What is the 'Multi-Unit Development Agreement' for Cinch I.T. franchises also known as?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
In addition, for qualified franchisees who desire the right to develop multiple CINCH I.T. franchises within a designated territory (the "Development Area") and that meet certain conditions, we also offer the opportunity to enter into a Multi-Unit Development Agreement with us (the "Multi-Unit Development Agreement" or "Development Agreement"), as defined under the NASAA Multi-Unit Commentary, to develop a mutually agreed upon number of franchises
in accordance with a development schedule specified in the Multi-Unit Development Agreement (the "Development Schedule"). Our current form of Multi-Unit Development Agreement is included as Exhibit E to this Disclosure Document.
Source: Item 1 — THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 9–12)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, a Multi-Unit Development Agreement is also referred to as a 'Development Agreement'. This agreement is offered to qualified franchisees who want to develop multiple Cinch I.T. franchises within a specific area, known as the 'Development Area'.
The Multi-Unit Development Agreement outlines a development schedule, which specifies the number of franchises the franchisee must open within a certain timeframe. The current form of the Multi-Unit Development Agreement is included as Exhibit E to the Disclosure Document. Upon opening each additional location, the franchisee must pay the then-current Initial Training Fee and sign the current standard franchise agreement. This agreement may differ from the initial Franchise Agreement and contain materially different terms, although the franchise and royalty fees will remain the same.
It's important to note that if a Cinch I.T. franchisee fails to meet the development schedule outlined in the Multi-Unit Development Agreement, Cinch I.T. has the right to terminate the agreement. If this happens, the franchisee will lose the rights to develop the remaining area and any initial franchise fees paid for locations that haven't been opened. However, existing Franchise Agreements for already-opened locations will not be terminated solely due to the termination of the Multi-Unit Development Agreement. Unless a franchisee signs a Multi-Unit Development Agreement, they have no obligation or right to open additional Cinch I.T. franchises.
The Franchise Agreement for the first Cinch I.T. location under the Development Schedule must be signed at the same time as the Multi-Unit Development Agreement. This ensures that the franchisee is committed to the development plan from the outset. This structure is common in franchising, as it allows franchisors to expand rapidly while ensuring that franchisees are committed to developing a territory.