In the event of a franchisee default, what remedies are available to Bath Tune Up besides termination?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor's right to terminate this Agreement or requires longer notice periods than those stated in this Agreement, and if the parties are prohibited by law from agreeing to the shorter periods stated in this Agreement, then Franchisor will conform to the requirements of those laws and regulations, but only to the
extent necessary to bring Franchisor's actions within the requirements of the law or regulation.
10.6. Alternative Remedies
In those circumstances under which Franchisor may terminate this Agreement, Franchisor may in its sole discretion: (a) redirect customer leads generated by Franchisor on Franchisee's behalf to other franchisees as contemplated in section 2.2(d); and/or (b) grant to Franchisee, in lieu of immediate termination of this Agreement, (i) an extended period of time (not to exceed six months from the last day of the cure period otherwise applicable to the breach) to cure the breach which gave rise to Franchisor's right to terminate, (ii) an option to reimburse Franchisor up to $1,000 for investigating the breach of this Agreement, or (iii) if the breach consists of the offer or sale of Bath Improvements in the territory assigned to another franchisee of Franchisor, require Franchisee to pay, as liquidated damages, and not a penalty, an amount equal to 100% of the total gross sales gen
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to the 2025 Bath Tune Up Franchise Disclosure Document, besides termination, Bath Tune Up has several alternative remedies available in the event of a franchisee default. These include withholding customer leads, granting an extended cure period, requiring reimbursement for investigating the breach, and demanding payment of liquidated damages for sales in another franchisee's territory.
Specifically, Bath Tune Up may redirect customer leads generated on behalf of the defaulting franchisee to other franchisees. This is particularly relevant because leads are a crucial component of generating revenue for a Bath Tune Up franchise. Additionally, Bath Tune Up can grant the franchisee an extended period, up to six months, to cure the breach that led to the default. Bath Tune Up can also require the franchisee to reimburse them up to $1,000 for the costs of investigating the breach.
Furthermore, if the default involves the franchisee making sales in another franchisee's exclusive territory, Bath Tune Up can require the defaulting franchisee to pay liquidated damages. This amount is equivalent to 100% of the gross sales generated in the other franchisee's territory. These damages are intended to compensate the other franchisee for the diverted business and cover Bath Tune Up's investigation costs. It is important to note that Bath Tune Up's decision to offer an extended cure period or accept reimbursement does not waive any other rights they have under the franchise agreement.
These alternative remedies provide Bath Tune Up with flexibility in addressing franchisee defaults, potentially allowing them to avoid termination while still protecting their interests and the interests of other franchisees. A prospective franchisee should consider these remedies and their potential financial implications when evaluating the Bath Tune Up franchise opportunity.