What can Franchisor condition its approval on regarding an Ella Cafe Developer's offering?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
Developer must pay Franchisor an initial franchise fee in the amount set forth in the Key Terms.
4. DEVELOPMENT SCHEDULE AND MANNER FOR EXERCISING DEVELOPMENT RIGHTS
- 4.1. Separate Franchise Agreements. The Franchise Agreement for the first Coffee House to be developed under this Agreement is executed simultaneously with this Agreement. The franchise agreement for the second and each additional Coffee House to be developed will be in the form of Franchisor's then-current franchise agreement, the terms of which may be materially different from the terms of the first franchise agreement, except that the initial franchise fee will be in the amount set forth in the Development Schedule in Attachment A.
- 4.2. Manner for Exercising Development Rights. Before exercising any development right granted hereunder, Developer (or Developer's Affiliate if approved in writing by Franchisor) must apply to Franchisor for a franchise to operate a Coffee House. If Franchisor, in its sole discretion, determines that Developer has met each of the following conditions, then Franchisor will grant Developer a franchise for each respective 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.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, before exercising any development right, a Developer must apply to Ella Cafe for a franchise to operate a Coffee House. Ella Cafe, in its sole discretion, determines if the Developer has met certain conditions. If these conditions are met, Ella Cafe will grant the Developer a franchise for each respective Coffee House.
Ella Cafe may condition its approval on several factors. Operationally, the Developer must be in compliance with the Development Schedule and the Development Agreement, as well as any other agreements between them and Ella Cafe or its affiliates. The Developer must also be conducting the operation of their existing Coffee Houses, if any, and be capable of operating the proposed Coffee House, in accordance with the terms and conditions of the Franchise Agreements, and the standards, specifications, and procedures set forth in the Manual.
Financially, the Developer, its Affiliates, and their respective Owners must satisfy Ella Cafe's then-current financial criteria for franchisees and owners of Coffee Houses. They must also have been and are faithfully performing all terms and conditions under each of the existing Franchise Agreements with Ella Cafe. Legally, the Developer must submit to Ella Cafe, in a timely manner, all information and documents requested by Ella Cafe as a basis for the issuance of individual franchises or pursuant to any right granted to Developer by the Development Agreement or by any Franchise Agreement.