How does a developer validly exercise their development rights for a Baya Bar outlet?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
nt using a newly formed entity, such as a limited liability company, corporation or partnership, for the sole purpose of entering into a Franchise Agreement and operating the Baya Bar café outlet pursuant thereto, provided that Developer shall also personally sign such Franchise Agreement as a principal.
5. EXERCISE OF DEVELOPMENT RIGHTS.
5.1 Valid Exercise. Developer shall exercise the development rights granted hereunder only by entering into a separate Franchise Agreement with Franchisor for each Baya Bar outlet for which a development right is granted. Developer shall execute and deliver to Franchisor, concurrently with the execution and delivery of this Agreement, Franchisor's current form of Franchise Agreement for the first Baya Bar outlet to be established by Developer pursuant to the Mandatory Development Schedule. For each subsequent Baya Bar outlet to be established hereunder, Developer shall execute and deliver to Franchisor Franchisor's then-current form of Franchise Agreement, which shall be presented to Developer together with Franchisor's then-current Franchise Disclosure Document. The then-current form of Franchise Agreement may differ from the current form of Franchise Agreement; provided however, the initial franchise fee for each additional outlet shall be the applicable amount set forth in in Section 4.1 hereof. Further, Developer acknowledges and agrees that Developer shall not receive any initial training related to each additional Baya Bar outlet. Developer hereby waives all obligations by Franchisor to provide any training to Developer contained in each Franchise Agreement, other than the initial Franchise Agreement executed concurrently with this Agreement, by and between Franchisor and Developer. Developer hereby acknowledges and agrees that the training Developer receives pursuant
- to the initial Franchise Agreement executed concurrently with this Agreement is sufficient to allow Developer to construct, equip, open and operate each of Developer's Baya Bar outlets in the Development Area.
- 5.2 Mandatory Development Schedule. Subsequent to Developer's signing of this Agreement and the initial Franchise Agreement, and provided that all conditions in Section 5.4 hereof are satisfied or waived, upon the execution of a lease for Developer's first Baya Bar outlet, Developer shall execute an additional Franchise Agreement for the development of the second Baya Bar outlet to be opened under the Mandatory Development Schedule. Provided that all conditions in Section 5.4 hereof are satisfied or waived, upon the execution of a lease for each subsequent Baya Bar outlet to be developed by Developer, Developer shall execute an additional Franchise Agreement for the development of the next Baya Bar outlet to be opened under the Mandatory Development Schedule.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a developer can exercise their development rights by entering into a separate Franchise Agreement with Baya Bar for each outlet they have the right to develop. The developer must execute and deliver Baya Bar's current form of Franchise Agreement. This must be done concurrently with the execution and delivery of the Development Agreement for the first Baya Bar outlet, adhering to the Mandatory Development Schedule. For each subsequent Baya Bar outlet, the developer will execute and deliver Baya Bar's then-current Franchise Agreement, which will be presented along with the then-current Franchise Disclosure Document.
It is important to note that the then-current form of the Franchise Agreement may differ from the initial form. However, the initial franchise fee for each additional outlet will remain as specified in Section 4.1 of the agreement. The developer will not receive any initial training for each additional outlet beyond the training received for the first outlet. The developer acknowledges that the initial training is sufficient to construct, equip, open, and operate all Baya Bar outlets within the Development Area.
Subsequent to signing the Development Agreement and the initial Franchise Agreement, and provided all conditions in Section 5.4 are met or waived, the developer must execute an additional Franchise Agreement for the second Baya Bar outlet upon the execution of a lease. This process continues for each subsequent Baya Bar outlet to be developed, with an additional Franchise Agreement required upon the execution of a lease for each outlet, all in accordance with the Mandatory Development Schedule. Failure to adhere to the Mandatory Development Schedule constitutes a material event of default under the agreement.