What is the dependency between the Area Development Agreement and the individual Face Foundrie franchise agreements regarding territorial rights?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
| 166 | | Accounting Guide | 168 | | Closing Statement | 173 |
ITEM 12. TERRITORY
Under an Area Development Agreement
If you sign an Area Development Agreement, we will describe the development territory in the Rider to that agreement ("Development Territory"). The territory will typically be described as a geographic area in which each of your Facial Bars must be developed. The factors that we consider in determining these territories include density of population, growth trends of population, apparent degree of affluence of population, the density of residential and business entities, traffic generators, driving time, natural boundaries, location of other Facial Bars, the number of Facial Bars you wish to develop, and our development plans. As long as you are in compliance with your obligations under the Area Development Agreement and all of the Franchise Agreements between you (and your affiliates) and us, we will not establish or operate, or license anyone other than you to establish or operate, a Facial Bar in these development territories, subject to our reserved rights below. Your rights in these territories will end at the earlier of: (i) the date your Area Development Agreement expires; and
(ii) the date you must sign the Franchise Agreement for your last Facial Bar under the terms of the Development Schedule. If the Development Territory covers more than one city, county, or designated market area, the protection for each particular city, county or designated market area will also expire on the date when we determine the protected territory to be given to you under a franchise agreement for your final Facial Bar to be developed in that city, county, or designated market area. When your rights in your Development Territory have expired under the Area Development Agreement, you will still have the rights granted to you in any portion of these territories under an individual franchise agreement.
If you are in full compliance with your Development Agreement and any existing Franchise Agreement you have entered into with us, then we will grant you the right to open the number of Facial Bars you agreed to open as part of your Development Schedule within your Development Territory. Your Development Schedule will depend on the number of units you acquire the rights to develop in your Development Agreement; however, generally, your Development Schedule will be based on you opening one Facial Bar every 10 months.
If you sign an Area Development Agreement, you must sign individual Franchise Agreements and find a site that meets our approval under our then-current site approval criteria under each individual Franchise Agreement you sign.
Under a Franchise Agreement
The Franchise Agreement grants to you the right to own and operate a Facial Bar at a specific location approved by us. You may not conduct the business of your Facial Bar at any site other than the approved premises or relocate your Facial Bar without our prior written consent. If the site for your Facial Bar has been identified before you sign the Franchise Agreement, then you must operate the Facial Bar at that site. If the site becomes unavailable to you for any reason, it is your obligation to select a new location, and to obtain our approval of that location before you acquire the site, and before you obtain any rights in the location. If a site has not been identified, we will designate an area, and you may locate your Facial Bar at any place within that area, so long as the site you select is not also within a territory of another Facial Bar. Until a site has been identified, you will not have any rights to operate your Facial Bar at any specific location.
Your Franchise Agreement may also specify a protected territory ("Territory"). We may attach a map to your Franchise Agreement that will identify the territory or we may simply describe an area surrounding your location. The map or description may not be a specific radius from your Facial Bar, because it will take into account traffic patterns and natural boundaries. Because each location is different, the Territory for each Facial Bar will be different; however, each Territory will generally contain a population of up to 40,000 individuals and range from a one to three-mile radius around the Facial Bar. The size and scope of the Territory will be determined, in our sole discretion, during the site confirmation process based upon various factors such as (a) whether the approved location is an urban area or a suburban area; (b) population of the area; (c) competition in the area; and (d) policies regarding protected territories and other conditions that we deem appropriate; among other factors.
Except as noted below, as long as you are in compliance with the Franchise Agreement, we will not operate a Facial Bar or grant to a third party the right to operate a Facial Bar within your Territory. Protected territories may overlap, but we will not approve anyone opening or operating a FACE FOUNDRIÉ facial bar within the protected territory given to another facial bar.
You may not move or relocate your Facial Bar without our prior written consent, which consent will not be unreasonably withheld.
Source: Item 12 — TERRITORY (FDD pages 43–46)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, an Area Development Agreement grants the developer certain territorial rights, but these rights are contingent upon compliance with both the Area Development Agreement and the individual Franchise Agreements. Specifically, Face Foundrie will not establish or operate, nor license anyone else to do so, a Facial Bar within the Development Territory as long as the developer adheres to the obligations under both agreements. These territorial rights are subject to Face Foundrie's reserved rights. The Area Development Agreement defines the development territory in a rider, typically as a geographic area where each Facial Bar must be developed. Factors considered include population density, growth trends, affluence, residential and business density, traffic, natural boundaries, existing Facial Bar locations, the number of units to be developed, and Face Foundrie's development plans.
The developer's rights within the Development Territory expire either when the Area Development Agreement expires or when the deadline to sign the Franchise Agreement for the last Facial Bar under the Development Schedule passes, whichever occurs first. If the Development Territory spans multiple cities, counties, or designated market areas, the protection for each of these expires when Face Foundrie determines the protected territory to be given under a franchise agreement for the final Facial Bar to be developed in that area. However, even after the Area Development Agreement rights expire, the franchisee retains the territorial rights granted under any individual franchise agreement within those territories.
Under a Franchise Agreement, Face Foundrie grants the franchisee the right to operate a Facial Bar at a specific, approved location. Franchisees cannot operate at any other site or relocate without prior written consent from Face Foundrie. The Franchise Agreement may also specify a protected territory, which is determined at Face Foundrie's sole discretion during the site confirmation process, considering factors like whether the location is urban or suburban, population, competition, and Face Foundrie's policies. While protected territories may overlap, Face Foundrie will not allow anyone to open or operate a Face Foundrie facial bar within another facial bar's protected territory. The size of the territory generally contains a population of up to 40,000 individuals and ranges from a one to three-mile radius around the Facial Bar.
It is important to note that Face Foundrie reserves certain rights, including the right to establish similar businesses under different names and symbols, and to distribute products through various channels, even within a franchisee's territory. As a result, Face Foundrie franchisees do not receive an exclusive territory and may face competition from other franchisees, company-owned outlets, or other distribution channels controlled by Face Foundrie. Additionally, Face Foundrie is not obligated to compensate franchisees for soliciting customers from their franchise territory.