Upon termination or non-renewal of my 360 Painting franchise, must I fulfill warranty obligations?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Franchise Agreement | Summary you agree to mediate any dispute, controversy or claim before | |
|---|---|---|---|
| bringing suit. | |||
| v. | Choi ce of forum | Section 27.2 | Subject to applicable state law, any mediation or litigation must be pursued in courts located in the county and state in which we maintain our principal place of business (currently the City of Charlottesville, VA). |
| w. | Choi ce of law | Section 27.1 | Subject to applicable state law, Virginia law applies, except disputes over the Marks will be governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sec. 1051 et seq.). |
| Provision | Section in Franchise Agreement | Summary financial report or other data that underestimates fees; multiple defaults within a twelve month period; material default under any other agreement you have with us; or 3 or more failed payments within any 12 month period. | |
| i. | Franchisee's obligations on termination or non renewal | Section 20; Internet Web Sites and Listings Agreement; Telephone Listing Agreement | You must: return all Confidential Information; stop using the System and the Marks and refrain from doing business under a confusing name or manner; pay all sums owed to us; de identify the Vehicles and the Business; cancel or assign to us any assumed names; assign your telephone and facsimile numbers to us; fulfill warranties obligations and either (i) post a bond equal to 0.5% of your gross sales for the last 24 mon |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 FDD, if a 360 Painting franchise is terminated or not renewed, the franchisee is obligated to fulfill any outstanding warranty obligations. Additionally, the franchisee must return all confidential information, cease using the 360 Painting system and marks, and refrain from operating under a confusingly similar name or manner. The franchisee is also required to pay all outstanding sums owed to 360 Painting, de-identify vehicles and the business, cancel or assign assumed names to 360 Painting, and assign telephone and facsimile numbers to the company.
Furthermore, the 360 Painting franchisee may be required to post a bond equal to 0.5% of their gross sales for the last 24 months. This bond serves as a financial guarantee to cover potential warranty claims that may arise after the termination or non-renewal of the franchise agreement. The specific terms and conditions regarding warranty obligations, bond requirements, and other post-termination responsibilities are detailed in Section 20, the Internet Web Sites and Listings Agreement, and the Telephone Listing Agreement of the 360 Painting franchise agreement.
It is important for prospective 360 Painting franchisees to carefully review these sections of the franchise agreement to fully understand their obligations upon termination or non-renewal. Understanding these requirements can help franchisees prepare for a smooth transition and avoid potential legal or financial repercussions. Franchisees should seek legal counsel to clarify any ambiguities and ensure they are fully aware of their responsibilities.