Is the Cinch I.T. Franchise Agreement with Addenda attached to the Disclosure Document?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
Our current form of Multi-Unit Development Agreement is included as Exhibit E to this Disclosure Document.
Upon establishing each additional outlet under the Development Schedule, you must deliver to us the then-current Initial Training Fee (as defined in Item 5) and you will be required to sign a copy of our then-current standard form of franchise agreement, which may differ from the current Franchise Agreement and contain terms and condition that are materially different than the form of Franchise Agreement that is attached as Exhibit D to this Disclosure Document, however, the franchise fee and royalty fee will remain the same as the first Franchise Agreement. If you fail to open and continue to operate the required number of franchises in accordance with the mutually agreed upon Development Schedule, we will have the right to terminate the Multi-Unit Development Agreement. If the Multi-Unit Development Agreement is terminated, you will lose all of your rights to develop the Development Area and the initial franchise fees paid for any franchises for which franchise agreements have not been signed. However, the Franchise Agreement for each Franchised Business which has been opened will not be terminated solely by reason of the termination of the Multi-Unit Development Agreement. Unless you sign a Multi-Unit Development Agreement, you have no obligation, nor any right, to open any additional franchises.
The Franchise Agreement for the first CINCH I.T. Franchised Business to be developed under Development Schedule must be executed and delivered at the same time you sign Multi-Unit Development Agreement.
Source: Item 22 — CONTRACTS (FDD page 60)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, the standard form of the franchise agreement is included as Exhibit D. Additionally, Exhibit C includes state-specific addenda to the Cinch I.T. franchise agreement. For franchisees developing multiple units, Addendum A pertains to the designated territories within the development area, while Addendum B outlines the development schedule. These addenda modify the standard agreement to account for state laws and multi-unit development arrangements.
Specifically for California franchisees, the Cinch I.T. FDD includes an addendum to Item 17, addressing aspects of the California Franchise Investment Law. This addendum clarifies franchisees' rights concerning termination or non-renewal, bankruptcy, non-compete covenants, binding arbitration, and the application of Massachusetts law versus California law. It also references California Corporations Code Section 31125 regarding material modifications to an existing franchise.
Prospective franchisees should carefully review Exhibit D, Exhibit C, Addendum A, and Addendum B to fully understand the terms and conditions of the Cinch I.T. franchise agreement, including any state-specific modifications or obligations related to multi-unit development. Consulting with legal counsel is advisable to assess the implications of these agreements and addenda, especially concerning issues such as termination rights, non-compete clauses, and dispute resolution processes.