What is the Chocolate Fish Coffee franchisee's obligation regarding the operation of the business?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
the Location. If no Location is stated on the Summary Page when this Agreement is signed, then the parties will determine the Location in accordance with Section 6.1. Franchisee shall develop, open and operate a Chocolate Fish Coffee business at the Location for the entire term of this Agreement.
- 2.2 Protected Territory. Chocolate Fish Franchising shall not establish, nor license the establishment of, another business within the Territory selling the same or similar goods or services under the same or similar trademarks or service marks as a Chocolate Fish Coffee business. Chocolate Fish Franchising retains the right to:
- (i) establish and license others to establish and operate Chocolate Fish Coffee businesses outside the Territory, notwithstanding their proximity to the Territory or their impact on the Business;
- (ii) operate and license others to operate businesses anywhere that do not operate under the Chocolate Fish Coffee brand name; and
- (iii) sell and license othersto sell products and services in the Territory through channels of distribution (including the internet) other than Chocolate Fish Coffee outlets.
- 2.3 Franchisee Control. Franchisee represents that it will identify each owner, officer and director of Franchisee, and describes the nature and extent of each owner's interest in Franchisee. If any of this information changes, Franchisee shall notify Franchisor within 10 days.
- 2.4 Principal Executive. Franchisee agrees that the person designated as the "Principal Executive" on the Summary Page is the executive primarily responsible for the Business and has decision-making authority on behalf of Franchisee. The Principal Executive must have at least 10% ownership interest in Franchisee. The Principal Executive does not have to serve as a day-today general manager of the Business, but the Principal Executive must devote substantial time and attention to the Business. If the Principal Executive dies, becomes incapacitated, transfers his/her interest in Franchisee, or otherwise ceases to be the executive primarily responsible for the Business, Franchisee shall promptly designate a new Principal Executive, subject to Chocolate Fish Franchising's reasonable approval.
- 2.5 Guaranty. If Franchisee is an entity, then Franchisee shall have each Owner sign a personal guaranty of Franchisee's obligations to Chocolate Fish Franchising, in the form of Attachment 3.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, franchisees are obligated to develop, open, and operate a Chocolate Fish Coffee business at the designated location for the entire term of the Franchise Agreement. This means the franchisee commits to running the business consistently throughout the agreement's duration, adhering to Chocolate Fish Coffee's standards and practices.
Chocolate Fish Coffee requires that the person designated as the "Principal Executive" on the Summary Page is the executive primarily responsible for the Business and has decision-making authority on behalf of Franchisee. The Principal Executive must have at least 10% ownership interest in Franchisee. While the Principal Executive doesn't have to manage the day-to-day operations, they must devote substantial time and attention to the business. If the Principal Executive changes, Chocolate Fish Franchising must approve the new appointment.
Furthermore, franchisees must identify themselves as independent owners of the business as prescribed by Chocolate Fish Coffee, including displaying appropriate signage. Franchisees are expected to maintain honest and fair business practices in all interactions with customers, employees, vendors, and other parties. They must also comply with any code of ethics or statement of values provided by Chocolate Fish Coffee and avoid any actions that could harm the goodwill associated with the Chocolate Fish Coffee brand. Franchisees are restricted from engaging in any other business activities at the Chocolate Fish Coffee location and cannot use business assets for purposes other than operating the Chocolate Fish Coffee business. If the franchisee is an entity, it cannot own or operate any other business except Chocolate Fish Coffee businesses. Franchisees cannot engage a third-party management company to manage or operate the Business without the prior written approval of Chocolate Fish Franchising.
These obligations ensure that Chocolate Fish Coffee franchisees operate their businesses in a manner that aligns with the brand's standards and protects its reputation. Franchisees should be prepared to commit fully to the operation of their Chocolate Fish Coffee business and adhere to the franchisor's guidelines.