AREA DEVELOPMENT AGREEMENT

[// GUIDANCE: This agreement grants rights to develop multiple franchise units within a defined territory. It must be used in conjunction with individual Franchise Agreements for each unit. Ensure FDD disclosure compliance.]

TABLE OF CONTENTS

1. Parties and Recitals
2. Definitions
3. Grant of Development Rights
4. Development Territory
5. Development Schedule
6. Development Fees
7. Individual Franchise Agreements
8. Developer's Obligations
9. Franchisor's Obligations
10. Territorial Protection
11. Reports and Records
12. Default and Termination
13. Effects of Termination
14. Transfer
15. Relationship of Parties
16. Dispute Resolution
17. General Provisions
18. Execution Block

1. PARTIES AND RECITALS

THIS AREA DEVELOPMENT AGREEMENT (this "Agreement") is made and entered into as of [EFFECTIVE_DATE] (the "Effective Date"), by and between:

FRANCHISOR:
[FRANCHISOR_LEGAL_NAME], a [STATE_OF_FORMATION] [ENTITY_TYPE], with its principal place of business at [FRANCHISOR_ADDRESS] ("Franchisor"); and

DEVELOPER:
[DEVELOPER_LEGAL_NAME], a [STATE_OF_FORMATION] [ENTITY_TYPE], with its principal place of business at [DEVELOPER_ADDRESS] ("Developer").

RECITALS

A. Franchisor has developed and owns a distinctive system (the "System") for the establishment and operation of [BUSINESS_DESCRIPTION] businesses under the trade name "[FRANCHISE_TRADE_NAME]" and related proprietary marks.

B. Franchisor grants to qualified persons the right to develop and operate [FRANCHISE_TRADE_NAME] businesses using the System and Proprietary Marks.

C. Developer desires to obtain the right to develop and operate multiple [FRANCHISE_TRADE_NAME] businesses within a defined geographic area according to a specified development schedule.

D. Developer acknowledges receipt of Franchisor's Franchise Disclosure Document ("FDD") at least fourteen (14) calendar days before execution of this Agreement, as required by FTC Rule 16 CFR Part 436.

NOW, THEREFORE, in consideration of the mutual covenants herein, the parties agree as follows:

2. DEFINITIONS

For purposes of this Agreement:

"Cumulative Development Obligation" means the total number of Franchised Businesses that Developer must have open and operating by each date specified in the Development Schedule.

"Development Fee" has the meaning set forth in Section 6.1.

"Development Period" means the period during which Developer has the right to develop Franchised Businesses under this Agreement, as set forth in Section 5.1.

"Development Schedule" means the schedule set forth in Exhibit A specifying the number of Franchised Businesses Developer must open by specified dates.

"Development Territory" means the geographic area described in Exhibit B within which Developer has the right to develop Franchised Businesses.

"Franchised Business" means a [FRANCHISE_TRADE_NAME] business operated under a Franchise Agreement with Franchisor.

"Franchise Agreement" means Franchisor's then-current form of franchise agreement that Developer must execute for each Franchised Business.

"Proprietary Marks" means the trademarks, service marks, trade names, and logos licensed under Franchise Agreements.

3. GRANT OF DEVELOPMENT RIGHTS

3.1 Development Rights

Subject to the terms of this Agreement, Franchisor grants to Developer, and Developer accepts, the right and obligation to develop and operate [TOTAL_NUMBER] ([NUMBER]) [FRANCHISE_TRADE_NAME] Franchised Businesses within the Development Territory according to the Development Schedule.

3.2 Nature of Rights

(a) Developer's rights under this Agreement are limited to the right to develop Franchised Businesses; Developer has no right to operate any Franchised Business except pursuant to a separate Franchise Agreement.

(b) Developer must execute Franchisor's then-current Franchise Agreement for each Franchised Business.

(c) This Agreement does not grant Developer the right to use the Proprietary Marks; such rights are granted only under individual Franchise Agreements.

3.3 Personal Obligation

The development rights granted hereunder are personal to Developer and may not be sublicensed, subdivided, or delegated.

