What happens if an Ella Cafe 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.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, adhering to the Development Schedule is critical for developers. The Development Schedule is outlined in the Key Terms. If a developer fails to meet the milestones set in the Development Schedule, it constitutes a default under Section 9.2 of the Development Agreement.
Specifically, the FDD states that failing to adhere to the Development Schedule, including any written extensions approved by Ella Cafe, or failing to meet the timeframe for developing replacement Coffee Houses, is considered a material breach of the agreement.
In the event of such a breach, Ella Cafe has the sole discretion to take corrective actions. These actions may include (i) terminating or modifying any territorial protections granted to the developer, (ii) reducing the size of the Development Area, or (iii) reducing the number of Coffee Houses the developer is allowed to establish under the Development Schedule. This means a developer could lose their exclusive territory, have their territory size reduced, or be limited in the number of Ella Cafe locations they can open if they don't meet the agreed-upon development timeline.