What happens if a Better Blend franchisee is unable to pay their debts as they become due?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall pay all vendors and suppliers in a timely manner.
Franchisee shall pay all taxes when due.
If Franchisee borrows money, it shall comply with the terms of its loan and make all loan payments when due.
If Franchisee leases the Location, Franchisee shall comply with its lease for the Location and make all rent payments when due.
- 11.13 Temporary Management. If (i) the Principal Executive dies or becomes incapacitated, (ii) this Agreement is terminated or expires and BBF elects to purchase assets of the Business as provided in Section 14.6, or (iii) Franchisee is operating the Business in a manner which, in BBF's reasonable opinion, constitutes a danger to the health or safety of any person, then BBF may (but is not obligated to) enter the Location and operate and manage the Business for Franchisee's (or Franchisee's estate's) account until this Agreement is terminated, the Business is transferred, the Business is purchased by BBF, or BBF returns the Business to Franchisee.
BBF's operation and management will not continue for more than 90 days without Franchisee's consent (or the consent of the representatives of Franchisee's estate).
If this Agreement has not terminated or expired, then BBF will account to Franchisee for all net income from the Business during the period in which BBF operates the Business.
BBF may collect a temporary management fee equal to 10% of Adjusted Gross Sales for the period in which BBF operates the Business, plus all expenses
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, franchisees are obligated to pay vendors, suppliers, taxes, and loan payments when due, as well as comply with lease terms and make rent payments when due. Failure to meet these obligations could lead to a breach of the franchise agreement.
If a franchisee operates the Better Blend business in a way that poses a danger to health or safety, Better Blend Franchising, LLC (BBF) has the option to step in and manage the business. BBF can manage the business for up to 90 days, accounting to the franchisee for net income during this period. BBF may collect a temporary management fee equal to 10% of Adjusted Gross Sales, in addition to all expenses incurred during the management period.
While the FDD outlines the franchisee's financial obligations and BBF's right to temporarily manage the business under specific conditions, it does not explicitly detail the consequences of a franchisee's general inability to pay debts as they become due. For a comprehensive understanding of the specific actions Better Blend might take if a franchisee faces financial difficulties, a prospective franchisee should seek clarification from the franchisor.