What constitutes compliance with the Ella Cafe Development Schedule?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
Developer acknowledges that the Projected Opening Date set forth in the Key Terms for each Coffee House to be developed hereunder is reasonable. Subject to Developer's compliance with the requirements of this Section 4., Developer must execute a Franchise Agreement for each Coffee House at or prior to the applicable execution date set forth in the Development Schedule, which must be a date no later than one year prior to the Projected Opening Date for the applicable Coffee House.
- 4.2.1.
Operational Conditions: Developer is in compliance with the Development Schedule and this Agreement, and Developer or its Affiliates are in compliance with any other agreement between them and Franchisor or its Affiliates.
Developer or its Affiliates are conducting the operation of their existing Coffee Houses, if any, and are capable of conducting the operation of the proposed Coffee House, in accordance with the terms and conditions of the respective Franchise Agreements, and the standards, specifications, and procedures set forth and described in the Manual (defined in the Franchise Agreement).
- 4.2.2. Financial Conditions: Developer, or its Affiliates, and their respective Owners satisfy Franchisor's then-current financial criteria for franchisees and owners of Coffee Houses.
Developer, or its Affiliates, and their respective Owners have been and are faithfully performing all terms and conditions under each of the existing Franchise Agreements with Franchisor.
Notwithstanding the above, this Agreement does not grant Developer the right to open or operate more than the cumulative total number of Coffee Houses Developer is obligated to develop under the Development Schedule.
- 4.3.1.
If, during the Term of this Agreement, Developer ceases to operate any Coffee House developed under this Agreement for any reason, Developer must develop a replacement Coffee House.
The replacement Coffee House must be developed within a reasonable time (not to exceed 180 days) after Developer ceases to operate the original Coffee House, and the acquisition of existing Coffee Houses will not serve to meet Developer's obligations under this Section 4.3.
However, if, during the Term of this Agreement, Developer transfers its interest in a Coffee House in accordance with the transfer provisions set forth in the applicable Franchise Agreement for the Coffee House, the transferred Coffee House will continue to be counted in determining whether or not Developer has complied with the Development Schedule, provided that such Coffee House continues to be operated as a Coffee House.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, compliance with the Development Schedule requires the developer to meet certain operational and financial conditions. Operationally, the developer must adhere to the Development Schedule and the Development Agreement, ensuring that existing Ella Cafe locations (if any) are operated according to the Franchise Agreements and the standards outlined in the Manual. Financially, the developer and their owners must meet Ella Cafe's then-current financial criteria for franchisees and owners, and they must faithfully perform all terms and conditions under existing Franchise Agreements with Ella Cafe.
Furthermore, the developer must execute a Franchise Agreement for each Ella Cafe location at or before the date specified in the Development Schedule, but no later than one year prior to the Projected Opening Date for that location. The initial franchise fee for subsequent locations will be as stated in the Development Schedule. The developer also needs to designate a Principal Executive who has full control over the development activities and who must complete Ella Cafe's initial training program.
If a developer ceases to operate an Ella Cafe location, they are obligated to develop a replacement within 180 days. Acquiring existing coffee houses does not fulfill this obligation. However, if the developer transfers their interest in a location according to the Franchise Agreement and it continues to operate as an Ella Cafe, it will still count toward meeting the Development Schedule. Overall, compliance hinges on meeting operational standards, financial requirements, and adhering to the timelines set forth in the Development Schedule and related agreements.