Can CB Franchising require a Chocolate Bash franchisee to remodel their business as a condition of obtaining a successor agreement?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- 3.2 Successor Agreement. When the term of this Agreement expires, Franchisee may enter into a successor agreement subject to the following conditions prior to each expiration:
- (i) Franchisee notifies CB Franchising of the election to renew between 90 and 180 days prior to the end of the term;
- (ii) Franchisee (and its affiliates) are in compliance with this Agreement and all other agreements with CB Franchising (or any of its affiliates) at the time of election and at the time of renewal;
- (iii) Franchisee has made or agrees to make (within a period of time acceptable to CB Franchising) renovations and changes to the Business as CB Franchising requires (including a Remodel, if applicable) to conform to the then-current System Standards;
- (iv) Franchisee and its Owners execute CB Franchising's then-current standard form of franchise agreement and related documents (including personal guaranty), which may be materially different than this form (including, without limitation, higher and/or different fees), except that Franchisee will not pay another initial franchise fee and will not receive more renewal or successor terms than described in this Section; and
- (v) Franchisee and each Owner executes a general release (on CB Franchising's thenstandard form) of any and all claims against CB Franchising, its affiliates, and their respective owners, officers, directors, agents and employees.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, CB Franchising can require a franchisee to complete renovations and changes to their Chocolate Bash business, including a remodel if applicable, as a condition for entering into a successor agreement. These renovations must conform to the then-current System Standards.
To renew their franchise agreement, a Chocolate Bash franchisee must notify CB Franchising of their election to renew between 90 and 180 days before the current term expires. The franchisee must also be in compliance with the existing agreement and any other agreements with CB Franchising or its affiliates at both the time of election and the time of renewal.
Additionally, the franchisee must execute CB Franchising's then-current standard form of franchise agreement and related documents, which may differ materially from the original agreement, potentially including higher or different fees. The franchisee and each owner must also execute a general release of any and all claims against Chocolate Bash, its affiliates, and their respective owners, officers, directors, agents, and employees. However, the franchisee will not pay another initial franchise fee and will not receive more renewal or successor terms than described in the agreement.