4. DEVELOPMENT TERRITORY

4.1 Defined Territory

The Development Territory is described in Exhibit B. Developer may develop Franchised Businesses only within the Development Territory.

4.2 Site Selection

(a) For each Franchised Business, Developer shall identify and submit for Franchisor's approval a proposed site within the Development Territory.

(b) Franchisor shall approve or disapprove each proposed site within [APPROVAL_DAYS] days after receiving all required site information.

(c) Franchisor's approval of a site is not a guarantee of success and does not relieve Developer of its obligation to conduct independent investigation.

4.3 Site Criteria

All sites must meet Franchisor's site selection criteria as set forth in the Operations Manual and communicated to Developer from time to time.

5. DEVELOPMENT SCHEDULE

5.1 Development Period

The Development Period shall commence on the Effective Date and continue until the earlier of:
(a) The date all [TOTAL_NUMBER] Franchised Businesses are open and operating;
(b) [DEVELOPMENT_PERIOD_YEARS] years from the Effective Date; or
(c) Termination of this Agreement.

5.2 Development Obligations

Developer shall develop Franchised Businesses according to the Development Schedule attached as Exhibit A. A Franchised Business is considered "open" when it first opens for business to the public.

5.3 Cumulative Obligations

The development obligations are cumulative. Developer must have the specified number of Franchised Businesses open and operating by each date in the Development Schedule.

DEVELOPMENT SCHEDULE (Exhibit A Summary)

5.4 Failure to Meet Schedule

Failure to meet any Cumulative Development Obligation shall constitute a material default of this Agreement.

6. DEVELOPMENT FEES

6.1 Development Fee

Upon execution of this Agreement, Developer shall pay to Franchisor a non-refundable development fee of $[DEVELOPMENT_FEE] (the "Development Fee").

6.2 Application of Development Fee

(a) Of the Development Fee, $[AMOUNT_PER_UNIT] shall be credited toward the initial franchise fee payable under each Franchise Agreement for the first [NUMBER] Franchised Businesses.

[// GUIDANCE: Typical structure is Development Fee = Number of Units x Partial Initial Franchise Fee. Remaining IFF due at each Franchise Agreement signing.]

(b) The Development Fee is fully earned upon receipt and is non-refundable, except as required by applicable law.

6.3 Franchise Fees

For each Franchised Business, Developer shall pay the initial franchise fee and all other fees specified in the Franchise Agreement then in effect, less any applicable credit from the Development Fee.

6.4 Payment

All payments shall be made in U.S. dollars by wire transfer or other method approved by Franchisor.

7. INDIVIDUAL FRANCHISE AGREEMENTS

7.1 Execution Required

Before opening each Franchised Business, Developer shall execute Franchisor's then-current form of Franchise Agreement for that unit.

7.2 Timing

Developer shall execute each Franchise Agreement no later than [DAYS] days before the scheduled opening date for that Franchised Business.

7.3 Form of Agreement

The Franchise Agreement shall be Franchisor's then-current standard form, which may contain terms materially different from Developer's first Franchise Agreement.

7.4 Separate Agreements

Each Franchised Business shall be governed by its own Franchise Agreement. The termination or expiration of this Agreement shall not affect Franchise Agreements already executed.

7.5 Conflict

In the event of any conflict between this Agreement and any Franchise Agreement, the Franchise Agreement shall control with respect to the operation of that Franchised Business.

8. DEVELOPER'S OBLIGATIONS

8.1 Development Diligence

Developer shall use best efforts to:
(a) Identify and secure sites for Franchised Businesses;
(b) Develop and open Franchised Businesses according to the Development Schedule;
(c) Meet all requirements for opening each Franchised Business; and
(d) Maintain each Franchised Business in compliance with its Franchise Agreement.

8.2 Adequate Resources

Developer shall maintain adequate financial resources, management capability, and organization to fulfill its development obligations.

8.3 Principal's Involvement

[PRINCIPAL_NAME] shall devote substantial personal time and attention to overseeing the development and operation of the Franchised Businesses.

