to meet the obligations, as failure to do so could result in termination of the entire agreement.