When does the term of the Multi-Unit Operator Agreement for Cilantro Taco Grill expire?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
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- TERM. Unless sooner terminated in accordance with this Agreement, the term of this Agreement and all rights granted by Franchisor under this Agreement shall expire on the date on which Multi-Unit Operator successfully and in a timely manner has complied with all of Multi-Unit Operator's obligations hereunder and has completed the development obligations in accordance with the Mandatory Development Schedule.
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, the Multi-Unit Operator Agreement's term and all rights granted by the franchisor expire when the Multi-Unit Operator has successfully and promptly met all obligations and completed the development obligations as outlined in the Mandatory Development Schedule. This means the agreement doesn't have a fixed expiration date but is tied to the franchisee fulfilling their development commitments.
For a prospective Cilantro Taco Grill multi-unit operator, this implies that the duration of the agreement is directly linked to their ability to meet the development schedule. Failure to adhere to the Mandatory Development Schedule constitutes a material event of default under the agreement, as stated in Section 5.2.1. This puts pressure on the operator to efficiently manage and execute the development of multiple Cilantro Taco Grill locations.
This type of agreement, where the term is tied to performance rather than a fixed period, is not uncommon in multi-unit franchising. It incentivizes the operator to develop the agreed-upon number of units within a reasonable timeframe. However, it also places a significant responsibility on the operator to ensure they have the resources and capabilities to meet the development obligations. Prospective franchisees should carefully review the Mandatory Development Schedule and assess their ability to comply with it before entering into the agreement.