8.4 Compliance with Law

Developer shall comply with all applicable federal, state, and local laws and regulations.

8.5 Confidentiality

Developer shall maintain the confidentiality of all Confidential Information received from Franchisor.

8.6 Non-Competition

During the term of this Agreement, Developer and its principals shall not, directly or indirectly, own, operate, or have any interest in any business that is competitive with [FRANCHISE_TRADE_NAME] businesses.

9. FRANCHISOR'S OBLIGATIONS

9.1 Site Approval

Franchisor shall timely review and respond to site approval requests.

9.2 Training

Franchisor shall provide initial training as specified in each Franchise Agreement.

9.3 Support

Franchisor shall provide the pre-opening and ongoing support described in the FDD and Franchise Agreement.

9.4 FDD Updates

Franchisor shall provide Developer with updated FDDs as required for compliance with applicable law.

10. TERRITORIAL PROTECTION

10.1 Exclusive Development Rights

During the Development Period, provided Developer is not in default of this Agreement and is meeting the Development Schedule:

(a) Franchisor shall not establish, or license another party to establish, a [FRANCHISE_TRADE_NAME] Franchised Business with a physical location within the Development Territory; and

(b) Franchisor shall not grant to another party the right to develop [FRANCHISE_TRADE_NAME] Franchised Businesses within the Development Territory.

10.2 Reserved Rights

Notwithstanding Section 10.1, Franchisor reserves the right to:

(a) Operate or license [FRANCHISE_TRADE_NAME] businesses at non-traditional locations within the Development Territory, including airports, stadiums, universities, military bases, and similar venues;

(b) Sell products and services under the Proprietary Marks through any distribution channel, including internet, catalog, and wholesale;

(c) Acquire or be acquired by other businesses that may have locations within the Development Territory;

(d) Use and license the Proprietary Marks in connection with other products and services; and

(e) Establish or license [FRANCHISE_TRADE_NAME] businesses outside the Development Territory that may serve customers within the Development Territory.

10.3 Loss of Protection

Developer's territorial protection under Section 10.1 shall terminate automatically upon:

(a) Developer's failure to meet any Cumulative Development Obligation;
(b) Developer's default of this Agreement; or
(c) Termination or expiration of this Agreement.

11. REPORTS AND RECORDS

11.1 Development Reports

Developer shall submit to Franchisor:

(a) Quarterly reports on development progress, including site selection status and construction timelines;

(b) Notice of any site acquisition or lease within [DAYS] days of execution;

(c) Notice of each Franchised Business opening within [DAYS] days; and

(d) Such other reports as Franchisor may reasonably request.

11.2 Record Keeping

Developer shall maintain records sufficient to verify compliance with the Development Schedule and this Agreement.

12. DEFAULT AND TERMINATION

12.1 Automatic Termination

This Agreement shall terminate automatically, without notice, upon:

(a) Developer's failure to meet any Cumulative Development Obligation by the specified deadline; or

(b) Termination of all Franchise Agreements between Franchisor and Developer or Developer's affiliates.

12.2 Termination by Franchisor

Franchisor may terminate this Agreement, effective upon notice, if:

(a) Developer fails to execute a Franchise Agreement when required under Section 7;

(b) Developer breaches any material provision of this Agreement and fails to cure within [CURE_DAYS] days after written notice;

(c) Developer makes any unauthorized transfer or attempted transfer;

(d) Developer or any principal is convicted of a felony or crime involving dishonesty;

(e) Developer becomes insolvent or files for bankruptcy;

(f) Developer makes a material misrepresentation in connection with this Agreement; or

(g) Any Franchise Agreement between Franchisor and Developer is terminated due to Developer's default.

12.3 Termination by Developer

Developer may terminate this Agreement by providing [NOTICE_DAYS] days written notice to Franchisor; provided, however, that such termination shall not relieve Developer of any accrued obligations.

12.4 Cross-Default

A default under any Franchise Agreement between Franchisor and Developer shall constitute a default under this Agreement.

