What is the definition of 'cause' for termination in the All States M.E.D. Franchise Agreement?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
| 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.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 32–39)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, 'cause' for termination without opportunity to cure includes several specific defaults. All States M.E.D. can terminate the franchise agreement if a franchisee fails to establish, equip, and begin operations on time, or if they don't satisfactorily complete the required training. Maintaining all necessary professional licenses, permits, and certifications is critical; failure to do so for more than five business days constitutes cause for termination.
Additionally, All States M.E.D. can terminate the agreement if the franchisee makes a material misrepresentation or omission during the franchise application process. Criminal behavior, such as a felony conviction or pleading no contest to a crime that could harm the reputation of either party or the franchised business, is also grounds for termination. Furthermore, franchisees must avoid activities or conduct that could adversely affect All States M.E.D. or the franchised business after receiving notice to stop such behavior.
Unauthorized use of the Operations Manual, trade secrets, or other confidential information can lead to termination. All States M.E.D. also requires that owners, officers, directors, managers, executives, employees, professional staff, and other individuals having access to trade secrets or confidential information sign non-disclosure and non-competition agreements. Failure to provide copies of these agreements if requested is also cause for termination.
Other actions that constitute cause for termination include abandoning the franchised business for five or more consecutive days, unauthorized surrender or 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 or safety laws, taking actions reserved to All States M.E.D., failure to comply with applicable law after notice, repeated breaches of the franchise agreement, failure to comply with specifications, or defaulting under any other agreement with All States M.E.D. or an affiliate. However, All States M.E.D. cannot terminate agreements solely for a breach of the ADA.