Under what circumstances can the Baya Bar Franchisor terminate the Development Agreement immediately without allowing the Developer an opportunity to cure?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- 7.2 Defaults With No Opportunity to Cure.
Developer shall be deemed to be in material default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, without affording Developer any opportunity to cure the default, effective immediately upon notice to Developer, if Developer:
7.2.1 has misrepresented or omitted material facts in applying for the development rights granted hereunder;
7.2.2 falsifies any report required to be furnished Franchisor hereunder;
7.2.3 fails to comply with any federal, state or local law, rule or regulation, applicable to the development and operations of Developer's Baya Bar outlets, including, but not limited to, the failure to pay taxes;
7.2.4 fails to develop the Baya Bar outlets in accordance with the Mandatory Development Schedule.
7.2.5 attempts a Transfer in violation of the provisions of Article 6 of this Agreement;
7.2.6 is convicted of, or pleads no contest to, a felony or to a crime that could damage the goodwill associated with the Marks or does anything that may harm the reputation of the System or the goodwill associated with the Marks;
7.2.7 receives an adverse judgment or a consent decree in any case or proceeding involving allegations of fraud, racketeering, unfair or improper trade practices or similar claim which is likely to have an adverse effect on the System, or the Marks, the goodwill associated therewith or Franchisor's interest therein, in Franchisor's sole opinion;
7.2.8 fails to comply with the non-disclosure and non-competition covenants in Article 8 hereof:
7.2.9 defaults, or an affiliate of Developer defaults, under any other agreement, including any Franchise Agreement, with Franchisor, or any of Franchisor's affiliates or suppliers, or a landlord and does not cure such default within the time period provided in such other agreement; or
7.2.10 terminates this Agreement without cause.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the franchisor can terminate the Development Agreement immediately without allowing the developer an opportunity to cure under specific circumstances. These circumstances include misrepresentation or omission of material facts when applying for development rights or falsifying any report required to be furnished to the franchisor.
Additionally, Baya Bar can immediately terminate the agreement if the developer fails to comply with any federal, state, or local law, rule, or regulation applicable to the development and operations of their Baya Bar outlets, including failure to pay taxes. Attempting a transfer in violation of the agreement's provisions, being convicted of or pleading no contest to a felony or a crime that could damage the goodwill associated with the Baya Bar marks, or receiving an adverse judgment or consent decree in cases involving allegations of fraud, racketeering, unfair trade practices, or similar claims that could adversely affect the Baya Bar system also constitute grounds for immediate termination.
Furthermore, immediate termination is possible if the developer fails to comply with the non-disclosure and non-competition covenants outlined in the agreement. Defaulting under any other agreement with the franchisor, its affiliates, suppliers, or a landlord without curing the default within the specified time period, or terminating the Development Agreement without cause, are also reasons for immediate termination by Baya Bar. These stipulations are important for potential developers to consider, as they highlight the conditions under which their development rights can be immediately revoked, emphasizing the need for compliance and ethical conduct.