What section of the Baya Bar Multi-Unit Development Agreement discusses termination by the franchisor without cause?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Unit Development | Summary | |
|---|---|---|---|
| Agreement | |||
| a. | Length of the franchise term | Art. 3 | As determined by you and us based on the number of Baya Bar outlets you are to develop. |
| b. | Renewal or extension of the Term | Not Applicable | Not Applicable |
| c. | Requirements for franchisee to renew or extend | Not Applicable | Not Applicable |
| d. | Termination by franchisee | Not Applicable | You may seek termination upon any grounds available by state law. |
| e. | Termination by franchisor without cause | Section 6.6 | The Multi-Unit Development Agreement will terminate automatically upon your death or permanent disability, unless prohibited by law and the Development Rights are transferred within 6 months to a replacement developer that we approve. |
| f. | Termination by franchisor with cause | Section 7.1 | We may 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). |
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, Section 6.6 of the Multi-Unit Development Agreement addresses termination by the franchisor without cause. However, the termination is limited to specific circumstances.
Specifically, the Multi-Unit Development Agreement will automatically terminate if the franchisee dies or becomes permanently disabled. There is an exception if such termination is prohibited by law, and the development rights are transferred within six months to a replacement developer approved by Baya Bar.
This is a fairly standard clause in franchise agreements, designed to protect the franchise system in the event the original franchisee is no longer able to continue the business. Prospective franchisees should consider the implications of this clause and ensure they have a plan in place to transfer the development rights in case of death or disability.