Is insolvency a curable or non-curable default for a Batteries Plus Bulbs franchise?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Agreement(1) | Summary(1) |
|---|---|---|
| a. Length of the franchise term | Section 3; Section 3 of Multiple Unit Franchise Agreement | Franchise Agreement: 10 years. Multiple Unit Franchise Agreement: Ends on last day of Development Schedule. |
| b. Renewal or extension | Section 3 | If you are in good standing, you can renew the Franchise |
| of the term | Agreement for one additional 10 year term. | |
| c. Requirements for you to renew or extend | Section 3 | Provide advance notice, comply with current Franchise Agreement, you and your Store Manager satisfactorily complete any new/refresher training programs, you and your Principal Owners must meet current managerial, financial and business standards, sign new agreement (which may contain materially different terms and conditions than your original Franchise Agreement), remodel, pay renewal fee and Omni-Channel access renewal fee, and sign a general release of claims. |
| d. Termination by you | Section 17 | If you comply with the Franchise Agreement, and we fail to cure a material provision within 60 days after written notice. |
| e. Termination by us | Not Applicable | |
| without cause | ||
| f. Termination by us with cause | Section 16; Section 13 of Multiple Unit Franchise Agreement | We may terminate the Franchise Agreement and Multiple Unit Franchise Agreement only if you default. |
| Provision | Section in Agreement(1) Summary(1) | |
| g. “Cause” defined – curable defaults | Sections 16(B) and (C); Section 13(A) of Multiple Unit Franchise Agreement Franchise Agreement: You have 30 days to cure failure to open Store when required, failure to complete training, failure to comply with System standards, fail to renew or maintain Store lease, breach under another Batteries Plus franchise agreement, and a violation of any material provision of the Agreement. You have 10 days to cure a failure to pay amounts due us or any creditors. Multiple Unit Franchise Agreement: You have 30 days to cure failure to meet development requirements, failure to comply with this Agreement or the Franchise Agreement or you terminate a franchise Agreement without cause, and failure to comply with any requirements in the Operations Manual. You have 10 days to cure a failure to pay amounts due us or any creditors. | |
| h. “Cause” defined – non- curable defaults | Sections 16(B) and (C); Section 13(B) of Multiple Unit Franchise Agreement Franchise Agreement: Failure on 3 or more occasions in any 12 months to comply with any provision, default which is not curable, repeatedly deceive Store customers, conviction of or proof that you have committed a felony or other crime which harms the Store’s reputation, insolvency, an assignment of assets to creditors, Store abandonment, defaults which injures the goodwill associated with the Licensed Marks, use of unapproved website or other unauthorized conduct on the internet, unauthorized assignment of agreement or interest, and intentionally falsify any information provided to us. Multiple Unit Franchise Agreement: Failure on 3 or more occasions in any 12 months to comply with any provision, unauthorized assignment, material misrepresentation or omission in franchise application, conviction of or proof that you have committed a felony or other crime that harms Store’s reputation, improper disclosure of Confidential Information, insolvency, unauthorized use of Licensed Marks that injures goodwill, use of unapproved website or other unauthorized conduct on the internet, default which is not curable or an immediate threat or danger to public health or safety resulting from construction, maintenance or operation of the Store. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 49–53)
What This Means (2025 FDD)
According to the 2025 Batteries Plus Bulbs FDD, insolvency is defined as a non-curable default. This means that if a Batteries Plus Bulbs franchisee becomes insolvent, Batteries Plus Bulbs has grounds to terminate the franchise agreement, and the franchisee does not have an opportunity to correct the situation to avoid termination.
Insolvency is listed among other non-curable defaults such as repeated customer deception, conviction of a felony, store abandonment, defaults that harm the brand's goodwill, unauthorized website use, unauthorized assignment of the agreement, and intentional falsification of information. These defaults are considered severe enough that the franchisor does not provide an opportunity for the franchisee to rectify the situation.
This policy is relatively standard in franchising, as insolvency indicates a fundamental inability to manage the business financially. The FDD also lists several curable defaults, such as failure to open the store when required, failure to complete training, failure to comply with system standards, failure to renew or maintain the store lease, breach under another Batteries Plus franchise agreement, and violation of any material provision of the agreement. For these curable defaults, Batteries Plus Bulbs typically gives the franchisee 10 to 30 days to resolve the issue.
Prospective Batteries Plus Bulbs franchisees should understand the implications of both curable and non-curable defaults, as these terms define the conditions under which the franchise can be terminated and what recourse, if any, the franchisee has to prevent termination. Maintaining financial stability is crucial to avoid insolvency and the immediate termination of the franchise agreement.