What happens if a 1-800-GOT-JUNK? franchisee receives three notices of default within a 12-month period?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee has received a notice of default pursuant to Section 17.1 on three (3) or more occasions (whether or not cured) during any consecutive twelve (12) Month period during the Term, then Franchisor may terminate this Agreement immediately upon written notice to Franchisee made expressly pursuant to this Section 17.2 and Franchisee shall have no opportunity to cure the current default.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, if a franchisee receives a notice of default on three or more occasions within any consecutive 12-month period, 1-800-GOT-JUNK? has the right to terminate the Franchise Agreement immediately. This termination is enacted through written notice to the franchisee.
This clause is significant because it means that even if a franchisee corrects the defaults that led to the initial notices, 1-800-GOT-JUNK? retains the right to terminate the agreement if further defaults occur within the specified timeframe. The franchisee does not have an opportunity to correct the current default that triggers the termination.
This type of 'three strikes' clause is not uncommon in franchising, as it protects the brand from franchisees who repeatedly fail to meet their obligations. However, it also places a significant burden on the franchisee to maintain consistent compliance with all aspects of the Franchise Agreement to avoid potential termination.