Under the Multi-Unit Development Agreement (MUDA), what is the franchisee required to do regarding the development schedule for Chocolate Bash businesses?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
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:
Source: Item 23 — RECEIPTS (FDD pages 39–101)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, a franchisee entering into a Multi-Unit Development Agreement (MUDA) is obligated to adhere to a specific development schedule for opening Chocolate Bash businesses. The franchisee and CB Franchising execute a Franchise Agreement for a single Chocolate Bash business on the same day they execute the MUDA. The MUDA outlines the commitment of the franchisee to develop and open multiple Chocolate Bash businesses according to an agreed-upon schedule.
Failure to meet the development schedule outlined in the MUDA can result in termination of the agreement by CB Franchising. This termination can occur without any opportunity for the franchisee to correct the failure. However, the document also states that the franchisee's commitment is "in the nature of an option only." If the MUDA is terminated due to the franchisee's default, the franchisee will not be held liable for lost future revenues or profits from unopened Chocolate Bash businesses. The franchisee also has the option to terminate the MUDA at any time.
The franchisee's right to develop additional Chocolate Bash franchises beyond the first store is contingent upon possessing sufficient financial and organizational capacity to successfully develop, open, operate, and manage each additional business, as determined by Chocolate Bash. Additionally, the franchisee must be in full compliance with all brand requirements at its existing Chocolate Bash businesses and must not be in default under any Franchise Agreement or any other agreement with Chocolate Bash.
For each Chocolate Bash franchise beyond the initial store, the franchisee is required to execute Chocolate Bash's current standard form of franchise agreement no later than three business days after securing a location through lease or acquisition. The MUDA itself does not grant the franchisee the right to construct, open, or operate a Chocolate Bash business; these rights are only conferred through the execution of a separate franchise agreement for each location.