Is Batteries Plus Bulbs obligated to operate a store if the franchisee defaults?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
16. FRANCHISOR'S TERMINATION RIGHTS
A. Termination of Franchise Agreement - Grounds. Franchisee will be in default, and Franchisor may, at its option, terminate this Agreement, as provided herein, if: (1) Franchisee (or the managing Principal Owner) fails to satisfactorily complete the initial training program or fails to open and commence commercial or retail sales operations of the Store at such time as provided in this Agreement; (2) Franchisee violates any material provision or obligation of this Agreement; (3) Franchisee or any of its managers, directors, officers or any Principal Owner makes a material misrepresentation or omission in the application for the Franchise; (4) Franchisee or any of its managers, directors, officers or any Principal Owner is convicted of, or pleads guilty to or no contest to a felony, a crime involving moral turpitude, or any other crime or offense that Franchisor believes will injure the System, the Licensed Marks or the goodwill associated therewith, or if Franchisor has proof that Franchisee has committed such a felony, crime or offense; (5) Franchisee fails to conform to the material requirements of the System or the material standards of uniformity and quality for the products and services as described in the Operations Manual or as Franchisor has established in connection with the System; (6) Franchisee or any affiliated entity under common control with Franchisee fails to timely pay Royalty and Service Fees, Digital Marketing and Local Media Program contributions or NMF Fees or any other obligations or liabilities due and owing to Franchisor or its affiliates, other Batteries Plus® franchisees or suppliers approved by Franchisor as a source for required items, or fails to timely pay any advertising cooperative obligations; (7) Franchisee is insolvent within the meaning of any applicable state or federal law; (8) Franchisee makes an assignment for the benefit of creditors or enters into any similar arrangement for the disposition of its assets for the benefit of creditors; (9) Franchisee voluntarily or otherwise "abandons" (as defined below) the Store; (10) Franchisee is involved in any act or conduct which
Source: Item 22 — Contracts (FDD page 80)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the FDD does not state that Batteries Plus Bulbs is obligated to operate a store if the franchisee defaults. The document outlines the conditions under which Batteries Plus Bulbs can terminate the franchise agreement, such as failure to meet training requirements, violation of the agreement, misrepresentation in the application, criminal convictions, failure to meet system standards, failure to make timely payments, insolvency, abandonment of the store, or involvement in damaging acts. These termination rights do not imply any obligation for Batteries Plus Bulbs to take over and operate the store.
Item 22 details various aspects of the franchise agreement, including termination rights, but it does not specify any obligation for Batteries Plus Bulbs to operate a defaulting franchisee's store. The agreement focuses on the franchisee's responsibilities and the franchisor's rights to protect the brand and system standards. The absence of a clause requiring the franchisor to operate a defaulted store suggests that Batteries Plus Bulbs is not contractually bound to do so.
A prospective franchisee should clarify with Batteries Plus Bulbs during their due diligence process what happens to the store's operations and assets if the franchisee defaults. Understanding the procedures and potential outcomes in case of default is crucial for assessing the risks and responsibilities associated with the franchise.