What constitutes a default under the Ben Jerrys Development Agreement?
Ben_Jerrys Franchise · 2025 FDDAnswer from 2025 FDD Document
JERRY'S in the form prescribed by BEN & JERRY'S, true and complete copies of the following reports, financial statements and other data:
- 5.2.1 Within ninety (90) days after the end of each fiscal year of DEVELOPER, financial statements prepared and reviewed by an independent certified public accountant, showing the results of operations, including the balance sheet, income statement, and statement of cash flow prepared in accordance with generally accepted accounting principles recognized in the United States as consistently applied ("Generally Accepted Accounting Principals" or "GAAP") (and, for each, the supporting notes) for DEVELOPER;
- 5.2.2 Within ninety (90) days after the end of each quarter of DEVELOPER'S fiscal year, financial statements including balance sheets and income statements for such owners of DEVELOPER as specified by BEN & JERRY'S;
- 5.2.3 Within thirty (30) days after their filing, DEVELOPER'S federal tax return for each year during the term of this Agreement; and
- 5.2.4 Such other forms, reports, records, information, and data as BEN & JERRY'S may reasonably designate.
6. DEFAULT AND TERMINATION
6.1 DEVELOPER shall be deemed to be in default under this Agreement, and all rights granted to DEVELOPER herein shall automatically terminate without notice to DEVELOPER, if DEVELOPER shall become insolvent or make a general assignment for the benefit of creditors; if a petition in bankruptcy is filed by DEVELOPER or such a petition is filed against and not opposed by DEVELOPER; if DEVELOPER is adjudicated as bankrupt or insolvent; if a bill in equity or other proceeding for the appointment of a receiver of DEVELOPER or other custodian for DEVELOPER'S business or assets is filed and consented to by DEVELOPER; if a receiver or other custodian (permanent or temporary) of DEVELOPER'S assets or property, or any part of the Development Agreement, is appointed by any court of competent jurisdiction; if proceedings for a composition with creditors under any state or federal law should be instituted by or against DEVELOPER; if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless supersedeas bond is filed); if DEVELOPER is dissolved; if execution is levied against DEVELOPER'S business or property; if suit to foreclose any lien or mortgage against any asset of DEVELOPER or DEVELOPER'S Scoop Shops is instituted against DEVELOPER and not dismissed within thirty (30) days; or if any asset of
DEVELOPER or of DEVELOPER'S Scoop Shops shall be sold after levy thereupon by any sheriff, marshal, or constable.
- 6.2 Upon the occurrence of any of the following events of default or upon any breach of any of the covenants listed in Section 8 of this Agreement, BEN & JERRY'S may, at its option, terminate this Agreement and all rights granted hereunder, without affording DEVELOPER any opportunity to cure the default, effective immediately upon the provision of notice to DEVELOPER (in the manner provided under Section 9 of this Agreement):
- 6.2.1 If the Franchise Agreement for any Scoop Shop operated by DEVELOPER (or a person or entity affiliated with DEVELOPER) is terminated;
Source: Item 23 — RECEIPTS (FDD pages 134–358)
What This Means (2025 FDD)
According to Ben Jerrys's 2025 Franchise Disclosure Document, several conditions can trigger a default under the Development Agreement. A default occurs automatically, without notice to the developer, if the developer becomes insolvent, makes an assignment for the benefit of creditors, files or does not oppose a bankruptcy petition, is adjudicated bankrupt or insolvent, consents to the appointment of a receiver, has a receiver appointed for their assets, institutes proceedings for composition with creditors, has a final judgment unsatisfied for 30 days or longer (unless a supersedeas bond is filed), dissolves, has an execution levied against their business or property, faces a foreclosure suit not dismissed within 30 days, or has assets sold after levy by a sheriff, marshal, or constable.
Ben Jerrys may also terminate the agreement immediately upon notice if the Franchise Agreement for any Scoop Shop operated by the developer (or an affiliate) is terminated, or if the developer or any owner commits or is convicted of a felony or any crime that Ben Jerrys believes is injurious to the system, proprietary marks, products, or associated goodwill.
Furthermore, failure to adhere to the Development Schedule constitutes a default. Ben Jerrys also considers it a default if the developer fails to comply with any material term or condition of the Development Agreement, or fails to comply with the terms of any Franchise Agreement or development agreement between the developer (or an affiliate) and Ben Jerrys. Upon such a default, Ben Jerrys can terminate the agreement with 30 days' written notice, although the developer can avoid termination by curing the default to Ben Jerrys's satisfaction within that period. No default under the Development Agreement constitutes a default under any Franchise Agreement between the parties.
These default conditions are typical in franchising, as franchisors need to protect their brand and system standards. Prospective Ben Jerrys developers should carefully review these conditions to understand their obligations and the potential consequences of non-compliance. The ability to cure certain defaults provides some protection, but others, such as insolvency, lead to immediate termination.