Does the Bath Tune Up agreement specify any exceptions to the default conditions related to indebtedness?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
anty made by the Pledgor herein or by the Pledgor (or any of its officers) in connection with the Financing Agreements shall prove to have been incorrect in any material respect when made; or
- (c) The Pledgor shall fail to perform or observe any term, covenant or agreement contained in this Agreement on its part to be performed or observed; or
- (d) The Pledgor shall default in the performance of or compliance with any term contained in any Financing Agreement other than this Agreement and such default shall not have been remedied or waived within any applicable grace period; or
(e) The Pledgor shall
- (i) fail to pay any principal of, or premium or interest on, any indebtedness, the aggregate outstanding principal amount of which is at least $10,000 (excluding indebtedness evidenced by the Note), when due (whether by scheduled maturity, required prepayment, acceleration, demand or
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to the 2025 Bath Tune Up Franchise Disclosure Document, the franchise agreement outlines specific events that constitute a default, including those related to indebtedness. One such event occurs if the franchisee fails to pay any principal or interest on any indebtedness when due. However, an exception exists if the aggregate outstanding principal amount of the indebtedness is less than $10,000, excluding indebtedness evidenced by the Note.
Another event of default occurs if the franchisee fails to perform or observe any term, covenant, or condition under any agreement or instrument relating to such indebtedness, which is material to the performance, business, property, assets, condition (financial or otherwise), or prospects of the franchisee. This failure must continue after any applicable grace period specified in the agreement or instrument.
These provisions are important for a prospective Bath Tune Up franchisee to understand, as they define the circumstances under which the franchisor can declare a default based on the franchisee's financial obligations. The $10,000 threshold provides a limited exception for smaller debts, but any failure to meet obligations on larger debts or any material breach of related agreements can trigger a default. Franchisees should carefully manage their debt and ensure compliance with all financial agreements to avoid potential default scenarios.