Under what conditions might Cost Cutters Family Hair Salon terminate the Development Agreement?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
our second Store to find a site for and then open your third Store, and then a final 18 months from the deadline for opening your third Store to find a site for and then open your fourth Store.
If you fail to meet any Minimum Development Quota, Cost Cutters has the right to terminate the Development Agreement by delivering a termination notice to you. While Cost Cutters' right to terminate the Development Agreement is, except as described below, its sole and exclusive remedy for your failure to meet a Minimum Development Quota, no development fees paid are refundable. If the Development Agreement requires you to develop more than one Cost Cutters Store within the Franchised Area, then Cost Cutters' decision to terminate the Development Agreement due to your failure to meet the Minimum Development Quota for your first Store also will, without separate notice, concurrently and automatically terminate the Franchise Agreement for that first Store (which you and Cost Cutters will sign concurrently with signing the Development Agreement). If the Development Agreement requires the development of only one Store within the Franchised Area, your failure to meet the Minimum Development Quota by the last day of the lone Development Period results in the expiration of the Development Agreement and, without separate notice, the concurrent and automatic expiration of the Franchise Agreement for that first Store (which you and Cost Cutters will sign concurrently with signing the Development Agreement).
Competition
You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. We and our affiliates retain all rights with respect to Cost Cutters Stores, the Marks, the offer and sale of products and services that are similar to, competitive with, or dissimilar from the products and services your Store offers and sells, and any other activities we and they deem appropriate, whenever and wherever we and they desire. Those rights include the following:
- (1) to own and operate, and to allow other franchisees and licensees to own and operate, Cost Cutters Stores at any physical locations (other than at the Cost Cutters Store's specific premises), in any geographic markets, and on any terms and conditions we and they deem appropriate;
Source: Item 12 — TERRITORY (FDD pages 52–55)
What This Means (2024 FDD)
According to the 2024 Cost Cutters Family Hair Salon Franchise Disclosure Document, Cost Cutters Family Hair Salon can terminate the Development Agreement if the franchisee fails to meet the Minimum Development Quota. This quota refers to the minimum agreed-upon number of Cost Cutters Family Hair Salon stores that the franchisee must have open and operating within the Franchised Area by the end of each Development Period. These Development Periods are fixed for all franchisees.
Specifically, after signing the Development Agreement and Franchise Agreement for the first store, the franchisee has 12 months to find a site and open that store. If participating in the Fast Start Program, the franchisee has 12 months from contract signing to open the first store, 18 months from the first store's deadline to open the second, another 18 months to open the third, and a final 18 months to open the fourth store.
If the Development Agreement requires the development of only one store and the franchisee fails to meet the Minimum Development Quota by the last day of the Development Period, the Development Agreement expires automatically. This expiration also leads to the concurrent and automatic expiration of the Franchise Agreement for that first store, without separate notice. If the agreement requires multiple stores, failure to meet the quota for the first store will also terminate the franchise agreement for the first store.