What are the non-curable defaults that will cause automatic termination of the Baya Bar Franchise Agreement?

According to Baya Bar's 2024 Franchise Disclosure Document, certain defaults will trigger an automatic termination of the Franchise Agreement without notice. These non-curable defaults, as detailed in Sections 17.1 and 17.2 of the agreement, include situations indicating financial instability or legal issues. Specifically, the agreement will terminate automatically if the franchisee becomes insolvent, declares bankruptcy, admits in writing their inability to pay debts, enters receivership, is subject to a levy or composition with creditors, has an unsatisfied final judgment against them for more than 30 days, or faces a foreclosure proceeding that is not dismissed within 30 days.

In addition to the automatic termination events, Baya Bar may terminate the Franchise Agreement with notice to the franchisee under a variety of other conditions. These include failing to acquire a site, complete construction, obtain necessary permits, or open the franchised business within the required time frames. Falsifying reports to Baya Bar, ceasing operations for 5 or more days (unless due to premises damage and application for relocation), losing possession of the premises (unless not at fault and timely application for relocation), and failing to restore and re-open the business within 120 days after a casualty (as may be extended by Baya Bar) are also grounds for termination.

Further reasons for termination with notice include failing to comply with applicable laws, defaulting under any lease for the premises, understating Gross Revenue two or more times, failing to comply with insurance and indemnification requirements, and attempting an unauthorized transfer of the franchise. The agreement can also be terminated if the franchisee or their legal representative fails to transfer the franchise as required upon death or permanent disability, misrepresents or omits a material fact in the franchise application, is convicted of a felony or crime that could damage Baya Bar's goodwill, receives an adverse judgment involving fraud or similar claims, conceals revenues or maintains false books, creates a threat to public health or safety, refuses an inspection or audit, uses Baya Bar's intellectual property in an unauthorized manner, makes an unauthorized disclosure of confidential information, or fails to comply with non-competition covenants.

Finally, Baya Bar can terminate the agreement if the franchisee defaults in the performance of their obligations three or more times during the term or receives two or more default notices in any 12-month period, defaults under any other agreement with Baya Bar or its affiliate, has insufficient funds to honor a check or EFT two or more times within any 12-month period, or terminates the Franchise Agreement without cause. These extensive conditions highlight the importance of understanding and adhering to the Franchise Agreement to avoid potential termination and its associated consequences.