If Better Blend cures a default on behalf of a franchisee, is Better Blend liable to the Better Blend franchisee?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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)
Based on the 2024 Better Blend Franchise Disclosure Document, the franchisor, Better Blend Franchising, LLC (BBF), has the option, but not the obligation, to step in and manage a franchisee's business under certain circumstances. These circumstances include the death or incapacitation of the Principal Executive, termination or expiration of the Franchise Agreement with BBF electing to purchase the business's assets, or if the franchisee operates the business in a manner that BBF deems a danger to public health or safety.
If Better Blend chooses to manage the business, it will do so for the franchisee's account until the agreement is terminated, the business is transferred, BBF purchases the business, or BBF returns the business to the franchisee. This management period cannot exceed 90 days without the franchisee's consent (or the consent of their estate's representatives). If the Franchise Agreement remains active, Better Blend must provide the franchisee with an accounting of all net income generated from the business during the period BBF managed it.
Better Blend is entitled to collect a temporary management fee equal to 10% of Adjusted Gross Sales during the management period, in addition to reimbursement for all expenses incurred. The FDD does not explicitly state whether Better Blend would be liable to the franchisee for actions taken to cure a default, but it does state the conditions under which Better Blend can temporarily manage the business. A prospective franchisee should seek clarification from Better Blend regarding liability in such situations.