What right and obligation does the Chop5 Salad Kitchen Development Agreement grant to the developer?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
4. DEVELOPMENT OBLIGATIONS
- 4.1. Development Schedule. You must develop, open and operate all Restaurants listed in the Development Schedule. You must develop and open each Restaurant in strict compliance with the opening dates set forth in the Development Schedule. We may, in our sole discretion, extend one or more opening dates listed in the Development Schedule if you demonstrate to our satisfaction that you used best efforts to comply with the opening date and the need for the extension is due to unforeseeable delays rather than your lack of diligence or funding. The opening date listed in the Development Schedule for a given Restaurant may be earlier than the opening date required under the terms of the associated Franchise Agreement. In order to comply with the Development Schedule you must open each Restaurant by the opening date listed in the Development Schedule even if such date is earlier than the opening date required by the associated Franchise Agreement.
- 4.2. Site Selection. You must select a specific site within the Development Territory for each Restaurant in compliance with our then-current site selection criteria. Each site you select is subject to our prior approval in accordance with the applicable Franchise Agreement.
- 4.3. Franchise Agreements. You must sign a separate Franchise Agreement for each Restaurant. You must sign the Initial Franchise Agreement for your first (1st) Restaurant at the time you sign this Agreement. We will not review proposed sites for a Restaurant until you sign the applicable Franchise Agreement for that Restaurant. Each Franchise Agreement shall be our then-current form of CHOP5 Salad Kitchen Franchise Agreement, the terms of which may vary materially and substantially from the terms of the Initial Franchise Agreement; provided, however, that the royalty fee will not exceed that imposed under the Initial Franchise Agreement. The development fee paid pursuant to §5 shall be deemed to include and satisfy the initial franchise fee imposed under each Franchise Agreement you sign for a Restaurant identified in the Development Schedule. You have no right to construct or operate a Restaurant until the parties have signed the Franchise Agreement and all ancillary agreements for that Restaurant. You must develop, open and operate each Restaurant in compliance with the Franchise Agreement and the Manual.
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, the Area Development Agreement grants the developer the right and obligation to develop, open, and operate Chop5 Salad Kitchen restaurants within a specific Development Territory, according to a Development Schedule. The developer must adhere to the opening dates outlined in the Development Schedule for each restaurant. However, Chop5 Franchise LLC may extend these dates if the developer demonstrates they used their best efforts and the delay was due to unforeseeable circumstances, not a lack of diligence or funding.
The developer is obligated to select sites for each restaurant within the Development Territory that meet Chop5 Salad Kitchen's site selection criteria, subject to the franchisor's approval. A separate Franchise Agreement must be signed for each restaurant, with the Initial Franchise Agreement signed at the same time as the Area Development Agreement. Chop5 Franchise LLC will not review proposed sites until the relevant Franchise Agreement is signed. While the terms of subsequent Franchise Agreements may differ from the initial one, the royalty fee will not exceed that of the Initial Franchise Agreement.
The development fee covers the initial franchise fee for each restaurant listed in the Development Schedule. The developer cannot begin construction or operation until both parties have signed the Franchise Agreement and all related ancillary agreements. The developer is obligated to develop, open, and operate each restaurant in accordance with both the Franchise Agreement and the Manual provided by Chop5 Salad Kitchen.