What is the purpose of the Multi-Unit Development Agreement for Chocolate Bash franchisees?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Division of Securities Department of Financial Institutions Post Office Box 1768 Madison, WI 53701 (608) 266-2801 | Securities And Franchise Registration Wisconsin Securities Commission 201 West Washington Avenue, Suite 300 Madison, WI 53703 | |
EXHIBIT C
MULTI-UNIT DEVELOPMENT AGREEMENT
| Name | Shares or Percentage of Ownership | |---|---| | | | | | | | | | | | | | | | Background Statement: On the same day as they execute this MUDA, CB Franchising and Franchisee have entered into a Franchise Agreement for the franchise of a Chocolate Bash business (the "Franchise Agreement"; capitalized terms used but not defined in this MUDA have the meanings given in the Franchise Agreement). CB Franchising and Franchisee desire that Franchisee develop multiple Chocolate Bash businesses.
1. Multi-Unit Commitment.
(a) Development Schedule; Fee. Franchisee shall develop and open Chocolate Bash businesses on the following schedule:
| Name | Title |
|---|---|
- (b) Payment**.** Upon execution of this MUDA, Franchisee shall pay the total Initial Franchise Fee to CB Franchising. The Initial Franchise Fee is non-refundable.
- 2. Form of Agreement. For Store #1, Franchisee and CB Franchising have executed the Franchise Agreement simultaneously with this MUDA. For each additional Chocolate Bash franchise, Franchisee shall execute CB Franchising's then-current standard form of franchise agreement no later than three business days after Franchisee leases or acquires a location. This MUDA does not give Franchisee the right to construct, open, or operate a Chocolate Bash business, and Franchisee acknowledges that Franchisee may construct, open, and operate each Chocolate Bash business only pursuant to a separate franchise agreement executed pursuant to this MUDA for each such Chocolate Bash business.
| conflicts of law). The parties agree that any California law for the protection of franchisees or | ||||
|---|---|---|---|---|
| business opportunity purchasers will not apply unless its jurisdictional requirements are met | ||||
| independently without | reference to this | Section 6. The | provisions of Article | 17 (Dispute |
- 4. Default and Termination. CB Franchising may terminate this MUDA by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
- (i) Franchisee fails to satisfy the development schedule; or
- (ii) CB Franchising has the right to terminate any franchise agreement between CB Franchising and Franchisee (or any affiliate thereof) due to Franchisee's default thereunder (whether or not CB Franchising actually terminates such franchise agreement).
- 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.
- 7. Dispute Resolution; Miscellaneous. The laws of the State of California (without giving effect to its principles of conflicts of law) govern all adversarial proceedings between the parties. The parties agree that any California law for the protection of franchisees or business opportunity purchasers will not apply unless its jurisdictional requirements are met independently without reference to this Section 7. Franchisee shall not Transfer this MUDA without the prior written consent of CB Franchising, and any Transfer without CB Franchising's prior written consent shall be void. The provisions of Article 17 (Dispute Resolution) and Article 18 (Miscellaneous) of the Franchise Agreement apply to and are incorporated into this MUDA as if fully set forth herein.
Source: Item 23 — RECEIPTS (FDD pages 39–101)
What This Means (2024 FDD)
According to the 2024 Franchise Disclosure Document, the Multi-Unit Development Agreement (MUDA) between CB Franchising and the franchisee outlines the terms for developing multiple Chocolate Bash businesses. The MUDA is executed on the same day as the initial Franchise Agreement for the first Chocolate Bash location. The purpose of the MUDA is to allow the franchisee to commit to a schedule for opening multiple Chocolate Bash locations.
Under the MUDA, the franchisee must adhere to a development schedule for opening Chocolate Bash businesses. Upon signing the MUDA, the franchisee is required to pay the total Initial Franchise Fee to CB Franchising, which is non-refundable. For each Chocolate Bash franchise beyond the first, the franchisee must execute the franchisor's current standard franchise agreement within three business days of securing a location. The MUDA itself does not grant the franchisee the right to open or operate a Chocolate Bash business; this right is only granted through separate franchise agreements executed for each location under the MUDA.
CB Franchising can terminate the MUDA if the franchisee fails to meet the development schedule or if CB Franchising has grounds to terminate any existing franchise agreement with the franchisee. However, the franchisee's commitment is treated as an option, limiting liability for lost future revenues if the MUDA is terminated due to the franchisee's default. The franchisee also has the option to terminate the MUDA at any time. The franchisee's right to develop subsequent Chocolate Bash franchises is contingent on having sufficient financial and organizational capacity and being in full compliance with brand standards and agreements.
The MUDA is governed by California law, excluding its conflicts of law principles, and certain California franchisee protection laws may not apply unless their jurisdictional requirements are independently met. The franchisee cannot transfer the MUDA without prior written consent from CB Franchising. Dispute resolution and miscellaneous provisions from the standard Franchise Agreement are incorporated into the MUDA. In California, the payment of development and initial fees attributable to a specific unit in the development schedule is deferred until that unit is open.