What are the conditions that an Auntie Annes franchisee must meet to be approved for reinstatement after a termination related to public health and safety?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
- G. Promptly sign all documents and take all other actions as we deem necessary to affect the intent and provisions of this Section 18.1.
- 18.2 Reinstatement. If this Agreement is terminated under Section 17.2.K (Franchised Business poses a threat to public health and safety), we may, in our sole discretion, permit you to apply for reinstatement of this Agreement within 7 days of the effective date of termination, after the first termination only. Our approval of reinstatement will not be unreasonably withheld and will be subject to the following conditions. You must:
- A. Cure the default that led to the termination of this Agreement;
- B. Pay us all fees due us, including Royalty Fees and Advertising Contributions;
- C. Pay us a fee to compensate us for your continued use of the Marks during the period of termination equal to the number of days between the date of termination of this Agreement and the date of reinstatement of this Agreement multiplied by the average daily Royalty Fee due to us during the calendar month preceding the date of termination,
- D. Pay us a reinstatement fee of 10% of the amount of the then-current initial franchise fee; and
- E. Sign and return to us our standard form of reinstatement agreement that we specify, which will include your commitment to a refurbishment plan that you and we must agree on.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, if a franchise agreement is terminated due to the business posing a threat to public health and safety, the franchisee has a limited opportunity to apply for reinstatement. This option is available only after the first such termination and the franchisee must apply within 7 days of the termination date.
To be considered for reinstatement, the Auntie Annes franchisee must first correct the issues that led to the termination. They must also pay all outstanding fees, including royalty and advertising fees. Additionally, the franchisee must compensate Auntie Annes for the period of termination by paying a daily fee equivalent to the average daily royalty fee from the month before termination, multiplied by the number of days the agreement was terminated.
Finally, the franchisee must pay a reinstatement fee equal to 10% of the current initial franchise fee and sign Auntie Annes's standard reinstatement agreement. This agreement will include a commitment to a refurbishment plan that both the franchisee and Auntie Annes must agree upon. Auntie Annes retains the sole discretion to approve the reinstatement, but states that approval will not be unreasonably withheld if all conditions are met.