What section of the Baya Bar Multi-Unit Development Agreement defines 'cause' for termination?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
able defaults listed in the Multi-Unit Development Agreement and described in h. immediately below). |
| Section in Multi | |||
|---|---|---|---|
| Unit Development | |||
| Provision | Agreement | Summary | |
| h. | "Cause" defined - non-curable defaults | Sections 7.1 and 7.2 | The Multi-Unit Development Agreement will terminate 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 Multi-Unit Development Agreement upon notice to you if you: misrepresent or omit a material fact in applying for the Development Rights; falsify any report to us; fail to comply with any federal, state or local law, rule or regulation, applicable to the development and operations of your Baya Bar outlets, including, but not limited to, the failure to pay taxes; fail to develop the Baya Bar outlets in accordance with the Mandatory Development Schedule; attempt a transfer in violation of the Franchise Agreement; 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; fail to comply with non competition covenants; default, or your affiliate defaults, under any other agreement, including any Franchise Agreement, with us or any of our affiliates, suppliers or landlord and does not cure such default within the time period provided in such other agreement; or terminate the Multi-Unit Development Agreement without cause. |
| i. | Franchisee's obligations on termination/ non-renewal | Section 7.4 | Upon termination, you must: cease all development operations and comply with the non-disclosure and non-competition covenants. |
| j. | Assignment of contract by franchisor | Section 6.1 | No restrictions on our right to assign. |
| k. | "Transfer" by franchisee defined | Section 6.3 | Any assignment, sale, transfer, gift, devise or encumbrance of any interest in the Multi-Unit Development Agreement or Development Rights. |
| l. | Franchisor approval of transfer by franchisee | Sections 6.2, 6.3 | No transfer is allowed without our consent, which we will not unreasonably withhold. |
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, the Multi-Unit Development Agreement outlines specific sections related to termination for cause. Section 7.1 states that Baya Bar may terminate the agreement if the franchisee defaults, with the defaults described throughout the agreement. Section 7.3 defines 'cause' related to curable defaults, allowing the franchisee five days to correct non-payments and other defaults, except for non-curable defaults.
Non-curable defaults, which lead to automatic termination without notice, are detailed in Sections 7.1 and 7.2. These include events such as insolvency, bankruptcy, admitting 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.
Baya Bar may also terminate the agreement with notice if the franchisee misrepresents or omits material facts during the application, falsifies reports, fails to comply with laws related to the Baya Bar outlet's development and operations (including tax payments), fails to meet the Mandatory Development Schedule, attempts unauthorized transfers, is convicted of a felony that could harm Baya Bar's reputation, receives an adverse judgment involving fraud, fails to comply with non-competition covenants, defaults under any agreement with Baya Bar or its affiliates, or terminates the Multi-Unit Development Agreement without cause. These provisions define the circumstances under which Baya Bar can terminate the agreement with a franchisee, distinguishing between curable and non-curable defaults.