To whom are Chocolate Bash franchisees permitted to make sales?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
an 25% of the Business, or (iv) control of the Business.
ARTICLE 2. GRANT OF LICENSE
- 2.1 Grant. CB Franchising grants to Franchisee the right to operate a Chocolate Bash business solely at the Location. If no Location is stated on the Summary Page when this Agreement is signed, then the parties will determine the Location in accordance with Section 6.1. Franchisee shall develop, open and operate a Chocolate Bash business at the Location for the entire term of this Agreement.
- 2.2 Protected Territory. CB Franchising shall not establish, nor license the establishment of, another Chocolate Bash business within the Territory. CB Franchising retains the right to:
- (i) establish and license others to establish and operate Chocolate Bash businesses outside the Territory;
- (ii) operate and license others to operate businesses anywhere that do not operate under the Chocolate Bash brand name; and
- (iii) sell and license othersto sell products and services in the Territory through channels of distribution (including the internet) other than Chocolate Bash outlets.
- 2.3 Franchisee Control. Franchisee represents that Attachment 1 (i) identifies each owner, officer and director of Franchisee, and (ii) describes the nature and extent of each owner's interest in Franchisee. If any information on Attachment 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.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the franchise agreement grants the franchisee the right to operate a Chocolate Bash business solely at the specified location. This implies that sales should primarily be made to customers at or through that location. The agreement also defines "Gross Sales" as the total dollar amount of all sales generated through the Business for a given period, including payment for any services or products sold by Franchisee, whether for cash or credit. This indicates that franchisees are expected to generate sales through various means, such as cash or credit transactions, for products and services they offer.
However, Chocolate Bash retains the right to sell and license others to sell products and services in the franchisee's territory through other channels of distribution, including the internet, other than Chocolate Bash outlets. This means that while franchisees operate their brick-and-mortar locations, Chocolate Bash can also engage in online sales or other distribution methods within the same territory. This could potentially create competition or overlap in customer reach.
Furthermore, franchisees are obligated to honor all valid gift cards and other pre-paid systems, regardless of whether they were issued by the franchisee or another Chocolate Bash business. This suggests that sales can also be made to customers using these pre-paid systems, expanding the potential customer base beyond those making immediate purchases. Franchisees must also comply with all procedures and specifications related to these gift cards and customer loyalty programs, ensuring consistency across the Chocolate Bash system.