What legal actions against a Beehive Homes franchisee can constitute an Event of Default?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.1. Events of Default. The following, subject to the notice requirements of Section 14.2 below, shall constitute "Events of Default":
- (a) Any monies payable by Franchisee to Franchisor shall not be paid as and when due and payable;
- (b) There shall be any failure or omission in the full and faithful performance and observance of any of the terms, conditions and limitations of this Agreement on Franchisee's part to be performed or observed (other than the payment of monies);
- (c) The occupancy of Franchisee's Home shall be less than 50% for thirty (30) or more consecutive days after once having attained an occupancy of greater than 50%;
- (d) There shall be filed by or against Franchisee, in any court pursuant to any statute, either of the United States or any state, a petition for any relief under the Federal Bankruptcy Act or for reorganization or for the appointment of a receiver or trustee for the
property of Franchisee, which is not vacated within a period of twenty (20) days, or Franchisee shall be adjudicated bankrupt or insolvent within the meaning of insolvency in either Bankruptcy Act proceedings or equity proceedings, or shall make a general assignment for the benefit of creditors, or, admit in writing its inability to pay its debts as they mature, or, as debtor, take the benefit of the provisions of any debtor relief act, whether now or hereafter enacted;
(e) Franchisee by its action or inaction, effects an incident which mayreasonably be expected to materially impair the goodwill associated with the Names and Marks;
(f) Franchisee commits any act which constitutes good cause for termination as determined under the law of the state in which the Home is located;
(g) Franchisee shall engage in any Unauthorized Transfer as provided in Section 13.5 of this Agreement; or
(h) The occurrence of an Event of Default under any other Franchise Agreement or other agreement between the Franchisee or any Affiliate of the Franchisee, on the one hand, and Franchisor or any of its Affiliates, on the other hand.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, several legal and financial actions against a franchisee can trigger an Event of Default under the franchise agreement. These events allow Beehive Homes to take action to protect its brand and financial interests.
Specifically, the following actions can constitute an Event of Default: failing to make payments to Beehive Homes when due, failing to perform obligations under the franchise agreement, experiencing a Home occupancy rate of less than 50% for 30 or more consecutive days after previously exceeding that occupancy level, facing bankruptcy or insolvency proceedings that are not resolved within 20 days, making an assignment for the benefit of creditors, or admitting an inability to pay debts. Additionally, actions that could reasonably impair the goodwill associated with the Beehive Homes brand, committing an act that constitutes good cause for termination under state law, engaging in an unauthorized transfer of the franchise, or experiencing an Event of Default under any other agreement with Beehive Homes or its affiliates can also trigger default.
These stipulations are important for prospective franchisees to understand, as an Event of Default can lead to termination of the franchise agreement. Beehive Homes is required to provide written notice of default, giving the franchisee a chance to cure the default within 30 days, unless the default is incurable or a longer cure period is required by state law. Failure to cure the default can then result in Beehive Homes terminating the agreement.
Furthermore, upon an Event of Default, Beehive Homes has the right to collect all outstanding fees, impose a cancellation fee of $10,000, and require the franchisee to cease using Beehive Homes' Names and Marks. Beehive Homes also has the option to require the franchisee to sell the Home and its contents within four months of written notice. These measures protect Beehive Homes' interests and ensure consistent brand standards across all franchise locations.