Under a Crave Multi-Unit Development Agreement, what must a franchisee adhere to regarding the establishment of Franchised Businesses within the Development Area?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
In certain circumstances, we will offer the right to enter into a multi-unit development agreement in the form attached as Exhibit C to this Disclosure Document (the "Multi-Unit Development Agreement") to develop any combination of multiple franchised Restaurants or Food Trucks to be located within a specifically described geographic area (the "Development Area"). We will determine the Development Area before you sign the Multi-Unit Development Agreement, and it will be included in the Multi-Unit Development Agreement. You must establish at least three Franchised Businesses within the Development Area according to a minimum performance schedule, and you must sign a separate Franchise Agreement for each Franchised Business established under the Multi-Unit Development Agreement.
You will sign the Franchise Agreement for the first Franchised Business to be developed under the Multi-Unit Development Agreement at the same time you sign the Multi-Unit Development Agreement. For each additional Crave franchise developed under the Multi-Unit Development Agreement, you must sign the form of Franchise Agreement that we are then offering to new franchisees, which may differ from the current Franchise Agreement included in this Disclosure Document. The size of the Development Area will vary depending upon local market conditions and the number of Franchised Businesses to be developed.
Source: Item 1 — THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 6–9)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, a franchisee entering into a Multi-Unit Development Agreement must adhere to specific requirements for establishing Franchised Businesses within their designated Development Area. The franchisee is obligated to establish at least three Franchised Businesses within the Development Area. This development must follow a minimum performance schedule as defined in the agreement. For each Franchised Business established under the Multi-Unit Development Agreement, the franchisee is required to sign a separate Franchise Agreement. The Development Area's size is determined by Crave, taking into account local market conditions and the number of Franchised Businesses to be developed. This area will be defined before the Multi-Unit Development Agreement is signed and will be included in the agreement.
Notably, the Franchise Agreement for the first Franchised Business to be developed under the Multi-Unit Development Agreement must be signed concurrently with the Multi-Unit Development Agreement. For subsequent Crave franchises developed under the agreement, the franchisee must sign the form of Franchise Agreement that Crave is offering to new franchisees at that time. This agreement may differ from the current Franchise Agreement included in the Disclosure Document, meaning the terms could evolve as Crave updates its standard franchise terms.
This multi-unit development structure is common in franchising, allowing franchisees to expand their footprint within a defined territory. However, it also carries the responsibility of meeting the development schedule and adhering to the then-current franchise terms for each new location. Prospective franchisees should carefully review the Multi-Unit Development Agreement and the current Franchise Agreement to understand their obligations and the potential for changes in the franchise terms over time. It is also important to assess the local market conditions and the feasibility of establishing the required number of franchises within the Development Area according to the specified schedule.