What constitutes a material default that could lead to termination of the Apricot Lane Franchise Agreement?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
Understates Gross Revenues two (2) or more times during the term of this Agreement or by more than two percent (2%) on any one occasion;
Becomes insolvent or makes a general assignment for the benefit of creditors, or if a petition in bankruptcy is filed by FRANCHISEE or such a petition is filed against and consented to by FRANCHISEE, or if FRANCHISEE is adjudicated bankrupt, or if a bill in equity or other proceeding for the appointment of a receiver of FRANCHISEE or other custodian by FRANCHISEE, or if a receiver or other custodian (permanent or temporary) of FRANCHISEE's assets or property, or any part thereof, is appointed by any court of competent jurisdiction, or if proceedings for a composition with creditors under any state or federal law should be instituted by or against FRANCHISEE, or if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless superseded as bond is filed), or if execution is levied against the Franchised Business or assets used therein, or suit to foreclose any lien or mortgage against the Premises or equipment is instituted against FRANCHISEE and not dismissed within thirty (30) days, or if the real or personal property of FRANCHISEE's Franchised Business shall be sold after levy thereupon by any sheriff, marshal, or constable;
Materially misuses or makes an unauthorized use of any Marks or commits any act which may reasonably be expected to impair the goodwill associated with any Marks;
Fails on two (2) or more separate occasions within any twelve (12) month period to comply with any material term or terms of this Agreement, whether or not such failures to comply are corrected after notice thereof is delivered to FRANCHISEE;
Operates the Franchised Business in a manner that presents a health or safety hazard to its customers or the public;
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- Repudiates its obligations or admits its inability to perform its obligations under this Agreement; or
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- Causes or allows the lease for the Premises to be terminated through act, omission or default under the lease.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, several actions or inactions can constitute a material default, leading to the termination of the Franchise Agreement. These include understating gross revenues two or more times during the agreement's term, or by more than two percent on any single occasion. Becoming insolvent, making an assignment for the benefit of creditors, or facing bankruptcy proceedings can also trigger termination.
Other causes for termination involve misuse of Apricot Lane's trademarks or actions that could impair the associated goodwill. Failing to comply with any material term of the agreement on two or more separate occasions within a 12-month period, even if corrected after notice, is also considered a material default. Operating the franchised business in a way that poses a health or safety hazard to customers or the public is another significant breach.
Additionally, repudiating obligations, admitting an inability to perform obligations under the agreement, or causing the lease for the premises to be terminated due to an act, omission, or default can lead to termination. These stipulations are typical in franchise agreements to protect the brand's integrity and ensure consistent operational standards across all franchise locations.