For Ella Cafe, what happens if the Developer fails to adhere to the Development Schedule?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
Developer's failure to adhere to the Development Schedule is a default under Section 9.2 of this Agreement.
Developer's failure to adhere to the Development Schedule (including any extensions thereof, approved by the Franchisor in writing) or to any time period for the development of replacement Coffee Houses is a material breach of this Agreement for which the Franchisee expressly acknowledges that the Franchisor may, at our sole discretion (i) terminate or modify any territorial protections granted to you, (ii) reduce the size of the Development Area, or (iii) reduce the number of Coffee Houses which you may establish under the Development Schedule.
- 9.2. Termination With Notice and Without Opportunity to Cure.
Franchisor has the right to terminate this Agreement, which termination will become effective upon delivery of notice without opportunity to cure if: (a) Developer fails to adhere to the Development Schedule set forth in the Key Terms
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, a Developer's failure to adhere to the Development Schedule constitutes a default under Section 9.2 of the Development Agreement.
Specifically, the FDD states that failure to adhere to the Development Schedule, including any approved extensions, or to meet the timelines for developing replacement Coffee Houses, is considered a material breach of the agreement. In such cases, Ella Cafe has the discretion to take actions such as terminating or modifying any territorial protections granted to the franchisee, reducing the size of the Development Area, or reducing the number of Coffee Houses the franchisee is allowed to establish under the Development Schedule.
Furthermore, Ella Cafe has the right to terminate the Development Agreement, effective immediately upon notice, if the Developer fails to adhere to the Development Schedule outlined in the Key Terms. This termination occurs without any opportunity for the Developer to rectify the situation. This underscores the importance of meeting the agreed-upon development milestones and the potential consequences of failing to do so.
Prospective Ella Cafe developers should carefully review the Development Schedule and ensure they have the resources and capabilities to meet the required timelines. Failure to do so could result in significant penalties, including loss of territorial rights or termination of the agreement.