For C3 Wellness Spa, what forms do the variable considerations in the franchise agreement take?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees that, as to the Development Spas, Franchisee shall meet the requirements of the Development Schedule including, without limitation, requirements as to the number of Development Spas that must be timely developed, established, open, and in operation by Franchisee within the Development Area and as to each respective Development Period.
4.5 REASONABLENESS OF DEVELOPMENT SCHEDULE
Franchisee agrees and represents that it has conducted its own independent investigation and analysis of the prospects for the establishment of Spa Location Franchises within the Development Area, that Franchisee approves of the Development Schedule as being reasonable and viable, and that Franchisee recognizes that failure to achieve the results described in the Development Schedule will constitute a material breach of this Agreement with time being of the essence.
SECTION 5 OTHER OBLIGATIONS OF FRANCHISEE
5.1 EXECUTION OF FRANCHISE AGREEMENTS
For each C3 Wellness owned, developed and opened for business by the Franchisee in the Development Area, Franchisee must execute Franchisor's then current standard Franchise Agreement. A then current standard Franchise Agreement must be executed by the Franchisee for each and every Development Spa on or before the earlier of: (a) the date Franchisee (subject to Franchisor's approval of the Spa Location) executes a lease for the Spa Location for each respective Development Spa; (b) the date Franchisee (subject to Franchisor's approval of the Spa Location) enters into a purchase agreement for the real estate for the Spa Location for each respective Development Spa; or (c) six months prior to the date that each respective Development Spa must be open and in operation pursuant to the Development Schedule.
5.2 ROYALTY FEES AND OTHER FRANCHISE AGREEMENT FEES ACKNOWLEDGMENT
Franchisee agrees that pursuant to the terms of each respective Franchise Agreement respecting and/or concerning the Development Area and/or this Agreement, that nothing contained in this Agreement shall obviate and/or reduce Franchisees obligations as set forth in each respective Franchise Agreement including, without limitation, Franchisees obligations, respectively, to pay royalty and all other fees in accordance with each respective Franchise Agreement. Nothing contained in this Agreement shall modify, reduce or mitigate Franchisee's obligations to Franchisor. The only fee and right contained in the Franchise
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, the C3 Wellness Spa franchise agreement involves variable considerations related to the development schedule and royalty fees. Franchisees entering into a multi-unit development agreement must adhere to a development schedule, which outlines the number of spas they need to establish and operate within a specific timeframe and area. Franchisees acknowledge the reasonableness of this schedule and recognize that failing to meet these requirements constitutes a material breach of the agreement.
For each C3 Wellness Spa developed within the designated area, franchisees must execute the franchisor's current standard Franchise Agreement. This agreement must be signed before the franchisee executes a lease or purchase agreement for the spa location, or six months before the spa is scheduled to open. This ensures that each spa operates under the most current terms and conditions set by C3 Wellness Spa.
Moreover, the franchisee is obligated to pay royalties and other fees as outlined in each respective Franchise Agreement. The Development Agreement does not reduce or mitigate these obligations. Therefore, prospective franchisees should carefully review the terms of the Franchise Agreement to fully understand their financial commitments and operational requirements for each spa they develop under the multi-unit agreement.