Can the 1-800-GOT-JUNK? franchisor terminate the agreement if the franchisee fails to pay a third party providing goods to the Franchised Business?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
Renewal Term and notwithstanding anything otherwise contained in this Agreement, Franchisor shall have the right to terminate this Agreement and the right and license granted hereby to Franchisee on account of one or more of the following defaults by Franchisee:
(a) failure to pay any sum when due to Franchisor, any Affiliate or nominee of Franchisor, Franchisee’s landlord, any governmental authority, the lessor of any Vehicle, supplier of any item of Supplies or other inventory, equipment or products to the Franchised Business, or any other third party providing any goods or services to the Franchised Business, and Franchisee fails to cure such non-payment within fifteen (15) days after written notice of such default has been delivered to Franchisee; or
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, 1-800-GOT-JUNK? has the right to terminate the Franchise Agreement if the franchisee fails to pay any sum when due to a third party providing goods or services to the Franchised Business. This includes suppliers of items, supplies, inventory, equipment, or products.
This termination right is contingent on the franchisee's failure to cure the non-payment within fifteen (15) days after receiving written notice of the default from 1-800-GOT-JUNK?. This means a franchisee has a short window to rectify the payment issue once they are notified.
This clause is fairly standard in franchise agreements, as it protects the integrity of the 1-800-GOT-JUNK? brand and ensures that suppliers and other third parties are not negatively impacted by a franchisee's financial mismanagement. Franchisees should maintain strong financial management practices to avoid potential termination of their agreement.