For Ella Cafe, what is the process for a developer to exercise their development rights?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
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. Financial Conditions: Developer, or its Affiliates, and their respective Owners satisfy Franchisor's then-current financial criteria for franchisees and owners of Coffee Houses.
Developer, or its Affiliates, and their respective Owners have been and are faithfully performing all terms and conditions under each of the existing Franchise Agreements with Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, a developer who wants to exercise their development rights must first apply to Ella Cafe for a franchise to operate a Coffee House. Ella Cafe will then determine, at its sole discretion, if the developer has met certain conditions.
The first set of conditions are operational. The developer must be in compliance with the Development Schedule and the Development Agreement, and must also be in compliance with any other agreement between them and Ella Cafe or its affiliates. Furthermore, the developer must 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 of the Franchise Agreements and the standards, specifications, and procedures set forth in the Manual.
The second set of conditions are financial. 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 also must have been and are faithfully performing all terms and conditions under each of the existing Franchise Agreements with Ella Cafe.
It is important to note that the franchise agreement for the second and each additional Coffee House to be developed will be in the form of Ella Cafe's then-current franchise agreement, which may have terms that are materially different from the terms of the first franchise agreement. The only exception to this is that the initial franchise fee will be in the amount set forth in the Development Schedule in Attachment A.