If Ella Cafe and the franchisee cannot agree on a site, can Ella Cafe terminate the Franchise Agreement?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- (ii) If your site is not already known and approved by us when you sign your franchise agreement, then we and you will specify in your franchise agreement Site Selection Area within which you must identify a site. We do not select your site. Your site is subject to our approval. To obtain our approval, you must provide all information and documents about the site that we require. We will not unreasonably withhold our approval; however, if we cannot agree on a location for the Franchised Business, we may in our sole discretion allow more time for site selection or terminate the Franchise Agreement. If your Franchise Agreement is terminated you are not entitled to any refund of your initial franchise fee or other amounts paid to us.
- (iii) The factors we consider in approving sites are general location and neighborhood, competition, trade area demographics, traffic patterns, parking, size, physical characteristics of existing buildings, and lease terms. If you fail to comply with your obligation to identify a site that is acceptable to us, develop, and open the franchise by the Opening Date, defined below, and unless we agree to extend the deadline in writing, you will be in default and we may terminate your franchise agreement.
- (iv) The time limit for us to approve or disapprove your proposed site is 30 days after you submit all of our required documents and information. (Section 6.1). If we and you cannot agree on a site, you will be unable to comply with your obligation to develop and open the franchise by the deadline stated in the franchise agreement. Unless we agree to extend the deadline, you will be in default and we may terminate your franchise agreement.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 24–33)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, if Ella Cafe and the franchisee cannot agree on a location for the Franchised Business, Ella Cafe has the discretion to allow more time for site selection or terminate the Franchise Agreement. If the Franchise Agreement is terminated, the franchisee is not entitled to a refund of the initial franchise fee or other amounts paid to Ella Cafe.
Ella Cafe does not select the site for the franchisee's business. The franchisee is responsible for identifying a site within a specified Site Selection Area, subject to Ella Cafe's approval. To obtain approval, the franchisee must provide all required information and documents about the site. Ella Cafe states that it will not unreasonably withhold approval. Factors considered for site approval include general location, neighborhood, competition, demographics, traffic patterns, parking, size, physical characteristics, and lease terms.
Furthermore, if the franchisee fails to identify a site acceptable to Ella Cafe and open the franchise by the Opening Date, the franchisee will be in default, and Ella Cafe may terminate the franchise agreement, unless an extension is agreed upon in writing. The time limit for Ella Cafe to approve or disapprove a proposed site is 30 days after the franchisee submits all required documents and information. If no agreement can be reached on a site, the franchisee will not be able to meet the opening deadline, potentially leading to termination of the agreement by Ella Cafe.