Can Baya Bar's obligations and rights with respect to its various franchisees differ materially?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
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
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the franchise agreement that a developer signs for subsequent Baya Bar outlets can differ from the initial agreement. Specifically, while the initial franchise fee remains consistent as stated in Section 4.1, the 'then-current form of Franchise Agreement may differ from the current form of Franchise Agreement'.
This means that Baya Bar can modify the terms and conditions of the franchise agreement for each new outlet a developer opens, except for the initial franchise fee. This could include changes to royalty fees, marketing obligations, operational requirements, or other aspects of the franchise relationship. However, the developer waives the right to additional training for each additional Baya Bar outlet beyond the initial one.
For a prospective franchisee, this highlights the importance of carefully reviewing the 'then-current Franchise Agreement' and 'then-current Franchise Disclosure Document' each time they open a new Baya Bar location. While the initial franchise fee remains the same, other material terms could change, potentially impacting the profitability and operational requirements of subsequent locations. The franchisee should seek legal counsel to understand the implications of these changes and negotiate terms where possible.