Under what condition can the Baya Bar Franchisor terminate the agreement with the Developer?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- 5.4.2 Developer shall be in full compliance with this Agreement, the Mandatory Development Schedule, and all Franchise Agreements with Franchisor and any other agreement with Franchisor or Franchisor's affiliates;
- 5.4.3 Developer has demonstrated the management skills necessary for competent operation, organization, customer service and record keeping of an additional Baya Bar outlet as determined by Franchisor, in Franchisor's sole discretion.
- 5.5 Termination for Failure of Condition. Notwithstanding anything to the contrary contained herein, in the event that Franchisor determines, in Franchisor's sole and absolute discretion, that any condition set forth in Section 5.4 hereof cannot be satisfied, Franchisor may terminate this Agreement upon written notice to Developer. Termination of this Agreement in accordance with this Section 5.5 shall have no effect on the validity of any other agreement between Franchisor and Developer, provided that Developer is in full compliance therewith.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the franchisor has the right to terminate the agreement with the developer under specific conditions. If Baya Bar determines, in its sole discretion, that any of the conditions outlined in Section 5.4 cannot be met, Baya Bar may terminate the agreement by providing written notice to the developer.
Section 5.4 lists the conditions that must be satisfied or waived before Baya Bar grants the developer the right to develop an additional Baya Bar outlet. These conditions include the developer requesting Baya Bar's current Franchise Disclosure Document, submitting all required information and documents, providing requested financial statements, and meeting Baya Bar's current financial criteria for multi-unit franchisees.
This termination clause gives Baya Bar significant discretion in deciding whether to allow the developer to proceed with opening additional locations. A prospective developer should carefully review Section 5.4 and understand the criteria Baya Bar will use to assess their qualifications for further development. The developer should also recognize the risk that Baya Bar could terminate the agreement if these conditions are not met to Baya Bar's satisfaction.