Under the Beehive Homes franchise agreement, what constitutes 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 conditions can trigger an 'Event of Default' under the franchise agreement. These events range from financial issues to operational failures and can have significant consequences for the franchisee.
Specifically, an Event of Default occurs if any payments due to Beehive Homes are not made on time. It also includes any failure to fully perform or adhere to the terms and conditions of the franchise agreement, aside from monetary payments. Operationally, if the Beehive Homes location's occupancy falls below 50% for 30 or more consecutive days after initially exceeding that occupancy rate, it constitutes an event of default.
Legal and financial troubles, such as bankruptcy filings, insolvency, or making an assignment for the benefit of creditors, also trigger default. Furthermore, any action or inaction by the franchisee that could reasonably harm the goodwill associated with the Beehive Homes brand is considered a default event. Committing an act that constitutes grounds for termination under the laws of the state where the home is located, engaging in unauthorized transfers of the franchise, or the occurrence of a default under any other agreement between the franchisee (or their affiliates) and Beehive Homes (or its affiliates) will also be considered an Event of Default.
These stipulations are important for prospective franchisees to understand, as an Event of Default can lead to termination of the franchise agreement and significant financial penalties. Franchisees should ensure they have a clear understanding of these conditions and the steps required to avoid default to protect their investment and business operation.