Can CB Franchising unreasonably withhold approval for a Chocolate Bash franchisee to engage a third-party management company?

According to the 2024 Chocolate Bash Franchise Disclosure Document, a franchisee is not allowed to engage a third-party management company to manage or operate their Chocolate Bash business without prior written approval from CB Franchising. However, CB Franchising agrees that this approval will not be unreasonably withheld.

This stipulation means that while Chocolate Bash franchisees are not automatically entitled to outsource the management of their business, Chocolate Bash cannot arbitrarily deny a request to do so. If a franchisee seeks to hire a third-party management company, Chocolate Bash must have a legitimate, reasonable basis for withholding approval.

For a prospective Chocolate Bash franchisee, this clause offers some flexibility. While day-to-day management by the owner or a designated Principal Executive is generally expected, the option to utilize a management company with franchisor approval provides a potential contingency plan or growth strategy. It would be prudent for a potential franchisee to discuss with Chocolate Bash the criteria they use to evaluate and approve third-party management companies to understand what factors might influence their decision.