Does a franchisee have the right to reject a 'Qualified Site' for a Big Blue Swim School?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) You (and your Approved Affiliates) do not have the right under this DRA to reject (and therefore must accept) a proposed Swim School site the location and physical and other characteristics of which, and the proposed commercial lease terms for which, were accepted by our real-estate committee (a "Qualified Site").
8. Default for Rejecting a Qualified Site for Second and Subsequent BIG BLUE Swim School Sites.
(a) If you (or your Approved Affiliate) reject a Qualified Site for a BIG BLUE Swim School to be constructed and developed within the Territory, that Qualified Site is proposed for your second or subsequent BIG BLUE Swim School to be constructed and developed within the Territory pursuant to this DRA, and you (or your Approved Affiliate) do not correct that failure by accepting the Qualified Site within ten (10) days after we deliver written notice of default, then we have the right to establish and operate, or grant to another franchisee the right to establish and operate, a BIG BLUE Swim School at that Qualified Site and to sign a lease for that Qualified Site (together, the "Qualified Site Lease Rights"). We have the right to exercise the Qualified Site Lease Rights even if you are not then otherwise in default under the Schedule or this DRA.
(b) If we exercise the Qualified Site Lease Rights (directly or through another franchisee), we have the unilateral right to amend immediately the definition and scope of the Territory to carve out and exclude from the Territory both (i) the BIG BLUE Swim School site that is the subject of the Qualified Site Lease Rights and (ii) an area of protection around that site the size and description of which will be consistent with the size and description of areas of protection that we customarily have granted or would grant to a franchisee developing a BIG BLUE Swim School in a similar market area. (This excised portion of the Territory is referenced as the "Carved-Out Area.") Our amendment of the Territory definition and scope will be effective upon our delivery of written notice to you. Your Territory definition otherwise will not be altered. After we deliver such written notice to you, you no longer will have any BIG BLUE Swim School development rights under this DRA in the Carved-Out Area. (c) Our or another franchisee's construction, development, and operation of a BIG BLUE Swim School within the Carved-Out Area, as permitted by the Qualified Site Lease Rights, will not count toward your compliance with the Schedule. However, each time the Qualified Site Lease Rights are exercised, you may elect to develop one less BIG BLUE Swim School in the Territory (based on the number of BIG BLUE Swim Schools remaining to be constructed and developed under the Schedule). You must notify us of that election within thirty (30) days after we deliver notice to you under clause (b) above, in which case the then-final BIG BLUE Swim School appearing on the Schedule will be deemed to be removed from the Schedule without further action. Within thirty (30) days after you notify us of that election, we will refund to you the pro rata portion of the Development Fee allocable to the BIG BLUE Swim School that is the subject of the Qualified Site Lease Rights.
Source: Item 23 — RECEIPTS (FDD pages 76–278)
What This Means (2025 FDD)
According to Big Blue Swim School's 2025 Franchise Disclosure Document, a franchisee does not have the right to reject a 'Qualified Site'. A 'Qualified Site' is defined as a proposed swim school site, including its location, physical characteristics, and commercial lease terms, that has been accepted by Big Blue Swim School's real estate committee.
However, the FDD outlines the ramifications if a franchisee rejects a Qualified Site for their second or subsequent Big Blue Swim School. In such cases, Big Blue Swim School has the right to establish and operate, or grant to another franchisee the right to establish and operate, a Big Blue Swim School at that Qualified Site. This right, termed the "Qualified Site Lease Rights," can be exercised even if the franchisee is not otherwise in default under the Development Rights Agreement (DRA).
If Big Blue Swim School exercises these rights, they can amend the territory to exclude the site and a surrounding protected area, referred to as the "Carved-Out Area." The franchisee will no longer have development rights in this Carved-Out Area. The construction and operation of a Big Blue Swim School in the Carved-Out Area will not count towards the franchisee's development obligations. However, the franchisee can elect to develop one less Big Blue Swim School in the territory, and in that case, Big Blue Swim School will refund a pro rata portion of the Development Fee allocable to the swim school that is the subject of the Qualified Site Lease Rights.