What constitutes 'good cause' for termination of the Afuri Ramen Dumpling franchise agreement?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
- 6.3.1 Default with Opportunity to Cure. You agree that it will be a default constituting a substantial breach of a material provision of this Agreement pursuant to relevant law, thus establishing good cause for termination of this Agreement and any other franchise and related agreements between the parties if you (or your owners, officers, or key employees) breach any term or provision of this Agreement and do not cure the breach (or reasonably begin to cure and diligently pursue the cure until the breach is remedied) within 30 days after receipt of our written "Notice to Cure." Termination will occur immediately upon delivery to you of our written declaration of termination for failure to cure within the allowed time frame.
- 6.3.2 Termination Without Opportunity to Cure. You agree that it will be a default constituting a substantial breach of a material provision of this Agreement pursuant to relevant law, thus establishing good cause for us to immediately terminate this Agreement and any other franchise and related agreements between the parties without other cause, and without giving you an opportunity to cure, if you (or your owners, officers, or key employees):
- A. Become insolvent, make a general assignment for the benefit of creditors, have a receiver appointed to administer or take possession of any part of the franchise or your assets, or admit to not being able to meet your obligations as they become due or become bankrupt, or become subject to any chapter of the United States Bankruptcy Code, unless you:
- (1) timely undertake to reaffirm the obligations under this Agreement;
- (2) timely comply with all conditions as legally may be imposed by us upon such an undertaking to reaffirm this Agreement; and
- (3) timely comply with such other conditions and provide such assurances as may be required in relevant provisions of the United States Bankruptcy Code;
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, 'good cause' for termination is established when a franchisee commits a substantial breach of a material provision within the franchise agreement, as determined by relevant law.
Specifically, Afuri Ramen Dumpling may terminate the franchise agreement if the franchisee fails to cure a breach within 30 days of receiving a written 'Notice to Cure'. This means that if Afuri Ramen Dumpling identifies a problem, they must give the franchisee a chance to fix it within that timeframe. If the franchisee doesn't address the issue adequately, Afuri Ramen Dumpling can terminate the agreement immediately.
However, there are also situations where Afuri Ramen Dumpling can terminate the agreement immediately without offering an opportunity to cure. This includes instances where the franchisee becomes insolvent, makes an assignment for the benefit of creditors, has a receiver appointed, admits inability to meet obligations, or becomes bankrupt. The franchisee can prevent termination in these cases by reaffirming their obligations under the agreement, complying with any legally imposed conditions, and meeting any other requirements under the United States Bankruptcy Code.