What happens if a Bens Soft Pretzels Sublicensee repeatedly defaults on material covenants?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
notice of your intent to enter into a renewal agreement at least 6 months but not more than 12 months prior to the end of the expiring term; (ii) you sign our then-current form of franchise agreement (modified to reflect that the agreement relates to a renewal agreement), the terms of which may differ from this Agreement, including higher fees; (iii) you have complied with the provisions of subparagraph 5.E regarding modernization and you perform any further items of modernization and/or replacement of the building, premises, trade dress, equipment and grounds as may be necessary for your Store to conform to the standards then applicable to new BEN'S SOFT PRETZELS stores, regardless of the cost of such modernizations and/or replacements; (iv) you are not in default of this Agreement or any other agreement pertaining to the franchise granted, you have not been in default of this Agreement on three or more occasions during the term of this Agreement, regardless of whether any cure has been effectuated, have satisfied all monetary and material obligations on a timely basis during the term, and are in good standing; (v) if leasing the Store premises, you have renewed the lease and have provided written proof of your ability to remain in possession of the premises throughout the renewal period; (vi) you comply with our then-current training requirements; and (vii) you and your owner(s) and guarantors execute a general release of claims in a form we prescribe.
Source: Item 22 — CONTRACTS (FDD pages 46–47)
What This Means (2025 FDD)
Based on the 2025 Bens Soft Pretzels Franchise Disclosure Document, the consequences of a Sublicensee repeatedly defaulting on material covenants are not explicitly detailed. However, the document does address defaults in the context of franchise agreement renewals.
Specifically, if a franchisee seeks to renew their agreement, Bens Soft Pretzels will assess whether the franchisee is in default of the existing agreement or has been in default on three or more occasions during the term, regardless of whether the defaults were cured. Meeting these conditions is necessary for renewal.
Therefore, while the FDD does not directly state the repercussions for repeated defaults beyond the context of renewal, it is clear that a history of defaults can negatively impact a franchisee's ability to extend their franchise term with Bens Soft Pretzels. A prospective franchisee should seek clarification from the franchisor regarding the specific consequences of repeated defaults during the franchise term.