What are the potential consequences for a Basecamp Fitness franchisee who fails to meet their obligations regarding royalty payments (Item 6 and Item 9), and how does this relate to the franchisor's termination rights (Item 9)?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
All rights granted in this Agreement immediately terminate upon written notice without opportunity to cure if: (i) you become insolvent, commit any affirmative action of insolvency or file any action or petition of insolvency; (ii) a receiver (permanent or temporary) of your property is appointed by a court of competent authority; (iii) you make a general assignment or other similar arrangement for the benefit of your creditors; (iv) a final judgment against you remains unsatisfied of record for thirty (30) days or longer; (v) execution is levied against your business or property, or the business or property of any of your affiliates that have entered into Franchise Agreements with us; (vi) a suit to foreclose any lien or mortgage against premises or equipment is instituted against you and not dismissed within thirty (30) days, or is not in the process of being dismissed; (vii) you fail to timely meet any of your obligations set forth in the Development Schedule or you fail to comply with our requirements for securing real estate for any Basecamp Fitness Studio; (viii) you or any of your affiliates open any Basecamp Fitness Studio before that person or entity
has signed a Franchise Agreement with us for that studio in the form we provide; (ix) you fail to comply with any other provision of this Agreement, or your or any of your affiliates fail to comply with any other agreement you or they have with us or our affiliates and do not correct the failure within thirty (30) days after written notice of that failure is delivered to the breaching party (except that if the failure to comply is the third failure to comply with any provision of any agreement that you or any of your affiliates have with us or an affiliate of ours within any twelve (12) consecutive month period, then we need not provide any opportunity to cure the default); or (x) we have delivered to you or any of your affiliates a notice of termination of a Franchise Agreement in accordance with its terms and conditions.
Rights and Duties of Parties Upon Termination or Expiration.
Upon termination or expiration of this Agreement, all rights granted to you under this Agreement will automatically terminate, and:
- A.
All remaining rights granted to you to develop Basecamp Fitness Studios under this Agreement will automatically be revoked and will be null and void and shall revert to us.
You will not be entitled to any refund of any fees.
What This Means (2025 FDD)
Based on the 2025 Basecamp Fitness Franchise Disclosure Document, a franchisee's failure to meet obligations, including those related to royalty payments, can lead to termination of the franchise agreement. Specifically, if a franchisee fails to comply with any provision of the Franchise Agreement and does not correct the failure within thirty days after written notice, Basecamp Fitness has grounds for termination. However, if this is the third failure to comply with any provision of any agreement within a twelve-month period, Basecamp Fitness does not need to provide an opportunity to cure the default before terminating the agreement.
Upon termination, all rights granted to the franchisee under the agreement automatically terminate. This includes the rights to develop Basecamp Fitness Studios, which revert back to the franchisor. The franchisee is not entitled to any refund of fees paid.
This termination clause highlights the importance of adhering to all contractual obligations, including timely royalty payments. Franchisees should ensure they have sufficient financial resources and systems in place to meet these obligations to avoid potential termination of their franchise agreement. The 'no cure' provision for repeat offenses within a short timeframe underscores the need for consistent compliance.