Must the franchisee stop operating the Franchised Business if the All States M.E.D. Franchise Agreement is terminated or not renewed?
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.
| 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; stop using any trade secrets, confidential information, the System and the Marks; cancel or assign to us any assumed names; pay all sums owed to us including damages and costs incurred in enforcing the Franchise Agreement; return the Operations Manual, trade secrets and all other confidential information; assign your telephone and facsimile numbers to us; comply with the covenants not to compete and any other surviving provisions of the Franchise Agreement. |
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, if the Franchise Agreement is terminated or not renewed, the franchisee must cease operating the Franchised Business. This means the franchisee can no longer provide services or operate under the All States M.E.D. brand.
In addition to ceasing operations, the franchisee must discontinue using any trade secrets, confidential information, the System, and the Marks associated with All States M.E.D. The franchisee is also required to cancel or assign any assumed names to All States M.E.D., pay all outstanding sums owed, including damages and costs incurred by All States M.E.D. in enforcing the Franchise Agreement, and return the Operations Manual, trade secrets, and all other confidential information.
Furthermore, the franchisee must assign their telephone and facsimile numbers to All States M.E.D. and comply with any non-compete covenants and other provisions that survive the termination or non-renewal of the Franchise Agreement. This ensures that the franchisee does not unfairly compete with All States M.E.D. after the agreement ends and protects All States M.E.D.'s interests and proprietary information.