What is the relationship between the Hawaiian Bros Island Grill Development Agreement and the Franchise Agreement?
Hawaiian_Bros_Island_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
opment obligations.
We will designate the Development Area in which you may develop and open one or more Restaurants in your Development Agreement. You may apply to develop and operate more than one Restaurant and, if you satisfy our application requirements for a multi-unit operator, we will discuss and jointly decide on the number of Restaurants you can develop under your Development Agreement. The Development Agreement contains no provision permitting us to change your Development Area during the term of your Development Agreement (unless you are in default). The Development Area in all cases excludes any and all "non-traditional venues" physically located within the Development Area, which we define to include a hospital or medical center, airport, public or private school, university or college campus, airport terminal, train or bus station, convention center, exhibition hall, amusement park, fairground, sports arena, ballpark, military base, state or national park, hotel, lodge, country club, social club, resort, casino, theater or other mass gathering location or event. This means that all such non-traditional venues will not be deemed to be a part of the definition of the Development Area, you may not operate at non-traditional venues, and there are no restrictions on our activities in or at those non-traditional venues, including our right to operate and grant others the right to engage in foodservice operations at those non-traditional venues under the Hawaiian Bros Island Grill trademark or other Marks that we have licensed to you. For this reason, you will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
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 the Franchise Agreement serve distinct but related purposes. The Development Agreement primarily concerns the rights and obligations related to developing multiple Hawaiian Bros Island Grill restaurants within a specific Development Area. It outlines the schedule for opening restaurants and the geographic boundaries in which the developer can operate. The Development Agreement does not grant operating rights; instead, it focuses on the franchisee's commitment to developing a certain number of locations. The Development Area excludes non-traditional venues such as hospitals, airports, and college campuses.
In contrast, the Franchise Agreement grants the right to operate a single Hawaiian Bros Island Grill restaurant at a specific location. A separate Franchise Agreement is required for each restaurant developed under the Development Agreement. The initial Franchise Agreement will be substantially the same as the one disclosed in the FDD, but subsequent agreements for additional restaurants may be based on the then-current form, which could differ. The Franchise Agreement also provides limited competitive protection within a three-mile radius, referred to as the "Territory," although this protection may not apply in densely populated metropolitan areas or to non-traditional venues.
The Development Agreement requires the franchisee to sign a separate Franchise Agreement for each restaurant they develop. Failure to adhere to the development schedule outlined in the Development Agreement constitutes a default. Upon expiration or termination of the Development Agreement, the right to develop further restaurants in the Development Area ends, but this does not affect the franchise status of any restaurants already in operation. The Development Agreement alone embodies additional development and franchise acquisition rights.
In summary, the Development Agreement sets the stage for multi-unit development, while the Franchise Agreement governs the operation of individual Hawaiian Bros Island Grill restaurants. The Development Agreement is a commitment to future expansion, whereas the Franchise Agreement is an agreement to operate a restaurant at a specific location. A prospective franchisee should carefully consider the terms of both agreements to understand their rights and obligations fully.