What events would cause the C3 Wellness Spa Development Agreement to automatically terminate?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
te, the operating territories for Franchisee's Development Spas may be smaller than the Development Area.
2.2 LIMITED EXCLUSIVITY AND RESERVED RIGHTS
Except as provided in Section 2.1 of this Agreement, Franchisor and Franchisee acknowledge and agree that the rights granted in this Agreement are non-exclusive and that Franchisor, on Franchisor's own behalf and on behalf of Franchisor's affiliates, successors and assigns, reserves all other rights not expressly granted to Franchisee in this Agreement.
2.3 PERSONAL RIGHTS
Franchisee agrees that Franchisee does not and shall not have or possess the right to franchise, subfranchise, license, sublicense and/or otherwise Transfer Franchisee's rights under this Agreement. The rights and privileges granted and conveyed to the Franchisee in this Agreement may not be Transferred, and, among other things, relate only to Development Area and subject to the terms and conditions of each respective Franchise Agreement for each Development Spa.
SECTION 3 TERM AND TERMINATION
3.1 TERM
This Agreement will be for a term that commences as of the Effective Date and, unless earlier terminated by Franchisor, will automatically end on the earlier of (a) the last day of the calendar month that the final Spa is required to be opened and operating under the Development Schedule, or (b) the day the final Spa is open (the "Term"). Upon expiration or termination of this Agreement for any reason, Franchisee will not have any rights within the Development Area other than territorial rights that may have been granted to Franchisee and maintained by Franchisee pursuant to the terms of any and/or each respective Franchise Agreement. The Term may not be renewed or extended.
3.2 TERMINATION BY FRANCHISOR
Franchisor will have the right, at Franchisor's option, to terminate this Agreement and all rights granted to Franchisee hereunder, without affording Franchisee with any opportunity to cure such default, effective upon written notice to Franchisee, or automatically upon the occurrence of any of the following events: (a) if Franchisee Abandons Franchisee's obligations under this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to the 2024 C3 Wellness Spa Franchise Disclosure Document, the Development Agreement can automatically terminate under specific conditions. The agreement will automatically end on the earlier of (a) the last day of the calendar month that the final Spa is required to be opened and operating under the Development Schedule, or (b) the day the final Spa is open. This means the agreement has a defined term linked to the development schedule.
Additionally, C3 Wellness Spa has the option to terminate the agreement immediately, without giving the franchisee a chance to fix the problem, if certain events occur. These events include: if the franchisee abandons their obligations under the agreement; if the franchisee, for four consecutive months, or any shorter period that indicates an intent, discontinues development of spas within the Development Area; if the franchisee becomes insolvent or bankrupt, or takes action to benefit creditors; if the franchisee fails to meet development obligations under the Development Schedule, such as failing to open the required number of spas; and/or if any individual Franchise Agreement is terminated.
These termination clauses are typical in development agreements, as they protect C3 Wellness Spa's interests by ensuring that franchisees actively develop the agreed-upon number of locations. The automatic termination provisions provide clarity and certainty for both parties regarding the agreement's duration and the consequences of failing to meet development milestones. A prospective franchisee should carefully review the Development Schedule and understand the implications of failing to meet those obligations.