What are 'Development Periods' in the context of a Cinch I.T. franchise agreement?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
. You acknowledge that the then-current form of Franchise Agreement may differ from Our current Franchise Agreement, and may include materially different economic terms, including, but not limited to, higher training fees and marketing fund contributions, however, the franchise fee and royalty fee will remain the same as the first Franchise Agreement.
5.2 Development Schedule.
- (a) Acknowledging that time is of the essence, You agree to exercise Your development rights according to Section 5.1 and according to the Development Schedule set forth on Addendum B, which schedule designates the number of CINCH I.T. Franchised Businesses in the Development Area to be established and in operation by You upon the expiration of each of the designated development periods ("Development Periods").
- (b) During any Development Period, You may, with Our prior written consent, develop more than the number of CINCH I.T. Franchised Businesses that You are required to develop during that Development Period. Any CINCH I.T. Franchised Businesses developed during a Development Period in excess of the minimum number of CINCH I.T. Franchised Businesses required to be developed upon expiration of that Development Period shall be applied to satisfy Your development obligation during the next succeeding Development Period. You shall not open more than the number of CINCH I.T. Franchised Businesses You are obligated to develop under this Agreement, as set forth in the Development Schedule; provided, however, that You may be permitted to open CINCH I.T. Franchised Businesses in excess of the number permitted by the Development Schedule if You receive Our advanced written permission, which may be granted or denied in Our sole discretion. You shall pay Us the then-current Initial Franchise Fee and the then-current Initial Training Fee, reduced as applicable, at the time You sign a Franchise Agreement for any additional CINCH I.T. Franchised Businesses.
- (c) If during the term of this Agreement, You, in accordance with the terms of any Franchise Agreement for a CINCH I.T. Franchised Business developed under this Agreement, transfer Your interest in such CINCH I.T. Franchised Business, the transferred CINCH I.T. Franchised Business shall continue to be counted in determining whether You have complied with the Development Schedule so long as it continues to be operated as a CINCH I.T. Franchised Business.
- (d) Opening Schedule.
- (i) You shall open each CINCH I.T. Franchised Business and shall commence
- (d) Opening Schedule.
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business in accordance with the Development Schedule set forth on Addendum B, unless, subject to Our approval, You obtain an extension of the Development Period from Us to commence operation of a particular CINCH I.T. Franchised Business under the procedure defined in (d)(ii) below. Each extension shall be for an additional ninety (90) day period commencing upon the expiration of the applicable Development Period, including any previous extensions thereof ("Extension Date"). No more than two (2) extensions of any Development Period will be permitted. If an extension of a Development Period is granted by Us, the Opening Date for the CINCH I.T. Franchised Business (as defined in the Franchise Agreement) shall be extended to the Extension Date. No extension of any Development Period shall affect the duration of any other Development Period or any of Your other development obligations. If an extension is requested in the final Development Period, the term of this Agreement shall be extended to the Extension Date, and thereafter You shall have no further rights under this Agreement. Each extension may be conditioned upon payment of an extension fee ("Extension Fee") of Five Thousand Dollars ($5,000.00) per extension.
- (ii) You shall notify Us in writing at least thirty (30) days prior to the Projected Opening Date (defined below) for a CINCH I.T. Franchised Business if You will be unable to commence operation of the CINCH I.T. Franchised Business by the expiration date of the Development Period in which such CINCH I.T.
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, 'Development Periods' are designated timeframes within which a multi-unit developer is required to establish and have operational a specific number of Cinch I.T. franchised businesses in their development area, as outlined in the Development Schedule (Addendum B). The franchisee agrees to adhere to this schedule, understanding that time is of the essence.
During any Development Period, a Cinch I.T. franchisee can develop more than the required number of franchised businesses with the franchisor's written consent. If they exceed the minimum requirement, these additional businesses will count towards fulfilling the development obligation for the subsequent Development Period. However, the franchisee cannot open more Cinch I.T. locations than stipulated in the Development Schedule without advance written permission from the franchisor, which may be granted or denied at their discretion. For each additional franchise, the franchisee must pay the then-current Initial Franchise Fee and Initial Training Fee (potentially reduced).
Cinch I.T. franchisees must open each franchised business and commence operations according to the Development Schedule. However, they can request an extension of a Development Period from Cinch I.T., subject to the franchisor's approval. Each extension is for an additional 90-day period, and no more than two extensions are permitted per Development Period. Requesting an extension requires written notification to Cinch I.T. at least 30 days before the Projected Opening Date, including reasons for the delay and the expected opening date, along with payment of an Extension Fee, which costs $5,000 per extension. Failure to adhere to the Development Schedule, including any approved extensions, constitutes a material breach of the agreement.