Does Better Blend have to actually terminate a franchise agreement for a default to trigger termination of the MUDA?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
- 4. Default and Termination. BBF may terminate this MUDA by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
- (ii) BBF has the right to terminate any franchise agreement between BBF and Franchisee (or any affiliate thereof) due to Franchisee's default thereunder (whether or not BBF actually terminates such franchise agreement).
Source: Item 23 — RECEIPTS (FDD pages 43–157)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, Better Blend does not have to actually terminate a franchise agreement for a default to trigger termination of the Multi-Unit Development Agreement (MUDA). The MUDA can be terminated if Better Blend has the right to terminate any franchise agreement with the franchisee due to default, regardless of whether Better Blend actually terminates the agreement.
This means that even if Better Blend chooses not to terminate a specific franchise agreement despite a franchisee's default, the existence of that default gives Better Blend the right to terminate the MUDA. This is a significant point for prospective multi-unit franchisees, as a default in one location could jeopardize their entire development agreement, even if that single unit franchise agreement remains in effect.
This provision in the MUDA provides Better Blend with considerable leverage over multi-unit franchisees. It incentivizes franchisees to maintain strict compliance across all their locations to avoid risking the entire development schedule. Prospective franchisees should carefully consider the implications of this clause and ensure they have the resources and management capabilities to prevent defaults across all their Better Blend locations.