Under what agreement would a multi-unit Chocolate Fish Coffee developer operate?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
If you sign a Multi-Unit Development Agreement (attached as Exhibit C to this disclosure document), you will develop multiple Chocolate Fish Coffee outlets, on an agreed-upon schedule.
You do not have the right to establish additional franchised outlets unless you sign a Multi-Unit Development Agreement ("MUDA") in the form attached as Exhibit C to this disclosure document. If you and we sign a MUDA, then you will have the right to establish a mutually-agreed number of additional outlets on a mutually-agreed schedule. Under the MUDA, your right to develop additional outlets is subject to (1) you must comply with the mutually-agreed development schedule, (2) you must have sufficient financial and organizational capacity to develop, open, operate, and manage each additional Chocolate Fish Coffee business, (3) you must be in compliance with all brand requirements at your open Chocolate Fish Coffee business(es), and (4) you must not be in default under any other agreement with us.
For each additional Chocolate Fish Coffee franchise, Franchisee shall execute Chocolate Fish Franchising's thencurrent 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 Fish Coffee business, and Franchisee acknowledges that Franchisee may construct, open, and operate each Chocolate Fish Coffee business only pursuant to a separate
Franchisee shall locate each Chocolate Fish Coffee business it develops under this MUDA within the following area: (the "Development Area").
Franchisee has exclusive rights to develop, open or operate Chocolate Fish Coffee businesses in the Development Area while this MUDA is effective.
Chocolate Fish 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) Chocolate Fish Franchising has the right to terminate any franchise agreement between Chocolate Fish Franchising and Franchisee (or any affiliate thereof) due to Franchisee's default thereunder (whether or not Chocolate Fish Franchising actually terminates such franchise agreement).
Franchisee may terminate this MUDA at any time.
If Chocolate Fish Franchising terminates this MUDA for Franchisee's default, Franchisee shall not be liable to Chocolate Fish Franchising for lost future revenues or profits from the unopened Chocolate Fish Coffee businesses.
Source: Item 5 — INITIAL FEES (FDD pages 9–10)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, a multi-unit developer operates under a Multi-Unit Development Agreement (MUDA). This agreement, attached as Exhibit C to the FDD, grants the developer the right to establish a mutually-agreed number of additional Chocolate Fish Coffee outlets based on a mutually-agreed schedule. The MUDA does not, on its own, grant the right to open or operate a Chocolate Fish Coffee business.
For each additional Chocolate Fish Coffee franchise beyond the first, the franchisee must execute Chocolate Fish Coffee's then-current standard form of franchise agreement. This must be done no later than three business days after the franchisee leases or acquires a location. The MUDA outlines specific conditions that must be met to develop additional units, including compliance with the development schedule, sufficient financial and organizational capacity, adherence to brand standards at existing locations, and compliance with all agreements with Chocolate Fish Coffee.
The MUDA also specifies that the franchisee must locate each Chocolate Fish Coffee business within a defined Development Area and grants exclusive development rights within that area while the MUDA is effective. Chocolate Fish Coffee retains the right to terminate the MUDA if the franchisee fails to meet the development schedule or defaults on any franchise agreement. However, the franchisee can terminate the MUDA at any time without penalty, and the franchisee will not be liable to Chocolate Fish Coffee for lost future revenues or profits from unopened locations if Chocolate Fish Coffee terminates the MUDA for default.