How is 'permanent disability' defined in the Ella Cafe franchise agreement?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
Upon the permanent disability of Developer (if Developer is a natural person) or any Principal who is a natural person, Franchisor may, in its sole discretion, require such interest to be transferred to a third party in accordance with the conditions described in this Section 8. within six months after notice to Developer. "Permanent disability" means any physical, emotional, or mental injury, illness, or incapacity which would prevent a person from performing the obligations set forth in this Agreement or in any guaranty made part of this Agreement for at least 90 consecutive days and from which condition recovery within 90 days from the date of determination of disability is unlikely.
Permanent disability will be determined by a licensed practicing physician selected by Franchisor, upon examination of the person; or if the person refuses to submit to an examination, then such person automatically will be deemed permanently disabled as of the date of such refusal for the purpose of this Section 8.8.2.
The costs of any examination required by this Section 8.8.2. will be paid by Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, permanent disability is defined within the context of the Multi-Unit Development Agreement. It refers to a physical, emotional, or mental condition that prevents a person from fulfilling their obligations under the agreement or any related guaranty. This condition must last for at least 90 consecutive days, with recovery within another 90 days being unlikely.
For a prospective Ella Cafe franchisee, this definition is crucial because it outlines the circumstances under which the franchisor may require the transfer of the franchise interest to a third party. If a developer or a principal person experiences such a disability, Ella Cafe has the discretion to mandate the transfer of their interest within six months of notification. This clause protects Ella Cafe's operational continuity by ensuring that the business remains under capable management.
The determination of permanent disability is made by a licensed physician selected by Ella Cafe, who will examine the individual in question. Refusal to undergo this examination automatically results in the person being deemed permanently disabled for the purposes of this agreement. Ella Cafe will cover the costs associated with this examination. This process ensures an objective assessment while also stipulating consequences for non-compliance with the examination requirement.
This clause carries significant implications for franchisees, as it highlights the importance of having contingency plans for potential health issues that could impact their ability to manage the franchise. It is a fairly standard clause in franchise agreements to protect the brand and ensure business continuity, but franchisees should carefully consider its implications and consult with legal counsel to fully understand their rights and obligations under such circumstances.