What constitutes a non-curable default related to non-monetary obligations for a Baya Bar franchise?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- 17.3.2 fails to perform any non-monetary obligation imposed by this Agreement (excepting those defaults of obligations set forth in Sections 17.1 and 17.2 for which there is no opportunity to cure) and such default shall continue for five (5) days after Franchisor has given written notice of such default, or if the default cannot be reasonably corrected within said five (5)-day period, then if it is not corrected within such additional time as may be reasonably required assuming Franchisee proceeds diligently to cure; provided, however, Franchisor has no obligation to give written notice of a non-monetary default more than two (2) times in any twelve (12)–month period, and the third such default, whether monetary or non-monetary, in any twelve (12) – month period shall be a non-curable default under Section 17.2.20.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a non-curable default related to non-monetary obligations occurs if a franchisee fails to perform any non-monetary obligation under the Franchise Agreement, excluding defaults already outlined in Sections 17.1 and 17.2 that cannot be cured. This default becomes non-curable if it happens for the third time within a twelve-month period, regardless of whether the previous defaults were monetary or non-monetary.
Specifically, Baya Bar only has to provide written notice of a non-monetary default twice in any twelve-month period. The third default, whether it involves money or not, within that same twelve-month window, immediately becomes a non-curable default. This means that Baya Bar can terminate the Franchise Agreement without providing an opportunity for the franchisee to correct the issue.
This policy highlights the importance of franchisees maintaining consistent compliance with all aspects of the Franchise Agreement, not just the financial ones. Franchisees should prioritize addressing any operational or contractual requirements promptly to avoid repeated defaults that could lead to termination. The relatively short timeframe and limited notices underscore the need for diligent management and adherence to Baya Bar's standards.