What form is the Multi-Unit Development Agreement (MUDA) for Ella Cafe in?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
You do not have the right to establish additional franchised Coffee House unless you sign a MUDA in the form attached as Exhibit C to this disclosure document for at least five units. If you and we sign a MUDA, then you will have the right to establish a mutually-agreed number of additional Coffee Houses on a mutually-agreed schedule. Under the MUDA, your right to develop additional Coffee Houses is subject to the following: (1) you must comply with the mutually-agreed development schedule, (2) you must have sufficient financial and organizational capacity to develop, open, operate, and manage each additional ELLA business, (3) you must be in compliance with all brand requirements at your open Ella Coffee House business(es), and (4) you must not be in default under any other agreement with us. We will approve the location of future sites and territories for those sites, and our then-current standards for sites and territories will apply. You are not obligated to develop additional Coffee Houses under the MUDA, and you may terminate it any time without penalty; however, if you do not meet your development schedule in the MUDA, we have the right to terminate your right to develop additional coffee houses.
If you fail to meet any of your obligations under the MUDA, including the development obligations, we (i) terminate or modify any territorial protections granted to you, (ii) reduce the size of the Development Area, )iii) reduce the number of Coffee Houses which you may establish under the Development Schedule. There are no circumstances that permit us to modify your territorial rights under the MUDA.
Source: Item 12 — TERRITORY (FDD pages 33–35)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the Multi-Unit Development Agreement (MUDA) is in the form attached as Exhibit C to the disclosure document. This agreement is necessary if a franchisee wishes to establish additional Ella Cafe locations, requiring a commitment to at least five units.
The MUDA grants the franchisee the right to establish a mutually-agreed number of additional Ella Cafe locations, based on a mutually-agreed schedule. However, this right is contingent upon several factors. The franchisee must adhere to the development schedule, possess the financial and organizational capacity to manage each additional location, comply with all brand requirements at their existing Ella Cafe businesses, and remain in compliance with all agreements with Ella Cafe.
Ella Cafe retains approval rights over the locations and territories for future sites, ensuring that they meet the company's standards. While the franchisee is not obligated to develop additional locations under the MUDA and can terminate it without penalty, failure to meet the development schedule allows Ella Cafe to terminate the franchisee's right to develop further locations. Furthermore, Ella Cafe can modify or terminate territorial protections or reduce the development area and the number of coffee houses a franchisee can establish if the franchisee fails to meet their obligations under the MUDA.