What is the definition of 'cause' for termination in the All States M.E.D. ADA?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
e a franchised outlet: | | | Royalties (8%) | ($66,602) |
| h. "Cause" Defined – Non Curable Defaults | FA: Section 16.2.1 ADA: Section 4 | We have the right to terminate the Franchise Agreement without giving you an opportunity to cure if you: fail to timely establish, equip and begin operations of the franchised business; fail to satisfactorily complete training; fail to maintain all required professional licenses, permits and certifications for more than 5 business days; made a material misrepresentation or omission in the application for the franchise; are convicted of or plead no contest to a felony or other crime or offense likely to affect the reputation of either party or the Franchised Business; after notice to cure, fail to refrain from activities, behavior or conduct likely to adversely affect either party or the Franchised Business; use the Operations Manual, trade secrets or other confidential information in an unauthorized manner; if required, fail to have your owners, officers, directors, managers, other executives, employees and professional staff, and other individuals |
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having access to trade secrets or other confidential information sign nondisclosure and noncompetition agreements or, if requested, fail to provide us with copies of all signed nondisclosure and non-compete agreements; abandon the Franchised Business for 5 or more consecutive days; surrender or transfer control of the Franchised Business in an unauthorized manner; fail to maintain the Franchised Business under the supervision of a Designated Manager following your death or disability; submit reports on 2 or more separate occasions understating any amounts due by more than 2%; are insolvent; misuse or make unauthorized use of the Marks; fail on 2 or more occasions within any 12 months to submit reports or records or to pay any fees due us or any affiliate; violate on 2 or more occasions any health, safety or other laws or operate the Franchised Business in a manner creating a health or safety hazard to customers, employees or the public; take any action reserved to us; fail to comply with applicable law after notice; repeatedly breach the franchise agreement or comply with specifications; or default under any other agreement with us (or an affiliate) so that we (or the affiliate) have the right to terminate the agreement. However, we may not terminate franchise agreements already in place solely for a breach of the ADA.
| i. Franchisee's Obligations on Termination/Non Renewal | FA: Section 17.1 | If the Franchise Agreement is terminated or not renewed, you must: stop operating the Franchised Business;
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 32–39)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, 'cause' for termination without opportunity to cure includes several specific defaults. These are defined with reference to Section 16.2.1 of the ADA and Section 4 of the Franchise Agreement (FA).
Specifically, All States M.E.D. can terminate the franchise agreement immediately if the franchisee fails to establish, equip, and begin operations on time, or if they don't satisfactorily complete the required training. Immediate termination can also occur if the franchisee fails to maintain necessary professional licenses, permits, and certifications for more than 5 business days. Misrepresentations or omissions in the franchise application, conviction of a felony, unauthorized use of the Operations Manual or trade secrets, and failure to have individuals with access to trade secrets sign non-disclosure and non-competition agreements also constitute cause for immediate termination.
Additional causes for termination without opportunity to cure include abandoning the business for 5 or more consecutive days, unauthorized transfer of control, failure to maintain supervision by a Designated Manager after death or disability, submitting reports understating amounts due by more than 2% on two or more occasions, insolvency, misuse of the Marks, repeated failures to submit reports or pay fees, repeated violations of health and safety laws, taking actions reserved to the franchisor, failure to comply with applicable law after notice, repeated breaches of the franchise agreement, or defaulting under any agreement with All States M.E.D. or an affiliate. However, All States M.E.D. may not terminate franchise agreements already in place solely for a breach of the ADA.