What is the definition of 'Term' in the Baya Bar franchise agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- **4.
TERM.** Unless terminated earlier in accordance with the terms set forth in this Agreement, this Agreement and the Franchise granted hereunder shall commence upon the Effective Date set forth above, and terminate on the date that is ten (10) years following the Opening Date, as defined in Section 8 hereof (the "Term").
- **5.
SUCCESSOR OPTIONS.** Subject to the terms and conditions of this Agreement, Franchisee shall have the right, following the expiration of the Term hereof, to enter into a new franchise agreement and other agreements then customarily employed by Franchisor
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the 'Term' of the franchise agreement is defined as the period starting from the effective date and ending ten years after the opening date of the franchise. This means a franchisee can operate their Baya Bar location for a decade, assuming the agreement isn't terminated earlier.
After the initial ten-year term, Baya Bar offers franchisees the option to enter into a new franchise agreement, called the 'Successor Franchise Agreement,' for two additional terms of five years each. To exercise this option, the franchisee must meet certain conditions, including not having committed three or more uncured defaults during the current term, completing any required additional training, securing the right to continue occupying the premises, executing a general release of claims, performing required remodeling, and paying a Successor Agreement Fee of $3,500 per term.
However, Baya Bar retains certain rights regarding renewal. If the franchisor is not offering new franchises, is revising the agreement, or cannot lawfully offer the current form of the Successor Franchise Agreement, they may extend the term on a month-to-month basis or offer to sign the Successor Agreement on the same terms. Additionally, Baya Bar reserves the right not to enter into a successor agreement if they decide to withdraw from the marketing area or territory where the franchise is located. Franchisees should be aware of these conditions and potential limitations regarding the renewal of their franchise agreement.