What constitutes a Better Blend franchisee ceasing operations, leading to a non-curable default?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise | Summary |
|---|---|---|
| or other agreement | ||
| d. Termination by | FA: § 14.1 | If we violate a material provision of the |
| franchisee | ||
| MUDA: § 4 | franchise agreement and fail to cure or to make | |
| substantial progress toward curing the violation | ||
| within 30 days after notice from you. | ||
| If you sign a MUDA, you may terminate it at | ||
| any time. | ||
| e. Termination by | ||
| franchisor without cause | ||
| f. Termination by | We may terminate your agreement for cause, | |
| franchisor with cause | ||
| subject to any applicable notice and cure | ||
| opportunity. | ||
| If you sign a Multi-Unit Development | ||
| Agreement, termination of your MUDA does | ||
| not give us the right to terminate your franchise | ||
| agreement. However, if your franchise | ||
| agreement is terminated, we have the right to | ||
| terminate your MUDA. | ||
| g. “Cause” defined-- | Non-payment by you (10 days to cure); violate | |
| curable defaults | ||
| franchise agreement other than non-curable | ||
| default (30 days to cure). | ||
| h. “Cause” defined--non- | FA: Misrepresentation when applying to be a | |
| curable defaults | ||
| franchisee; knowingly submitting false | ||
| information; bankruptcy; fail to open by | ||
| specified deadline; lose possession of your | ||
| location; violation of law; violation of | ||
| confidentiality; violation of non-compete; | ||
| violation of ethics and values; violation of | ||
| transfer restrictions; slander or libel of us; | ||
| refusal to cooperate with our business | ||
| inspection; cease operations; operate in a | ||
| manner dangerous to health or safety (if not | ||
| corrected within 48 hours); score below 90/A | ||
| on government health inspections more than | ||
| twice in 36 months; score below passing grade | ||
| on brand inspection more than twice in 36 | ||
| months; three defaults in 12 months; cross- | ||
| termination; | ||
| a felony, or commission or accusation of an act | ||
| that is reasonably likely to materially and | ||
| unfavorably affect our brand; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 34–38)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, a franchisee ceasing operations constitutes a non-curable default. This means that if a Better Blend franchisee stops running their business, Better Blend has grounds to terminate the franchise agreement immediately without providing an opportunity to correct the issue.
In the franchise industry, certain defaults are considered so severe that they cannot be remedied. Ceasing operations falls into this category because it fundamentally undermines the franchise agreement. The franchisee is obligated to maintain and operate the business, and abandonment is a serious breach of contract.
This provision protects Better Blend by allowing them to quickly reclaim the territory and find a new franchisee who will actively operate the business. For a prospective franchisee, it highlights the importance of careful planning and sufficient capital to ensure the business can remain operational. Unexpected closure can lead to immediate termination and loss of the franchise investment.