13. EFFECTS OF TERMINATION

13.1 Loss of Development Rights

Upon termination or expiration of this Agreement:

(a) Developer's right to develop additional Franchised Businesses shall immediately cease;

(b) Franchisor may develop or license others to develop [FRANCHISE_TRADE_NAME] businesses in the former Development Territory without restriction;

(c) No refund of the Development Fee shall be due; and

(d) Developer shall have no claim against Franchisor for lost profits or other damages.

13.2 Continuing Franchise Agreements

Termination or expiration of this Agreement shall not affect Franchise Agreements already executed, which shall continue in accordance with their terms.

13.3 Outstanding Obligations

Developer shall remain liable for all obligations accrued before termination.

14. TRANSFER

14.1 Transfer by Franchisor

Franchisor may transfer this Agreement without Developer's consent.

14.2 Transfer by Developer

(a) Developer shall not transfer any interest in this Agreement or Developer's ownership without Franchisor's prior written consent.

(b) A "transfer" includes any sale, assignment, gift, pledge, or other disposition, including transfers of ownership interests in Developer.

14.3 Conditions to Approval

Franchisor may condition approval of any transfer upon:

(a) Payment of a transfer fee of $[TRANSFER_FEE];

(b) The transferee meeting Franchisor's then-current qualifications;

(c) The transferee executing then-current development and franchise agreements;

(d) Developer's compliance with all obligations under this Agreement;

(e) Payment of all amounts owed to Franchisor;

(f) Developer and its principals executing non-competition agreements; and

(g) Developer executing a general release.

14.4 Right of First Refusal

Franchisor shall have the right of first refusal to acquire the development rights upon the same terms as any bona fide third-party offer.

15. RELATIONSHIP OF PARTIES

15.1 Independent Contractors

The parties are independent contractors. Nothing herein creates a partnership, joint venture, agency, or employment relationship.

15.2 No Authority

Developer has no authority to bind Franchisor or to incur obligations on Franchisor's behalf.

16. DISPUTE RESOLUTION

16.1 Governing Law

This Agreement shall be governed by the laws of the State of [GOVERNING_LAW_STATE], without regard to conflict of laws principles.

16.2 Mandatory Arbitration

Any dispute arising out of this Agreement shall be resolved by binding arbitration administered by the American Arbitration Association in [ARBITRATION_CITY, STATE].

16.3 Injunctive Relief

Franchisor may seek injunctive relief in any court of competent jurisdiction to protect the Proprietary Marks and Confidential Information.

16.4 Jury Waiver

THE PARTIES WAIVE THE RIGHT TO TRIAL BY JURY.

16.5 Limitation of Actions

Any claim must be brought within one (1) year after the cause of action accrues.

17. GENERAL PROVISIONS

17.1 Entire Agreement

This Agreement constitutes the entire agreement between the parties regarding the subject matter hereof.

17.2 Amendment

This Agreement may be amended only by written instrument signed by both parties.

17.3 Waiver

No waiver of any breach shall constitute a waiver of any subsequent breach.

17.4 Severability

If any provision is held invalid, the remaining provisions shall continue in full force.

17.5 Notices

All notices shall be in writing and delivered personally, by overnight courier, or by certified mail to the addresses set forth in the preamble.

17.6 Counterparts

This Agreement may be executed in counterparts.

17.7 Time is of the Essence

Time is of the essence in all matters relating to this Agreement.

18. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties have executed this Area Development Agreement as of the Effective Date.

FRANCHISOR:

[FRANCHISOR_LEGAL_NAME]

DEVELOPER:

[DEVELOPER_LEGAL_NAME]

EXHIBITS

Exhibit A - Development Schedule
Exhibit B - Development Territory Description and Map
Exhibit C - Developer Principal Information
Exhibit D - Personal Guaranty

NOTICE: This template is provided for informational purposes only and does not constitute legal advice. Area Development Agreements involve complex franchise law considerations. This agreement must be reviewed by qualified franchise counsel and disclosed in the FDD before use.