What happens if an All States M.E.D. franchisee fails to establish, equip, and commence operations of the franchised business according to Section 5?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.2.1 Franchisor has the right to terminate this Agreement, without any opportunity to cure by Franchisee, if Franchisee:
- (a) fails to timely establish, equip, and commence operations of the Franchised Business according to Section 5;
Franchisee shall comply with these conditions and be prepared to open and continuously operate the Franchised Business within 180 days after the Effective Date. Time is of the essence.
5.4 Failure to Open
Should Franchisee fail to commence operations of the Franchised Business within 300 days after the Effective Date, Franchisor has the right to terminate this Agreement. Franchisee must secure a location within 90 days. Franchisor shall have a period of 10 days to approve such location, and Franchisee must sign the lease within 15 days following our approval of such location. If this Agreement is terminated according to this Section 5.4, Franchisor shall retain the entire Franchise Fee paid by Franchisee. The Franchise Fee retained shall be specifically understood and agreed by the parties to be in consideration of the services provided, time expended, work performed, and other efforts of Franchisor up to the date of Franchisee's failure to timely commence operations of the Franchised Business and shall not be construed as nor considered to be a penalty.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the franchisor can terminate the franchise agreement without allowing the franchisee an opportunity to correct the issue if the franchisee fails to establish, equip, and commence operations of the franchised business according to Section 5 of the agreement.
Additionally, if the All States M.E.D. franchisee fails to commence operations within 300 days of the effective date of the agreement, All States M.E.D. has the right to terminate the agreement. The franchisee must secure a location within 90 days, and All States M.E.D. has 10 days to approve the location. Following approval, the franchisee must sign the lease within 15 days.
If the agreement is terminated under these conditions, All States M.E.D. will retain the entire franchise fee paid by the franchisee. This fee is understood as compensation for the services provided, time expended, work performed, and other efforts by All States M.E.D. up to the date the franchisee failed to commence operations and will not be considered a penalty.