Can All Team terminate the franchise agreement if the franchisee is convicted of any criminal misconduct?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
ntitled to written notice of default, but ATFC shall [if permitted by applicable law] be required to grant FRANCHISEE only ten (10) days to remedy such default. ATFC has the right to termination this Agreement upon providing FRANCHISEE written notice of said termination.
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- Without Opportunity to Cure. Notwithstanding anything contained herein to the contrary, if state law permits, ATFC shall be permitted to terminate the franchise immediately and without notice when the basis or grounds for cancellation is: (a) conviction of a felony or any other criminal misconduct which, in ATFC's opinion materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise; (b) fraudulent activity which, in ATFC's opinion, materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise; (c) abandonment of the franchise; (d) bankruptcy or insolvency of the FRANCHISEE; (e) the termination of any other agreement between FRANCHISEE and ATFC or its affiliates; (f) repeated failure or refusal to comply with the lawful provisions of this Agreement, (i.e., three (3) or more times in any twelve (12) month period) whether or not such failures or refusals are corrected after notice; or (g) any other act or omission which permits termination without notice and/or an opportunity to cure under applicable state law.
- B. Termination By FRANCHISEE.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, All Team can terminate the franchise agreement immediately and without notice if a franchisee is convicted of a felony or any other criminal misconduct. However, this is contingent on All Team's opinion that the misconduct materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise. This termination clause is subject to state law, meaning that if state law does not permit termination without notice under these circumstances, All Team must provide written notice of default and, if permitted by applicable law, only ten days to remedy the default.
This provision means that a franchisee's criminal conviction, even for something seemingly unrelated to the business, could lead to the termination of their franchise if All Team believes it harms the franchise's reputation or operations. The franchisee has a limited time, potentially as short as ten days, to address the situation if the state law requires notice and an opportunity to cure. This creates a significant risk for franchisees, as any criminal conviction could jeopardize their investment and business.
It is important to note that the specific application of this clause may vary depending on the state in which the franchise operates, due to franchise laws that protect franchisees. For example, certain states may require a longer cure period or may have stricter definitions of what constitutes 'reasonable cause' for termination. Therefore, prospective franchisees should consult with a legal professional to understand how these provisions apply in their specific state and what rights they have under local franchise laws.