Under what circumstances will the Baya Bar Multi-Unit Development Agreement terminate automatically?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
cable | | 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). |
| 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; |
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 will terminate automatically upon the franchisee's death or permanent disability, unless prohibited by law. However, there is an exception: if the Development Rights are transferred within 6 months to a replacement developer approved by Baya Bar, the agreement may continue.
Additionally, the Franchise Agreement will terminate automatically, without notice, if the franchisee experiences certain non-curable defaults. These include 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 that is not dismissed within 30 days.
It is important for a prospective Baya Bar franchisee to understand these termination conditions, as they represent significant risks. The automatic termination upon death or disability highlights the need for succession planning. The non-curable defaults leading to automatic termination underscore the importance of maintaining financial stability and adhering to legal and financial obligations. Franchisees should carefully review Sections 6.6, 17.1, and 17.2 of the Multi-Unit Development Agreement to fully understand these provisions.