For Ella Cafe, is time considered of the essence regarding the Development Schedule?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- **4.3.
Development Schedule**.
Acknowledging that time is of the essence, Developer agrees to exercise its development rights according to Section 4.2. and the Development Schedule reflected in the Key Terms.
Developer's failure to adhere to the Development Schedule is a default under Section 9.2 of this Agreement.
Developer may, subject to the terms and conditions of this Agreement, and with Franchisor's prior written consent, which may be withheld in its sole discretion, develop more than the total minimum number of Coffee Houses which Developer is required to develop during any Development Period.
Any Coffee Houses in excess of the minimum number of Coffee Houses required to be developed will be applied to satisfy Developer's development obligation during the next succeeding Development Period, if any.
Notwithstanding the above, this Agreement does not grant Developer the right to open or operate more than the cumulative total number of Coffee Houses Developer is obligated to develop under the Development Schedule.
- 4.3.1.
If, during the Term of this Agreement, Developer ceases to operate any Coffee House developed under this Agreement for any reason, Developer must develop a replacement Coffee House.
The replacement Coffee House must be developed within a reasonable time (not to exceed 180 days) after Developer ceases to operate the original Coffee House, and the acquisition of existing Coffee Houses will not serve to meet Developer's obligations under this Section 4.3.
However, if, during the Term of this Agreement, Developer transfers its interest in a Coffee House in accordance with the transfer provisions set forth in the applicable Franchise Agreement for the Coffee House, the transferred Coffee House will continue to be counted in determining whether or not Developer has complied with the Development Schedule, provided that such Coffee House continues to be operated as a Coffee House.
If the transferred Coffee House ceases to be operated as a Coffee House during the Term of this Agreement, Developer must develop a replacement Coffee House within a reasonable time (not to exceed 180 days) thereafter, otherwise, the Coffee House will not count toward Developer's Development Schedule obligations hereunder.
- 4.3.2.
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, time is indeed of the essence when it comes to adhering to the Development Schedule. The document explicitly states this point, emphasizing its importance. This means that the developer's commitment to meeting the deadlines outlined in the Development Schedule is a critical aspect of the agreement.
Failure to adhere to the Development Schedule can have significant repercussions for the Ella Cafe developer. The franchisor retains the right, at its sole discretion, to take corrective actions if the developer fails to meet the schedule. These actions can include terminating or modifying any territorial protections that were initially granted to the developer, reducing the size of the Development Area, or decreasing the number of Coffee Houses the developer is permitted to establish under the Development Schedule.
Furthermore, the FDD specifies that failure to adhere to the Development Schedule, including any approved extensions, or to the time period for developing replacement Coffee Houses, constitutes a material breach of the agreement. This acknowledgement underscores the seriousness with which Ella Cafe views adherence to the Development Schedule and the potential consequences for developers who fail to meet these obligations. Prospective developers should carefully review the Development Schedule and ensure they have the resources and capabilities to meet the outlined deadlines.