What is the relationship between the MUDA and the separate franchise agreement required for each Chocolate Bash business?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
ranchisee 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).
Source: Item 23 — RECEIPTS (FDD pages 39–101)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, a Multi-Unit Development Agreement (MUDA) is established when both Chocolate Bash and the franchisee agree to develop multiple Chocolate Bash businesses. The MUDA outlines the development schedule and associated fees. Simultaneously with the MUDA, a Franchise Agreement is executed for the first Chocolate Bash store. For each subsequent Chocolate Bash franchise, the franchisee must execute Chocolate Bash's current standard franchise agreement within three business days of securing a location through lease or acquisition.
The MUDA itself does not grant the franchisee the right to open or operate a Chocolate Bash business. The right to operate each Chocolate Bash business is contingent upon the execution of a separate franchise agreement for each location, as specified within the MUDA. This means that while the MUDA sets the stage for developing multiple units, each unit requires its own individual franchise agreement to be fully operational.
CB Franchising can terminate the MUDA if the franchisee fails to meet the development schedule or if CB Franchising has the right to terminate any franchise agreement with the franchisee due to default, regardless of whether they actually terminate the franchise agreement. The franchisee must have sufficient financial and organizational capacity to develop, open, operate, and manage each additional Chocolate Bash business, as determined by CB Franchising. Additionally, the franchisee must be in full compliance with all brand requirements at its open Chocolate Bash businesses and not be in default under any Franchise Agreement or other agreement with CB Franchising.
If Chocolate Bash terminates the MUDA due to the franchisee's default, the franchisee will not be liable for lost future revenues or profits from unopened Chocolate Bash businesses. The franchisee also has the right to terminate the MUDA at any time. This arrangement provides Chocolate Bash with a mechanism to ensure that multi-unit franchisees are committed to the brand and capable of fulfilling their development obligations, while also protecting the franchisee from excessive liability if development plans do not materialize.