What is the nature of the Chocolate Bash franchisee's commitment to develop businesses under the MUDA?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- 5. Limitation of Liability. Franchisee's commitment to develop Chocolate Bash businesses is in the nature of an option only. If CB Franchising terminates this MUDA for Franchisee's default, Franchisee shall not be liable to CB Franchising for lost future revenues or profits from the unopened Chocolate Bash businesses. Franchisee may terminate this MUDA at any time.
- 6. Conditions. Franchisee's right to develop each Chocolate Bash franchise after the Store #1 is subject to the following:
- (i) Franchisee must possess sufficient financial and organizational capacity to develop, open, operate, and manage each additional Chocolate Bash business, in the reasonable judgment of CB Franchising, and
- (ii) Franchisee must be in full compliance with all brand requirements at its open Chocolate Bash businesses, and not in default under any Franchise Agreement or any other agreement with CB Franchising.
Source: Item 23 — RECEIPTS (FDD pages 39–101)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, a franchisee's commitment to develop multiple units under a Multi-Unit Development Agreement (MUDA) is viewed as an option, not an obligation. The MUDA outlines a development schedule that the franchisee is expected to follow for opening Chocolate Bash businesses.
However, the agreement specifies that if Chocolate Bash terminates the MUDA due to the franchisee's failure to meet the development schedule, the franchisee will not be held liable for lost future revenues or profits from unopened Chocolate Bash locations. The franchisee also has the option to terminate the MUDA at any time.
The right to develop additional Chocolate Bash franchises beyond the first store is contingent on the franchisee demonstrating sufficient financial and organizational capacity, as determined by Chocolate Bash, to successfully manage each new business. Furthermore, the franchisee must maintain full compliance with all brand standards at their existing Chocolate Bash locations and must not be in default under any agreements with Chocolate Bash.