Under what circumstances is Better Blend required to account for and transmit benefits received from a franchisee's transactions to the franchisee?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
items that will promote or benefit the System or the Better Blend brand include enhancing the value of the Marks, improving customer service and satisfaction, improving product quality, improving uniformity, enhancing or encouraging modernization, and improving the competitive position of the System and Better Blend outlets.
- 11.13 Temporary Management. If (i) the Principal Executive dies or becomes incapacitated, (ii) this Agreement is terminated or expires and BBF elects to purchase assets of the Business as provided in Section 14.6, or (iii) Franchisee is operating the Business in a manner which, in BBF's reasonable opinion, constitutes a danger to the health or safety of any person, then BBF may (but is not obligated to) enter the Location and operate and manage the Business for Franchisee's (or Franchisee's estate's) account until this Agreement is terminated, the Business is transferred, the Business is purchased by BBF, or BBF returns the Business to Franchisee. BBF's operation and management will not continue for more than 90 days without Franchisee's consent (or the consent of the representatives of Franchisee's estate). If this Agreement has not terminated or expired, then BBF will account to Franchisee for all net income from the Business during the period in which BBF operates the Business. BBF may collect a temporary management fee equal to 10% of Adjusted Gross Sales for the period in which BBF operates the Business, plus all expenses
(including internal costs of personnel and overhead) incurred by BBF, which is in addition to Royalty Fees, Marketing Fund Contributions, or other amounts owed under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, Better Blend Franchising, LLC (BBF) is required to account to the franchisee for all net income from the business under specific temporary management circumstances. This occurs if (i) the Principal Executive dies or becomes incapacitated, (ii) the Franchise Agreement is terminated or expires and BBF elects to purchase assets of the Business, or (iii) the Franchisee is operating the Business in a manner that constitutes a danger to the health or safety of any person. In these situations, BBF may enter the Location and operate and manage the Business for the Franchisee's (or Franchisee's estate's) account.
BBF's operation and management will not continue for more than 90 days without the Franchisee's consent (or the consent of the representatives of Franchisee's estate). If the Franchise Agreement has not terminated or expired, then BBF will account to the Franchisee for all net income from the Business during the period in which BBF operates the Business. However, BBF may collect a temporary management fee equal to 10% of Adjusted Gross Sales for the period in which BBF operates the Business, plus all expenses.
Additionally, regarding gift cards and other pre-paid systems, if a franchisee honors a gift card or other pre-paid system sold by another location, or vice versa, Better Blend and the franchisee will cooperate so that the cash received is fairly allocated to the location where that gift card or other pre-paid system is redeemed, subject to fees and charges. This ensures that each location receives appropriate credit for the transactions they process, even if the initial sale occurred elsewhere.