Under the Multi-Unit Commitment, what is the Franchisee required to do regarding Better Blend Nutrition businesses?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
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 23 — RECEIPTS (FDD pages 43–157)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, a franchisee entering into a Multi-Unit Development Agreement (MUDA) is obligated to develop and open Better Blend Nutrition businesses according to a pre-determined schedule. This commitment also involves paying the associated non-refundable initial franchise fees for each location. The MUDA is executed concurrently with the Franchise Agreement for the initial Better Blend Nutrition business.
For each additional Better Blend Nutrition franchise beyond the first, the franchisee must execute Better Blend's current standard franchise agreement. This must occur when, or before, the franchisee signs a letter of intent to lease or acquire a location. The MUDA itself does not grant the franchisee the right to open or operate a Better Blend Nutrition business; this right is only secured through the separate franchise agreement specific to each location.
Better Blend can terminate the MUDA if the franchisee fails to meet the development schedule or if Better Blend has grounds to terminate any existing franchise agreement with the franchisee. However, the franchisee's commitment is treated as an option, limiting liability for lost future revenues from unopened locations if Better Blend terminates the MUDA due to the franchisee's default. The franchisee also has the option to terminate the MUDA at any time.
The right to develop subsequent Better Blend Nutrition franchises is conditional. The franchisee must demonstrate sufficient financial and organizational capacity to manage each additional business, as judged by Better Blend. Furthermore, the franchisee must be in full compliance with all brand requirements at their existing Better Blend Nutrition businesses and not be in default under any agreement with Better Blend.