Under the Chocolate Bash Multi-Unit Development Agreement, what is the relationship between CB Franchising and the Franchisee?
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;
Source: Item 23 — RECEIPTS (FDD pages 39–101)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, the relationship between CB Franchising and the franchisee under the Multi-Unit Development Agreement (MUDA) involves specific commitments and conditions. On the same day the MUDA is executed, CB Franchising and the franchisee also enter into a Franchise Agreement for a Chocolate Bash business. The MUDA outlines the franchisee's commitment to develop multiple Chocolate Bash businesses.
The franchisee is obligated to adhere to a development schedule for opening Chocolate Bash locations. Upon executing the MUDA, the franchisee must pay the total Initial Franchise Fee to CB Franchising, which is non-refundable. For the first store, the Franchise Agreement is executed simultaneously with the MUDA. For each additional franchise, the franchisee must execute CB Franchising's current standard franchise agreement within three business days of leasing or acquiring 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 for each location.
CB Franchising retains the right to 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. However, if CB Franchising terminates the MUDA due to the franchisee's default, the franchisee is not liable for lost future revenues or profits from unopened Chocolate Bash businesses, and the franchisee may terminate the MUDA at any time. The franchisee's right to develop additional Chocolate Bash franchises after the first store is contingent on possessing sufficient financial and organizational capacity, as determined by CB Franchising, and maintaining full compliance with brand requirements at open locations, without being in default under any agreement with CB Franchising.
The laws of California govern all legal proceedings between the parties, and the franchisee cannot transfer the MUDA without CB Franchising's prior written consent. The dispute resolution and miscellaneous provisions of the Franchise Agreement are incorporated into the MUDA. This structure ensures that while the franchisee commits to developing multiple units, each unit is governed by its own franchise agreement, and CB Franchising maintains control over the franchisee's ability to expand based on performance and compliance.