Under what agreement would a Better Blend franchisee develop three or more franchises?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
If you sign a Multi-Unit Development Agreement (attached as Exhibit C to this disclosure document), you will develop multiple Better Blend outlets, on an agreed-upon schedule.
Background Statement: On the same day as they execute this MUDA, BBF and Franchisee have entered into a Franchise Agreement for the franchise of a Better Blend Nutrition business (the "Franchise Agreement"; capitalized terms used but not defined in this MUDA have the meanings given in the Franchise Agreement). BBF and Franchisee desire that Franchisee develop multiple Better Blend Nutrition businesses.
1. Multi-Unit Commitment. Franchisee shall develop and open Better Blend Nutrition businesses, and pay associated non-refundable initial franchise fees, on the following schedule:
2. Form of Agreement. For Store #1, Franchisee and BBF have executed the Franchise Agreement simultaneously with this MUDA. For each additional Better Blend Nutrition franchise, Franchisee shall execute BBF's then-current standard form of franchise agreement when (or before) Franchisee signs a letter of intent to lease or acquire a location. This MUDA does not give Franchisee the right to construct, open, or operate a Better Blend Nutrition business, and Franchisee acknowledges that Franchisee may construct, open, and operate each Better Blend Nutrition business only pursuant to a separate franchise agreement executed pursuant to this MUDA for each such Better Blend Nutrition business.
- 4. Default and Termination. BBF may terminate this MUDA by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
- (i) Franchisee fails to satisfy the development schedule; or
- (ii) BBF has the right to terminate any franchise agreement between BBF and Franchisee (or any affiliate thereof) due to Franchisee's default thereunder (whether or not BBF actually terminates such franchise agreement).
- 5. Limitation of Liability. Franchisee's commitment to develop Better Blend Nutrition businesses is in the nature of an option only. If BBF terminates this MUDA for Franchisee's default, Franchisee shall not be liable to BBF for lost future revenues or profits from the unopened Better Blend Nutrition businesses. Franchisee may terminate this MUDA at any time.
- 6. Conditions. Franchisee's right to develop each Better Blend Nutrition franchise after the Store #1 is subject to the following:
- (i) Franchisee must possess sufficient financial and organizational capacity to develop, open, operate, and manage each additional Better Blend Nutrition business, in the reasonable judgment of BBF, and
- (ii) Franchisee must be in full compliance with all brand requirements at its open Better Blend Nutrition businesses, and not in default under any Franchise Agreement or any other agreement with BBF.
Source: Item 5 — INITIAL FEES (FDD pages 10–11)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, a franchisee who signs a Multi-Unit Development Agreement will develop multiple Better Blend outlets on an agreed-upon schedule.
The Multi-Unit Development Agreement (MUDA) requires the franchisee to develop and open Better Blend Nutrition businesses according to a set schedule and pay the associated non-refundable initial franchise fees. Simultaneously with the MUDA, the franchisee and Better Blend execute a Franchise Agreement for the first store. For each additional franchise, the franchisee must execute Better Blend's current standard form of franchise agreement when or before signing a letter of intent to lease or acquire a location.
The MUDA does not grant the franchisee the right to construct, open, or operate a Better Blend Nutrition business. The franchisee can only proceed with each additional Better Blend Nutrition business by executing a separate franchise agreement for each location, as outlined in the MUDA. Better Blend can terminate the MUDA if the franchisee fails to meet the development schedule or if Better Blend has the right to terminate any franchise agreement due to the franchisee's default. However, the franchisee's commitment is considered an option, and if Better Blend terminates the MUDA due to the franchisee's default, the franchisee is not liable for lost future revenues or profits from unopened locations. The franchisee can also terminate the MUDA at any time.
The franchisee's right to develop each subsequent Better Blend franchise after the first store is contingent upon having sufficient financial and organizational capacity, in Better Blend's reasonable judgment, and being in full compliance with all brand requirements at its open Better Blend Nutrition businesses, without any defaults under any Franchise Agreement or other agreement with Better Blend.