What is the dependency between the Development Agreement and Franchise Agreement for Hawaiian Bros Island Grill?
Hawaiian_Bros_Island_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
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Your Development Agreement will contain a schedule of the dates by which you must open each Restaurant to be developed under the Development Agreement. The Development Agreement requires you to sign a separate Franchise Agreement for each Restaurant. The first Franchise Agreement you sign will be substantially the same form of Franchise Agreement that was disclosed in the disclosure document you received before signing the Development Agreement, but all additional Franchise Agreements you sign for additional Hawaiian Bros Island Grill Restaurants will be our then-current form of Franchise Agreement. That form may differ from the form of Franchise Agreement included in this disclosure document. The Development Agreement only governs your development rights; it grants no operating rights and is not the equivalent of a franchise for the Development Area. Your failure to adhere to the Development Agreement's development schedule will be an event of default under the Development Agreement.
While your Development Agreement remains in effect, and assuming you are not in default, we will not grant anyone else the right to develop or operate a Restaurant in your Development Area (again, there are no restrictions on us in or at non-traditional venues physically located in the Development Area). We define a Restaurant in the Development Agreement to be a retail establishment at a fixed (permanent) location that operates on a continuous, year-round basis. You will not have any competitive protection from Special Outlets, that we, our affiliates or another franchisee develops or operates in your Development Area. We define Special Outlets as a ghost kitchen, a kiosk, a food truck, a temporary or seasonal booth, or
similar installation that is operated under the Hawaiian Bros Island Grill trade name and which may serve some or all of the same products and services as a Restaurant. The term also includes a mobile dispensing unit, such as a cart or customized RV, operated under the Hawaiian Bros Island Grill trade name.
Your competitive protection as a developer relates only to retail establishments operating under the Hawaiian Bros Island Grill trade name (with the exceptions noted above). The Development Agreement imposes no restrictions on our right to operate or franchise establishments operating under different trade names or to offer our proprietary products or Hawaiian Bros Island Grill merchandise through department stores, supermarkets, similar establishments, and other distribution channels.
Source: Item 12 — TERRITORY (FDD pages 49–53)
What This Means (2025 FDD)
According to the 2025 Hawaiian Bros Island Grill Franchise Disclosure Document, the Development Agreement and Franchise Agreement are related but distinct. The Development Agreement allows a franchisee the rights to develop and open multiple Hawaiian Bros Island Grill restaurants within a specific Development Area. However, the Development Agreement does not grant operating rights; instead, it requires the franchisee to sign a separate Franchise Agreement for each restaurant they plan to open. The initial Franchise Agreement must be substantially the same as the one included in the disclosure document, but subsequent agreements may be based on the then-current form, which could differ.
The Development Agreement outlines a development schedule that the franchisee must adhere to. Failure to meet this schedule constitutes a default under the Development Agreement. If the Development Agreement expires or is terminated, the franchisee loses the right to develop further restaurants in the Development Area, although this does not affect the operation of any existing franchised restaurants. The franchisee has a conditional right to renew the Development Agreement if they meet specific criteria, including opening all restaurants under the original agreement on schedule, remaining in compliance, and meeting financial qualifications.
The Franchise Agreement grants the franchisee the right to operate a single Hawaiian Bros Island Grill restaurant at a specific location secured in accordance with the Development Agreement. The Franchise Agreement may provide limited competitive protection within a three-mile radius, referred to as the "Territory," although this protection does not apply to restaurants in densely populated metropolitan areas or to non-traditional venues. The Franchise Agreement does not allow the franchisee to open additional restaurants within the Territory without permission, and it grants no rights to acquire additional franchises. Hawaiian Bros Island Grill retains the right to operate or franchise other establishments under different brand names, even if they compete with the franchisee's restaurant.