Is a Chocolate Bash franchisee required to personally conduct 'on-premises' supervision of their business?
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 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 29–30)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, the franchisee is not required to serve as the day-to-day general manager of the business. However, the franchisee must designate a "Principal Executive" who has at least a 10% ownership interest in the franchise. This Principal Executive is the person primarily responsible for the business and must have decision-making authority.
While the Principal Executive doesn't have to manage the daily operations, they must devote substantial time and attention to the Chocolate Bash business. This suggests an active oversight role, even if they delegate day-to-day management to someone else. The Principal Executive is also expected to attend required in-person and remote meetings, such as national or regional brand conventions, and cannot miss more than three consecutive required meetings.
If the designated 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, subject to Chocolate Bash's approval. This ensures that there is always a responsible party overseeing the franchise who has a vested interest in the business's success and is accountable to the franchisor.