What is the definition of 'permanent disability' in the Baya Bar franchise agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
without limitation, transfer by devise or inheritance, is subject to the conditions for Transfers in this Article 16 and unless transferred by gift, devise or inheritance, subject to the terms of Section 16.6 above. For purposes of this Agreement, the term "permanent disability" means a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent such person from providing continuous and material supervision of the operation of Franchisee's Franchised Business during the six (6)-month period from its onset.
Immediately after the death or permanent disability of such person, or while the Franchise is owned by an executor, administrator, guardian, personal representative or trustee of that person, the Franchised Business shall be supervised by an interim successor manager satisfactory to Franchisor, or Franchisor, in its sole discretion, may provide interim management at Fr
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to the 2024 Baya Bar Franchise Disclosure Document, a 'permanent disability' is defined within the context of the franchise agreement. Specifically, it refers to a mental or physical disability, impairment, or condition that is reasonably expected to prevent, or actually does prevent, a person from providing continuous and material supervision of the Baya Bar franchise's operations. This definition applies during the six-month period following the onset of the disability.
This definition is important because if a franchisee or one of their principals experiences such a disability, the agreement requires their interest in the franchise to be transferred within six months. Failure to do so constitutes a material default, potentially leading to the termination of the franchise agreement. During this interim period, Baya Bar requires the franchise to be supervised by an interim successor manager approved by them, or Baya Bar may provide interim management themselves for a fee.
For a prospective Baya Bar franchisee, this clause highlights the importance of having a succession plan in place. The franchisee needs to consider who would manage the business if they were to become permanently disabled. The requirement for continuous and material supervision underscores the active role Baya Bar expects franchisees to play in their business. The franchisor's right to provide interim management at a fee also presents a potential cost to the franchisee during such a period.
It is important for potential franchisees to fully understand the implications of this clause and to discuss with Baya Bar what would be considered an acceptable interim successor manager. Furthermore, franchisees should evaluate insurance options that could provide financial support or management assistance in the event of a permanent disability.