What constitutes a 'cross-default' under the Amorino franchise agreement?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
Any default under this Agreement or of any obligation owed to us or our affiliates, whether hereunder or under another agreement with us, or any default under any agreement related to the Franchised Business, such as a lease, a vendor agreement, invoice, order, supply agreement, or subcontract, will be regarded as a default under this Agreement.
In each of the foregoing cases, we and our affiliates will have all remedies allowed hereunder and at law, including termination of your rights (and/or those of any person/company affiliated with you) and our (and/or our affiliates') obligations.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, a 'cross-default' occurs when a franchisee defaults on any obligation to Amorino or its affiliates, whether under the franchise agreement itself or any other agreement. This includes defaults under agreements related to the franchised business, such as a lease, vendor agreement, invoice, order, supply agreement, or subcontract.
This means that if an Amorino franchisee fails to meet their obligations in one area, it can trigger a default under the franchise agreement, even if the original default is seemingly unrelated. For example, failure to pay a vendor on time could be considered a default under the franchise agreement if it's covered by a vendor agreement.
The implications of a cross-default are significant. Amorino and its affiliates have all available remedies, including termination of the franchise rights. This provision gives Amorino broad powers to enforce not only the franchise agreement but also any related agreements, increasing the risk to the franchisee. Franchisees should be diligent in meeting all obligations to Amorino, its affiliates, and related vendors to avoid triggering a cross-default and potential termination of their franchise.