Under what circumstances can Better Blend terminate a franchisee's right to develop additional outlets under a Multi-Unit Development Agreement?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
You do not have the right to establish additional franchised outlets unless you sign a Multi-Unit Development Agreement ("MUDA") in the form attached as Exhibit C to this disclosure document. If you and we sign a MUDA, then you will have the right to establish a mutually-agreed number of additional outlets on a mutually-agreed schedule. Under the MUDA, your right to develop additional outlets is subject to (1) you must comply with the mutually-agreed development schedule, (2) you must have sufficient financial and organizational capacity to develop, open, operate, and manage each additional Better Blend business, (3) you must be in compliance with all brand requirements at your open Better Blend business(es), and (4) you must not be in default under any other agreement with us. We will approve the location of future sites and territories for those sites, and our then-current standards for sites and territories will apply. For each future site, you must sign our then-current form of Franchise Agreement, which may be materially different than the original Franchise Agreement that you signed. You are not obligated to develop additional outlets under the MUDA, and you may terminate it any time without penalty. If you do not meet your development schedule in the MUDA, we have the right to terminate your right to develop additional outlets.
Source: Item 12 — TERRITORY (FDD pages 27–29)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, a franchisee's right to develop additional outlets under a Multi-Unit Development Agreement (MUDA) can be terminated under specific circumstances. The franchisee must comply with the mutually agreed-upon development schedule outlined in the MUDA. They must also possess the financial and organizational capacity to successfully develop, open, operate, and manage each additional Better Blend business. Furthermore, the franchisee must maintain compliance with all brand requirements at their existing Better Blend businesses. Finally, the franchisee must not be in default under any other agreement with Better Blend. If a franchisee fails to meet the development schedule outlined in the MUDA, Better Blend retains the right to terminate the franchisee's right to develop additional outlets.
This aspect of the MUDA is crucial for prospective multi-unit franchisees to understand. It emphasizes the importance of adhering to the development schedule and maintaining sufficient resources to support the expansion. Failing to meet these obligations can result in the loss of development rights, potentially hindering the franchisee's growth plans.
It is important to note that while Better Blend can terminate the right to develop additional outlets if the development schedule in the MUDA is not met, the franchisee has the option to terminate the MUDA at any time without penalty. This provides the franchisee with some flexibility if their circumstances change or if they decide that they no longer wish to pursue further development. However, Better Blend must approve the location of future sites and territories for those sites, and Better Blend's then-current standards for sites and territories will apply. For each future site, the franchisee must sign Better Blend's then-current form of Franchise Agreement, which may be materially different than the original Franchise Agreement that was signed.