What costs and expenses can Better Blend charge a franchisee for curing a default?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall reimburse BBF for its costs and expenses (including the allocation of any internal costs) for such action, plus 10% as an administrative fee.
- 11.4 Right to Discontinue Supplies Upon Default. While Franchisee is in default or breach of this Agreement, BBF may (i) require that Franchisee pay cash on delivery for products or services supplied by BBF, (ii) stop selling or providing any products and services to Franchisee, and/or (iii) request any third-party vendors to not sell or provide products or services to Franchisee.
No such action by BBF shall be a breach or constructive termination of this Agreement, change in competitive circumstances, or similarly characterized, and Franchisee shall not be relieved of any obligations under this Agreement because of any such action.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, if a franchisee is in default of their agreement, Better Blend may take certain actions and charge the franchisee for associated costs. Specifically, Better Blend can require the franchisee to pay cash on delivery for any products or services they supply during the period of default. They can also halt the sale or provision of any products or services to the franchisee and request that third-party vendors do the same. These actions do not constitute a breach of the agreement by Better Blend, nor do they relieve the franchisee of their obligations.
Additionally, if Better Blend needs to take action to ensure compliance with the franchise agreement, the franchisee is responsible for reimbursing Better Blend for all associated costs and expenses. This includes any internal costs that Better Blend incurs, plus an additional 10% administrative fee. This means that if Better Blend has to send representatives to the franchise location, or take other measures to correct the default, the franchisee will bear the financial burden of these actions.
In situations where Better Blend temporarily manages the business due to the franchisee's default, death, incapacitation, or the business operating in a manner that endangers health or safety, Better Blend can collect a temporary management fee. This fee is equal to 10% of Adjusted Gross Sales for the period in which Better Blend operates the business, in addition to all expenses incurred during that time. This could significantly impact the franchisee's revenue during the period of temporary management. Prospective franchisees should clarify what specific actions constitute a default and the full range of costs they might incur to cure such defaults.