What is the effect of the Module Amendment on the original Extreme Art Studio Franchise Agreement?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
The Franchise Agreement is hereby amended accordingly.
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- GROSS SALES, ROYALTIES AND BRAND FUND CONTRIBUTIONS.
For the avoidance of doubt, the definition of "Gross Sales" in the Franchise Agreement shall include revenues from the Module(s) and Franchisee agrees to pay the standard applicable Royalties and Brand Fund Contributions under the Franchise Agreement on all such amounts.
The Franchise Agreement is hereby amended accordingly.
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- FRANCHISEE ACKNOWLEDGEMENTS.
Franchisee acknowledges and agrees that the Module(s) will require Franchisee to incur increased initial and ongoing expenses in operating the Extreme Art Business including but not limited to inventory, equipment, supplies, materials, products, staff training and signage, some of which must only be purchased from Franchisor's approved vendors.
Franchisee acknowledges that the expenses will result in a material increase to the cost to operate the Extreme Art Business and that it has had an opportunity to investigate these expenses prior to entering into this Module Amendment and is solely responsible for such expenses.
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- NO REPRESENTATIONS BY FRANCHISOR.
Franchisor makes no representations, warranties, or guaranties, express or implied, relating to the viability of the Module(s), including but not limited to the potential revenues, income, profits, volume or success of the Module(s) contemplated by this Module Amendment.
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- ENTIRE AGREEMENT.
Each party has carefully read this Module Amendment and this Module Amendment expresses the final and entire agreement between the parties as to the Module(s).
There are no oral or other agreements or understandings between the parties affecting this Module Amendment.
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- REAFFIRMATION.
Except as specifically provided in this Module Amendment, all of the terms, conditions and provisions of the Franchise Agreement will remain in full force and effect as EXTREME
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, the Module Amendment modifies the original Franchise Agreement to allow franchisees to add additional service modules to their Extreme Art Studio business. The amendment incorporates the recitals of the agreement, specifies module selection and associated fees, and outlines reporting requirements related to the modules.
Specifically, the Franchise Agreement is amended to include revenues from the added modules in the definition of "Gross Sales," which affects royalty and brand fund contributions. Franchisees are responsible for increased expenses related to operating the modules, such as inventory, equipment, and staff training. Extreme Art Studio does not provide any guarantees regarding the viability or potential success of the modules.
Furthermore, franchisees acknowledge that they will not receive any territorial rights in connection with the modules, and other franchisees, including those from affiliated brands like Kidcreate Studio Franchising, may offer identical curriculum and services, potentially creating competition. The Module Amendment also introduces a $250 monthly Module Technology Fee, in addition to other fees owed under the Franchise Agreement. Except as specifically modified by the Module Amendment, all other terms and conditions of the original Franchise Agreement remain in full force and effect.