What happens if a Chocolate Bash franchisee is not in compliance with the System?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- 11.10 Temporary Public Safety Closure. If CB Franchising discovers or becomes aware of any aspect of the Business which, in CB Franchising's opinion, constitutes an imminent danger to the
health or safety of any person, then immediately upon CB Franchising's order, Franchisee must temporarily cease operations of the Business and remedy the dangerous condition. CB Franchising shall have no liability to Franchisee or any other person for action or failure to act with respect to a dangerous condition.
- 7.12 Maintenance and Repair. Franchisee shall at all times keep the Business in a neat and clean condition, perform all appropriate maintenance, and keep all physical property in good repair.
In addition, Franchisee shall promptly perform all work on the physical property of the Business as CB Franchising may prescribe from time to time, including but not limited to periodic interior and exterior painting; resurfacing of the parking lot; roof repairs; and replacement of obsolete or worn out signage, floor coverings, furnishings, equipment and décor.
Franchisee acknowledges that the System Standards may include requirements for cleaning, maintenance, and repair.
- 7.13 Remodeling. In addition to Franchisee's obligations to comply with all System Standards in effect from time to time, CB Franchising may require Franchisee to undertake and complete a Remodel of the Location to CB Franchising's satisfaction.
Franchisee must complete the Remodel in the time frame specified by CB Franchising.
CB Franchising may require the Franchisee to submit plans for CB Franchising's reasonable approval prior to commencing a required Remodel.
CB Franchising's right to require a Remodel is limited as follows: (i) the Remodel will not be required in the first two or last two years of the term (except that a Remodel may be required as a condition to renewal of the term or a Transfer), and (ii) a Remodel will not be required more than once every five years from the date on which Franchisee was required to complete the prior Remodel.
- 7.14 Meetings. The Principal Executive shall use reasonable efforts to attend all in-person meetings and remote meetings (such as telephone conference calls) that CB Franchising requires, including any national or regional brand conventions.
Franchisee shall not permit the Principal Executive to fail to attend more than three consecutive required meetings.
- 7.16 Suppliers and Landlord. Franchisee shall pay all vendors and suppliers in a timely manner.
If Franchisee leases the Location, Franchisee shall comply with its lease for the Location.
7.17 Public Relations. Franchisee shall not make any public statements (including giving interviews or issuing press releases) regarding Chocolate Bash, the Business, or any particular incident or occurrence related to the Business, without CB Franchising's prior written approval, which will not be unreasonably withheld.
7.18 Association with Causes. Franchisee shall not in the name of the Business (i) donate money, products, or services to any charitable, political, religious, or other organization, or (ii) act in support of any such organization, without CB Franchising's prior written approval, which will not be unreasonably withheld.
7.19 No Other Activity at the Location. Franchisee shall not engage in any activity at the Location other than operation of the Chocolate Bash Business.
7.20 No Other Businesses. If Franchisee is an entity, Franchisee shall not own or operate any other business except Chocolate Bash businesses.
7.21 No Third-Party Management. Franchisee shall not engage a third-party management company to manage or operate the Business without the prior written approval of CB Franchising, which will not be unreasonably withheld.
7.22 No Co-Branding. Franchisee shall not "co-brand" or associate any other business activity with the Chocolate Bash Business in a manner which is likely to cause the public to perceive it to be related to the Chocolate Bash Business.
(xi) Franchisee has received two or more notices of default and Franchisee commits another breach of this Agreement, all in the same 12-month period;
(xii) CB Franchising (or any affiliate) terminates any other agreement with Franchisee (or any affiliate) due to the breach of such other agreement by Franchisee (or its affiliate) (provided that termination of a Multi-Unit Development Agreement with Franchisee or its affiliate shall not give CB Franchising the right to terminate this Agreement); or
(xiii) Franchisee or any Owner is accused by any governmental authority or third party of any act that in CB Franchising's opinion is reasonably likely to materially and unfavorably affect the Chocolate Bash brand, or is charged with, pleads guilty to, or is convicted of a felony.
14.3 Effect of Termination. Upon termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to non-competition, confidentiality, indemnity, and dispute resolution, will remain in effect, and Franchisee must immediately:
(i) pay all amounts owed to CB Franchising based on the operation of the Business through the effective date of termination or expiration;
(ii) return to CB Franchising all copies of the Manual, Confidential Information and any and all other materials provided by CB Franchising to Franchisee or created by a third party for Franchisee relating to the operation of the Business, and all items containing any Marks, copyrights, and
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, several consequences can arise if a franchisee fails to comply with the standards and requirements of the Chocolate Bash system. Chocolate Bash may order a franchisee to temporarily cease operations of the business and remedy any dangerous condition if the franchisor discovers any aspect of the business that poses an imminent danger to health or safety. The franchisee is responsible for keeping the business in good condition, performing maintenance, and making necessary repairs. Chocolate Bash can also require the franchisee to undertake a remodel of the location, with some limitations on the frequency of required remodels. The franchisee must also use reasonable efforts to attend all in-person and remote meetings that Chocolate Bash requires, and cannot permit the principal executive to miss more than three consecutive required meetings.
Additional requirements include paying all vendors and suppliers in a timely manner and complying with the location's lease terms. The franchisee cannot make public statements about Chocolate Bash or the business without prior written approval from Chocolate Bash. Similarly, the franchisee needs approval before associating the business with any charitable, political, or religious organization. The franchisee is restricted from engaging in any activity at the location other than operating the Chocolate Bash business, and if the franchisee is an entity, it cannot own or operate any other business except Chocolate Bash businesses. Furthermore, the franchisee cannot engage a third-party management company or co-brand the business without Chocolate Bash's approval.
Chocolate Bash can terminate the franchise agreement if the franchisee fails to comply with its obligations. Specifically, the agreement can be terminated if the franchisee has received two or more notices of default and commits another breach of the agreement within a 12-month period. Termination can also occur if Chocolate Bash terminates another agreement with the franchisee due to a breach. Finally, Chocolate Bash can terminate the agreement if the franchisee or any owner is accused of any act that could negatively affect the Chocolate Bash brand, or is charged with or convicted of a felony. Upon termination, the franchisee must pay all outstanding amounts, return all confidential information and materials, and cease using the Chocolate Bash marks.