Can Chocolate Fish Coffee require a remodel of the business as a condition of renewal?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- 7.13 Remodeling. In addition to Franchisee's obligations to comply with all System Standards in effect from time to time, Chocolate Fish Franchising may require Franchisee to undertake and complete a Remodel of the Location to Chocolate Fish Franchising's satisfaction. Franchisee must complete the Remodel in the time frame specified by Chocolate Fish Franchising. Chocolate Fish Franchising may require the Franchisee to submit plans for Chocolate Fish Franchising's reasonable approval prior to commencing a required Remodel. Chocolate Fish Franchising's right to require a Remodel is limited as follows: (i) the Remodel will not be required in the first two or last two years of the term (except that a Remodel may be required as a condition to renewal of the term or a Transfer), and (ii) a Remodel will not be required more than once every five years from the date on which Franchisee was required to complete the prior Remodel.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, Chocolate Fish Franchising may require a remodel of the location as a condition of renewal. Chocolate Fish Franchising can mandate that franchisees undertake and complete a remodel of their location to meet Chocolate Fish Franchising's standards. The franchisee is responsible for completing the remodel within the timeframe specified by Chocolate Fish Franchising and may need to submit plans for approval before starting the remodel.
The FDD outlines specific limitations on when Chocolate Fish Coffee can require a remodel. A remodel will not be required during the first two or last two years of the franchise term. However, an exception exists, allowing a remodel to be required as a condition for renewal of the term or a transfer of the franchise. Additionally, Chocolate Fish Franchising will not require a remodel more than once every five years, calculated from the completion date of the previous remodel.
This requirement has significant financial implications for prospective franchisees. Remodeling can be a substantial expense, and franchisees need to factor in the potential cost of a remodel when considering renewal. The definition of "Remodel" includes conforming to current standards for building design, exterior facade, trade dress, signage, fixtures, furnishings, equipment, decor, color schemes, and presentation of the Marks. This ensures that the franchise location aligns with the brand's current image.
It is important for potential franchisees to discuss the potential costs and scope of required remodels with Chocolate Fish Coffee during their due diligence. Understanding the frequency and potential expenses associated with remodels is crucial for long-term financial planning and assessing the overall profitability of the franchise.