What is the Chocolate Bash franchisee agreeing to regarding the Principal Executive?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
hment 1 changes (which is not a Transfer), Franchisee shall notify CB Franchising within 10 days.
- 2.4 Principal Executive. Franchisee agrees that the person designated as the "Principal Executive" on the Summary Page is the executive primarily responsible for the Business and has decision-making authority on behalf of Franchisee. The Principal Executive must have at least 10% ownership interest in Franchisee. The Principal Executive does not have to serve as a day-today general manager of the Business, but the Principal Executive must devote substantial time and attention to the Business. If the Principal Executive dies, becomes incapacitated, transfers his/her interest in Franchisee, or otherwise ceases to be the executive primarily responsible for the Business, Franchisee shall promptly designate a new Principal Executive, subject to CB Franchising's reasonable approval.
- 2.5 Guaranty. If Franchisee is an entity, then Franchisee shall have each Owner sign a personal guaranty of Franchisee's obligations to CB Franchising, in the form of Attachment 3.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the franchisee must designate a "Principal Executive" who is primarily responsible for the Chocolate Bash business and has decision-making authority. This Principal Executive must be identified on the Summary Page of the Franchise Agreement.
The Principal Executive is not required to be the day-to-day general manager, but they must devote substantial time and attention to the Chocolate Bash business. They also must maintain at least a 10% ownership interest in the franchise. This ensures that the person in charge has a vested interest in the success of the business.
If the Principal Executive dies, becomes incapacitated, transfers their interest, or otherwise ceases to be the executive primarily responsible, the franchisee must promptly designate a new Principal Executive. However, this new designation is subject to Chocolate Bash's approval, ensuring that the replacement meets their standards. Additionally, the Principal Executive is expected to attend all in-person and remote meetings required by Chocolate Bash, and failure to attend more than three consecutive meetings is not permitted.