What is the dependency between the MUDA and the separate franchise agreement for each Chocolate Bash business?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
ranchisee develop multiple Chocolate Bash businesses.
1. Multi-Unit Commitment.
(a) Development Schedule; Fee. Franchisee shall develop and open Chocolate Bash businesses on the following schedule:
| Name | Title |
|---|---|
- (b) Payment**.** Upon execution of this MUDA, Franchisee shall pay the total Initial Franchise Fee to CB Franchising. The Initial Franchise Fee is non-refundable.
- 2. Form of Agreement. For Store #1, Franchisee and CB Franchising have executed the Franchise Agreement simultaneously with this MUDA. For each additional Chocolate Bash franchise, Franchisee shall execute CB Franchising's then-current standard form of franchise agreement no later than three business days after Franchisee leases or acquires a location. This MUDA does not give Franchisee the right to construct, open, or operate a Chocolate Bash business, and Franchisee acknowledges that Franchisee may construct, open, and operate each Chocolate Bash business only pursuant to a separate franchise agreement executed pursuant to this MUDA for each such Chocolate Bash business.
| conflicts of law). The parties agree that any California law for the protection of franchisees or | ||||
|---|---|---|---|---|
| business opportunity purchasers will not apply unless its jurisdictional requirements are met | ||||
| independently without | reference to this | Section 6. The | provisions of Article | 17 (Dispute |
- 4. Default and Termination. CB Franchising may terminate this MUDA by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
- (i) Franchisee fails to satisfy the development schedule; or
- (ii) CB Franchising has the right to terminate any franchise agreement between CB Franchising and Franchisee (or any affiliate thereof) due to Franchisee's default thereunder (whether or not CB Franchising actually terminates such franchise agreement).
- 5. Limitation of Liability. Franchisee's commitment to develop Chocolate Bash businesses is in the nature of an option only.
Source: Item 23 — RECEIPTS (FDD pages 39–101)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, a Multi-Unit Development Agreement (MUDA) does not grant the franchisee the right to open or operate a Chocolate Bash business. Instead, the franchisee can only operate each Chocolate Bash location under a separate franchise agreement, which is executed according to the MUDA for each business.
Specifically, the franchisee and Chocolate Bash execute a franchise agreement simultaneously with the MUDA for the first store. For each additional franchise, the franchisee must execute Chocolate Bash's current standard franchise agreement form no later than three business days after securing a location by lease or acquisition.
Chocolate Bash can terminate the MUDA if the franchisee fails to meet the development schedule or if Chocolate Bash has the right to terminate any franchise agreement with the franchisee due to a default. However, the franchisee's commitment is treated as an option, limiting liability for lost future revenues if the MUDA is terminated due to the franchisee's default. The franchisee also has the option to terminate the MUDA at any time.
The right to develop further Chocolate Bash franchises after the initial store is conditional. The franchisee must demonstrate sufficient financial and organizational capacity to manage each additional business, as judged by Chocolate Bash. Additionally, the franchisee must be in full compliance with brand standards at existing locations and not be in default under any agreement with Chocolate Bash.