What is the dependency between compliance and the ability to acquire a successor Extreme Art Studio franchise?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
If you (and each of your owners) are not, both on the date you give us written notice of your election to acquire a successor franchise and on the date on which the term of the successor franchise commences, in full compliance with this Franchise Agreement and all System Standards, you acknowledge that we need not grant you a successor franchise, whether or not we had, or chose to exercise, the right to terminate this Franchise Agreement during its term under Section 14.2.
13.2 GRANT OF A SUCCESSOR FRANCHISE.
- 13.2.1 You agree to give us written notice ("Your Notice") of your election to acquire a successor franchise no more than 12 months and no less than six months before this Franchise Agreement expires. We agree to give you written notice ("Our Notice") not more than three months after we receive your notice, of our decision:
- (a) to grant you a successor franchise;
- (b) to grant you a successor franchise on the condition that you correct existing deficiencies of the Franchised Business or in your operation of the Franchised Business;
- (c) not to grant you a successor franchise based on our determination that you and your owners have not substantially complied with this Franchise Agreement during its term or were not in full compliance with this Franchise Agreement and all System Standards on the date you gave us written notice of your election to acquire a successor franchise; or
- (d) not to grant you a successor franchise if we are no longer offering franchises for Extreme Art Studio Businesses.
13.2.2 If applicable, Our Notice will:
- (a) describe the improvements, technology upgrades, trade dress updates, and/or modifications required to bring the Operating Assets of the Franchised Business into compliance with then-applicable System Standards for new Extreme Art Studio Businesses; and
- (b) state the actions you must take to correct operating deficiencies and the time period in which you must correct these deficiencies.
- 13.2.3 If we elect not to grant you a successor franchise, Our Notice will describe the reasons for our decision. If we elect to grant you a successor franchise, your right to acquire a successor franchise is subject to your full compliance with all of the terms and conditions of this
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, a franchisee's compliance with the franchise agreement and system standards is critical to their ability to acquire a successor franchise. Specifically, to be eligible for a successor franchise, the franchisee and their owners must have substantially complied with the existing franchise agreement during its term. Furthermore, both on the date the franchisee provides written notice of their intent to acquire a successor franchise and on the date the successor franchise term would begin, they must be in full compliance with the franchise agreement and all system standards.
Extreme Art Studio emphasizes that if the franchisee or any of their owners are not in full compliance with the franchise agreement and system standards on the date they give notice of their election to acquire a successor franchise, Extreme Art Studio is not obligated to grant a successor franchise. This applies regardless of whether Extreme Art Studio had the right to terminate the franchise agreement during its original term but chose not to exercise that right.
Extreme Art Studio may grant a successor franchise contingent upon the franchisee correcting existing deficiencies in the franchised business or its operation. If Extreme Art Studio elects not to grant a successor franchise, they will provide written notice describing the reasons for their decision. Even if a successor franchise is initially approved, the franchisee's right to acquire it remains subject to their full compliance with all terms and conditions of the original franchise agreement through its expiration date, as well as adherence to any obligations outlined in Extreme Art Studio's notice regarding required corrections or improvements.