Can the Franchisor seek a declaratory judgment that the Bang Cookies agreement is terminated?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 23: RECEIPTS]
You may terminate the agreement on any grounds available by law.
- The following is added to the end of the "Summary" section of Item 17(j), titled "Assignment of contract by franchisor":
However, no assignment will be made except to an assignee who in good faith and judgment of the franchisor, is willing and financially able to assume the franchisor's obligations under the Franchise Agreement.
- The following is added to the end of the "Summary" sections of Item 17(v), titled "Choice of forum", and Item 17(w), titled "Choice of law":
The foregoing choice of law should not be considered a waiver of any right conferred upon the franchisor or upon the franchisee by Article 33 of the General
Business Law of the State of New York.
North Dakota FDD Amendment
Amendments to the Bang Cookies Franchise Disclosure Document
- Item 5, "Initial fees", Item 5 is supplemented by the addition of the following:
Refund and cancellation provisions will be inapplicable to franchises operating under North Dakota Law, North Dakota Century Code Annotated Chapter 51-19, Sections 51-19-01 through 51-19-17. If franchisor elects to cancel this Franchise Agreement, franchisor will be entitled to a reasonable fee for its evaluation of you and related preparatory work performed and expenses actually incurred.
- Item 6, "Other Fees", Item 6 is supplemented by the addition of the following:
No consent to termination or liquidated damages shall be required from franchisees in the State of North Dakota.
3.2 TERMINATION BY FRANCHISOR
Franchisor possesses the right, at Franchisor's option, to terminate this Agreement and all rights granted to Franchisee hereunder, without affording Franchisee with any opportunity to cure such default, effective upon written notice to Franchisee, or automatically upon the occurrence of any of the following events: (a) if Franchisee Abandons Franchisee's obligations under this Agreement; (b) if Franchisee for four consecutive months, or any shorter period that indicates an intent by Franchisee to discontinue Franchisee's development of Shops within the Development Area; (c) if Franchisee becomes insolvent or is adjudicated bankrupt, or if any action is taken by Franchisee, or by others against the Franchisee, under any insolvency, bankruptcy or reorganization act, or if Franchisee makes an assignment for the benefit or creditors or a receiver is appointed by the Franchisee; (d) if Franchisee fails to meet its development obligations under the Development Schedule for any single Development Period including, but not limited to, Franchisee's failure to establish, open and/or maintain the cumulative number of Bang Cookies Shops in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Development Shop and/or any other Franchise Agreement between Franchisor and Franchisee.
17.B. CEASE OPERATIONS AND PROTECTION OF THE SYSTEM
Upon expiration, termination, or Transfer of this Agreement for any reason, Franchisee shall immediately:
- (1) Permanently cease to be a franchise owner of the Shop that was the subject of this Agreement and cease to operate such Shop under the System;
- (2) Refrain from directly or indirectly, holding oneself/itself out to any person or entity, or represent themselves/itself as a present or former Bang Cookies franchisee;
- (3) Permanently cease to use, in any manner: (a) the System including, without limitation, the Confidential Information, the Licensed Marks, the Business Management System Data, and the operations manual; (b) any methods, procedures, or techniques associated with the System in which Franchisor possesses proprietary rights or constitute Franchisor's trade secrets; (c) System Supplies, including communicating with or ordering products from Franchisor's designated suppliers and vendors of System Supplies; (d) the Approved Services and Products; and (e) any other advertising, marketing, media, and any other information, documents or things associated with Franchisor, the System, the Licensed Marks, Bang Cookies Shops, the Franchised Business, and Franchisee's former Bang Cookies Shop, including, without limitation, any confidential, proprietary methods, procedures, descriptions of products, techniques, trade secrets, proprietary marks, distinctive forms, slogans, symbols, signs, stationary, advertising material, articles, logos, devices, items and all other things, tangible or intangible, associated with Franchisor, the System,
the Licensed Marks, and Bang Cookies Shops;
- (4) Return to Franchisor the operations manual (including any and all parts, supplements, and copies of the operations manual), the Confidential Information (including without limitation the Business Management System Data and all customer lists and information), and all other confidential materials, equipment, software, information, and property owned by Franchisor and all copies thereof provided, however, that Franchisee may retain Franchisee's copies of this Agreement, correspondence between Franchisor and Franchisee, but not including Confidential Information that may be contained in or attached thereto, and other documents that Franchisee needs to retain pursuant to applicable law;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
Based on the 2024 Bang Cookies Franchise Disclosure Document, the franchisee may terminate the agreement on any grounds available by law. The FDD includes amendments for franchisees operating under North Dakota law, stating that no consent to termination or liquidated damages shall be required from franchisees in the State of North Dakota.
Additionally, the franchisor has specific rights to terminate the agreement under certain conditions, such as if the franchisee abandons their obligations, becomes insolvent, fails to meet development obligations, or if any related Franchise Agreement is terminated. The franchisor can terminate the agreement without providing an opportunity to cure the default in these specific instances.
Upon termination of the agreement, the franchisee must immediately cease operations as a Bang Cookies franchise, discontinue using the System, Licensed Marks, and Confidential Information, and return the operations manual and other confidential materials to the franchisor. However, the franchisee is allowed to retain copies of the Franchise Agreement, correspondence with the franchisor (excluding confidential information), and other documents required by law.