For C3 Wellness Spa, when must the Franchise Agreement be signed for the second and subsequent Development Spas?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee's second Development Spa and all Development Spas thereafter, respectively, are to be developed and operated by Franchisee pursuant to the terms and conditions of Franchisor's then current Franchise Agreement which Franchisee must sign, 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.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to C3 Wellness Spa's 2024 Franchise Disclosure Document, a franchisee with a multi-unit development agreement must sign a current standard Franchise Agreement for each spa after the first. The agreement must be signed on or before the earliest of three dates. These dates are (a) when the franchisee executes a lease for the spa location, subject to the Franchisor's approval; (b) when the franchisee enters a purchase agreement for the real estate, again subject to Franchisor approval; or (c) six months before the spa is scheduled to open according to the Development Schedule.
This requirement ensures that C3 Wellness Spa franchisees adhere to the brand's current standards and legal agreements as they expand. By tying the agreement to key milestones like lease signing or property purchase, C3 Wellness Spa aims to maintain control over site selection and development timelines. The six-month deadline before opening provides a buffer for finalizing agreements and ensuring compliance before launch.
The Development Schedule is a critical component, outlining the specific timelines for opening new spas within the Development Area. Failure to meet these deadlines constitutes a material breach of the agreement. This schedule, along with the Franchise Agreement signing deadlines, underscores the importance of careful planning and execution for multi-unit developers.
Notably, the initial franchise fee for each additional Development Spa (over and above the first) is $0, meaning it is waived, provided the franchisee is not in default of the terms of the C3 Wellness Multi-Unit Development Agreement. This waiver is payable at the time of signing the Franchise Agreement for each Development Spa.