What constitutes a 'Default' under the Amorino franchise agreement that could lead to termination?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
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16. DEFAULT AND TERMINATION
- A. Termination Upon Notice In Certain Events. You shall be deemed to be in default under this Agreement, and we may terminate this Agreement and the franchise granted under this Agreement with immediate effect upon delivery of notice to you (without any opportunity to cure) upon the occurrence of any of the following events (each a "Default"):
- (1) You fail to make any payment due under this Agreement within 30 (thirty) days of when it is due.
- (2) You become insolvent, make a general assignment for the benefit of creditors, file a voluntary petition in bankruptcy, have an involuntary petition in bankruptcy filed against you which is not dismissed within 30 days after filing, are adjudicated as bankrupt or insolvent, suffer temporary or permanent court-appointed receivership of your assets or property, or any part thereof,
- (3) Your Business Entity is dissolved;
- (4) Execution is levied against your business or property;
- (5) Judicial, non-judicial or administrative proceedings to foreclose any lien or mortgage against the Franchised Location premises or assets or equipment is instituted against you and not dismissed within 30 days; or
- (6) If the real or personal property of the Franchised Business is sold after levy thereupon by any sheriff, marshal, or constable
- (7) Your Supervising Principal or Manager fails to successfully complete the initial training by the Opening Date;
- (8) You fail to acquire a site by the Site Selection Date (or such later date as we, in our sole and absolute discretion, specify in writing);
- (9) You fail to open the Store for business by the Opening Date (or such later date as we, in our sole and absolute discretion, specify in writing);
- (10) You abandon the Franchised Business (which will be presumed if you cease operations for five (5) consecutive days or more, other than in the case of an agreed-upon period of closure or as a result of a Force Majeure Event);
- (11) Any Approval required to operate the Franchised Business is revoked, terminated or otherwise lost unless the required approval is reinstated within a reasonable time.;
- (12) If the term of your lease expires or if your right to possession of your Amorino premises is otherwise lost without you being at fault, we will not terminate this Agreement as long as you relocate and reopen your Amorino store within 180 days from the date on which your prior lease terminated. The provisions of this Agreement will apply to the location, lease and design approval, equipping and other features of your relocated Amorino facility and the term of this Agreement will be extended by the amount of time between the termination of your prior lease and the opening of your relocated facility;
- (13) you or any Principal or Manager is convicted of, or pleads guilty or no contest to, a felony, a crime involving moral turpitude, or any other crime or offense that Amorino believes is reasonably likely to have an adverse effect on the Franchised Business, System, Proprietary Marks, or reputation of Amorino;
- (14) there is any transfer or attempted transfer in violation of Section 15;
- (15) you, or any of your Principals or Affiliates, challenge our right or the right of any of our Affiliates to use, or license others to use, the System, the Proprietary Marks, the Copyrighted Materials, or any part thereof;
- (16) you or any Principal fails to comply with the confidentiality or
noncompete covenants in Section of this Agreement;
- (17) you or any Principal provide us with any false or misleading information or make any material misrepresentation in connection with your franchise application or at any time during the term of this Agreement;
- (18) you knowingly maintain false books or records;
- (19) your failure to make any payment when due to Amorino or any of its affiliates or approved suppliers;
- (20) failure to comply with any other terms or conditions: three or more breaches of a similar nature of any terms and conditions of this Agreement within a twelve month period, even if cured; or
- (21) you sell or offer for sale gelato, sorbet, gelato macarons, or restricted dry goods (such as Amorino branded cones) which you purchased or obtained from a source or supplier other than an approved supplier.
- B. Termination with 20-Day Cure Period. Amorino has the right to terminate this Agreement, which termination will become effective upon delivery of written notice of termination, if the default is other than as provided in Section 16.A above, and is of a nature that it is capable of being cured and the default has not been cured within twenty (20) days of receipt of such notice, otherwise, the termination shall be effective immediately upon receipt of the notice. However, if the default is of such a nature that more than 20 days are reasonably required to cure the violation, we will give you such additional time as is reasonably necessary to cure the default as long as you start the corrective action within the initial 20-day period and proceed with the cure diligently to its completion.
- C. Termination Related to Death or Permanent Incapacity.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, several actions or failures can constitute a default, leading to the termination of the franchise agreement. These defaults are categorized with differing consequences, some allowing for a cure period while others result in immediate termination upon notice.
Immediate termination can occur if a franchisee fails to make payments within 30 days of the due date, becomes insolvent or bankrupt, dissolves the business entity, faces execution against their business or property, or undergoes foreclosure proceedings that are not dismissed within 30 days. It also applies if the franchisee's property is sold after levy, the supervising principal or manager fails to complete initial training, a site is not acquired by the specified date, the store fails to open by the opening date, or the franchisee abandons the business for five or more consecutive days without agreement or due to a Force Majeure Event. Furthermore, the loss of any required operating approval that is not reinstated in a reasonable time also constitutes an immediate default.
For defaults that allow a 20-day cure period, Amorino can terminate the agreement if the franchisee does not rectify the issue within the given timeframe after receiving written notice. However, if the default requires more than 20 days to cure, Amorino may grant additional time, provided the franchisee begins corrective action within the initial 20-day period and diligently works towards completion. Other actions that can lead to termination include selling unauthorized goods, three breaches of a similar nature of any terms and conditions of the agreement within a twelve month period, a transfer or attempted transfer in violation of Section 15, challenging Amorino's rights to use the System, Proprietary Marks, or Copyrighted Materials, failing to comply with confidentiality or noncompete covenants, providing false or misleading information, maintaining false books or records, or failing to make any payment when due to Amorino or any of its affiliates or approved suppliers.
Additionally, a default under any agreement with Amorino or its affiliates, or any agreement related to the franchised business (such as a lease or vendor agreement), will be considered a default under the franchise agreement. Amorino also has the right to terminate the agreement if an approved transfer is not completed within the designated time frame following the death or permanent incapacity of the franchisee or the sole principal of the franchisee. Prospective franchisees should carefully review Section 16 and other relevant sections of the franchise agreement to fully understand their obligations and the potential consequences of non-compliance.