What recourse does a Baya Bar franchisee have to cure defaults?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
terminate only if you default. The Multi-Unit Development Agreement describes defaults throughout. Please read it carefully. | | g. | “Cause” defined – curable defaults | Section 7.3 | You have 5 days to cure non-payments and any other defaults (except for non- curable defaults listed in the Multi-Unit Development Agreement and described in h. immediately below). |
| h. | "Cause" defined - non-curable | Sections 17.1 and | The Franchise Agreement will terminate |
|---|---|---|---|
| defaults | 17.2 | automatically, without notice for the | |
| following defaults: insolvency; bankruptcy; | |||
| written admission of inability to pay debts; | |||
| receivership; levy; composition with | |||
| creditors; unsatisfied final judgment for | |||
| more than 30 days; or foreclosure | |||
| proceeding that is not dismissed within 30 | |||
| days. | |||
| We may terminate the Franchise | |||
| Agreement upon notice to you if you: do | |||
| not acquire a site, do not complete | |||
| construction, obtain permits and/or open | |||
| the Franchised Business within required | |||
| time frames; falsify any report to us; cease | |||
| operations for 5 days or more, unless the | |||
| premises are damaged and you apply to | |||
| relocate; lose possession of the premises, | |||
| unless you are not at fault for loss and you | |||
| timely apply to relocate; fail to restore and | |||
| re-open the Franchised Business within | |||
| 120 days after a casualty, as may be | |||
| extended by us; fail to comply with | |||
| applicable laws; default under any lease | |||
| for the premises; understate Gross | |||
| Revenue two (2) or more times; fail to | |||
| comply with insurance and indemnification | |||
| requirements; attempt a transfer in | |||
| violation of the Franchise Agreement; fail, | |||
| or your legal representative fails to | |||
| transfer as required upon your death or | |||
| permanent disability; misrepresent or omit | |||
| a material fact in applying for the | |||
| Franchise; are convicted or plead no | |||
| contest to a felony or crime that could | |||
| damage the goodwill or reputation of our | |||
| trademarks or the System; receive an | |||
| adverse judgment in any proceeding | |||
| involving allegations of fraud, racketeering | |||
| or improper trade practices or similar claim | |||
| that could damage the goodwill or | |||
| reputation of our trademarks or the | |||
| System; conceal revenues or maintain | |||
| false books; create a threat or danger to | |||
| public health or safety; refuse an | |||
| inspection or audit by us; use our | |||
| trademarks, copyrighted material or | |||
| Confidential Information in an | |||
| unauthorized manner; make an | |||
| unauthorized disclosure of Confidential | |||
| Information; fail to comply with non | |||
| competition covenants; default in the | |||
| performance of your obligations three (3) | |||
| or more times during the term or receive | |||
| two (2) or more default notices in any 12- | |||
| month period; default under any other | |||
| agreement with us or our affiliate; have | |||
| insufficient funds to honor a check or EFT | |||
| two (2) or more times within any twelve | |||
| (12)-month period; or terminate the | |||
| Franchise Agreement without cause. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 43–52)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a franchisee has a limited time to cure certain defaults. Specifically, the franchisee has 5 days to correct non-payment issues or any other curable defaults. However, this cure period does not apply to defaults that are deemed non-curable under the Multi-Unit Development Agreement.
The Franchise Agreement outlines specific defaults that are considered non-curable, leading to automatic termination without notice. These include situations such as insolvency, bankruptcy, a written admission of inability to pay debts, receivership, levy, composition with creditors, an unsatisfied final judgment for more than 30 days, or a foreclosure proceeding not dismissed within 30 days.
Additionally, Baya Bar may terminate the Franchise Agreement with notice if the franchisee fails to acquire a site, complete construction, obtain necessary permits, or open the franchised business within the required timeframes. Other non-curable defaults include falsifying reports, ceasing operations for 5 or more days (with exceptions for premises damage and relocation applications), losing possession of the premises (with similar exceptions), failing to restore and re-open after a casualty within 120 days, failing to comply with laws, defaulting on a lease, understating gross revenue multiple times, failing to meet insurance and indemnification requirements, or attempting an unauthorized transfer.
Further non-curable defaults include misrepresentation during the application process, conviction of a crime damaging Baya Bar's goodwill, receiving an adverse judgment related to fraud or improper trade practices, concealing revenues, creating a public health or safety threat, refusing inspections, unauthorized use of trademarks or confidential information, failing to comply with non-competition covenants, repeated defaults, insufficient funds for checks, or terminating the Franchise Agreement without cause. These stipulations highlight the importance of understanding the terms of the Franchise Agreement and adhering to Baya Bar's standards to avoid potential termination.